How Much Do I Need To Retire? Dave Ramsey Answers … But Be Careful!

How Much Do I Need To Retire? Dave Ramsey Answers … But Be Careful!

How much do I need to retire? is a common question that I hear, and it’s a really important one. 

Recently, I was reading a blog from popular financial person Dave Ramsey, and he was weighing in on the subject of retirement. I think Dave helps so many people when it comes to debt elimination and figuring out the baby steps in saving. He does great work there, but when it comes to retirement planning, in my opinion, you might want to think twice about implementing some of the advice that he gives. I’m going to go over it with you today and why you might want to be careful and what you can do instead to put yourself in a better position

First of all, realistically, you don’t want to implement anybody’s advice without meeting with them and considering your specific situation. I would much prefer doing that versus listening to someone on YouTube, or somewhere else, on what you should be doing with your money. So, talk to someone that you trust. 

Anyway, as I was looking at Dave’s blog and what he thought about this, he says that if you’re able to live on 8% of your nest egg, and if your mutual funds can do 12%, you’ll have 4% to cover inflation. Okay; that makes sense – if you want to live on 40K, he says, you need $500,000 in the bank. So, take your total nest egg and divide it by 0.08 to get that number you’ll need to live on each month.

This is, in my opinion, a little bit risky. And here’s why: 

The Sequence of Return Risk

What this means is that someone who retires in 2007 and someone who retires in 2010 are going to have drastically different outcomes of their retirement. If they were taking the same amount and their investments did the same thing, the outcomes, because of the withdrawal rates, have a big difference. 

Applying this to our example: if you’ve got 500K and you’re taking out 40K, an 8% withdrawal, and you’re averaging 12% somehow, but let’s say it’s 2007 and then the financial crisis happens. What if the investments, because you’re invested aggressively, get cut in half but you still need 40K to live? Now you’re taking out 16% and that could really crash a plan, so that’s something to be careful about. 

Aggressive Investments

Regarding this idea of the 12% rate of return on mutual funds, if you’re achieving that sort of return, my thought is that you’d have to be invested pretty aggressively. Many people who are in retirement don’t feel comfortable taking that sort of risk and going along with the rollercoaster that comes with investing in equities – especially looking at 2020 and what happened in March – because there’s fluctuations that happen. 

People in retirement don’t always want to do that, so a lot of times we’ll bring up the three-bucket strategy as a possible retirement withdrawal strategy. 

Unexpected Expenses

Let’s look at an example of a 500K nest egg to start that first year in 2020. And in this scenario, achieving a 12% return and taking out 8%, that plan looks successful and you’re actually growing your assets in retirement; fantastic.

But what if you were off by 5K of expenses; what if you really needed 45K per year instead of 40? That’s a big difference that drastically impacts your plan. And what if you were right: you needed 40K a year. But what if instead of 12% you only got 10%, how does that impact the plan? Those are just a couple of reasons why you might want to be careful when planning and make sure that you talk with a professional to map it out and think of all the different scenarios. 

And if this isn’t the best way, then what is a good way to go?

  1. Decide how much you need each month
  2. Estimate how much you might be having come in from social security and other pensions, other guaranteed income sources, and then subtract that from the monthly amount in step one
  3. Take the number from step one and minus the number from step two, and then divide that number by 0.04, which is a more reasonable 4% withdrawal rate

But again, this is still basic. The 4% withdrawal rate isn’t bulletproof, it’s an opinion, it’s a financial withdrawal strategy out there. I recommend meeting with someone and specifically looking over your scenarios, just yours and not anybody else’s. A lot really depends on the money that you have invested and the withdrawal rate that you’re using. 

As advisors, we’ve helped hundreds of people plan retirement, and we know that the more specific you can get in your plan, the more peace of mind you’ll have in retirement. If you’re interested in more peace of mind, reach out to me and I can help create your streamlined retirement blueprint, or I can give you The Perfect Retirement Plan that can help walk you through steps to take for your own retirement plan. 

Claiming Social Security at 62 Could Really Hurt If These Three Things Apply To You

There’s so much conflicting advice out there when it comes to this topic. If you’ve got questions or you just want to talk to someone live, click on the link at the end of this post and I’d be glad to talk about your specific situation and ideas for social security. 

If you’re thinking about claiming social security before your full retirement age, here are three things that could hurt you, that you might want to pay attention to. 

Number One

You plan to continue to work before your full retirement age. Currently in 2020, if you make more than about $18,000 per year in wages, and you receive social security, that social security benefit could be reduced. They might deduct as much as $1 for every $2 you earn above that $18,000 limit. So if you plan on earning an income either from work or from self-employment before your full retirement age, think twice about claiming early. 

Number Two

You don’t have a lot in retirement savings. The average earner typically receives about 40% of their former wage from social security, but it’s common for retirees to need about 80-90% of their previous income just to live comfortably. Those with savings can supplement that extra need. But if you don’t have that option, then it might be a mistake to claim early because it’s going to permanently reduce that benefit that you could receive. 

Number Three

You have a chance at living a long life – hopefully you do. And if you anticipate living a long life, then it may not make sense to cut your social security benefit by claiming it early at 62. Because when you do that, you permanently reduce the monthly benefit. 

As an example, the percentage reduction is about 30% if you were to take it early at 62 versus waiting for full retirement age. So this means if you’re entitled to about $1,500 per month from social security at full retirement age, then that might just mean you’re getting just a thousand bucks per month at age 62. 

In some cases, filing for benefits early is a smart move and it can make a lot of sense. But if any of the above scenarios that I just mentioned apply to you, then you might want to be thinking about waiting instead. And if you’d like to talk about social security or retirement income planning, then click on the link here or reach out to me and I’d be glad to have a free meeting with you or give you a free copy of The Perfect Retirement Plan so that you can start to evaluate some of these things yourself. 

Planning For Every Scenario in Retirement

Your retirement plan is not valuable, but the continual process of planning is, so step one is to create a flexible, adaptable retirement plan, not a static one. 

What I mean by adaptable is a successful and secure retirement plan with investable assets each year until well into your nineties, as with the example shown in the video. 

Now we know that life isn’t static and you and I both know that things change, life changes. So your plan should be able to change too and to adapt on the fly. 

Now, what if the unexpected happens; an additional expense that we didn’t plan for? How does that impact a decision made today or next year? How does that impact the long-term plan? 

Let’s say that you sell your business earlier than planned and you retire early. How does that impact the long-term plan? 

Or you’ve got a family, you’ve got grandkids, you want to take them on vacations while you still can. How does that impact if you were to spend $20,000 per year to go to the lake house or go to North Carolina, whatever it may be. 

So there’s all these different things and things we don’t even know that are going to happen yet. 

The main point is that when life changes, let’s change the plan. And if we have an idea of what could come, let’s see what sort of impact that has on the long-term plan. So I hope that gave you a good picture of how to create a plan that’s flexible and that’s adaptable.

Five Mini Plans In Every One Retirement Plan

Five Mini Plans In Every One Retirement Plan

These 5 mini-plans make up every successful retirement plan. A retirement plan is not something to take lightly. What you put away now, and where you put it, can greatly impact how much security you will have later on in life when you are looking to retire. When developing a retirement plan, there are a lot of aspects to consider. What will your income look like? How will taxes play into it? What happens if later on in life you face medical complications. There is no way of knowing these things ahead of time, but there are plenty of ways to plan for them so that when the time comes, you will be able to face surprises down the road with some peace of mind. There are five mini plans that we include in an overall retirement plan to help round the plan out and cover all necessary bases.

  1. Income Plan

This plan is important to ensure that when you are ready to retire, you can count on a reasonable and stable income to cover your month to month expenses. There are a variety of  components to this plan including, but not limited to: social security, maximization, spousal planning, and investment income. This plan is foundational to retirement, as it ensures that you will be able to maintain a comfortable lifestyle, even when you are no longer actively working.

2. Investment Plan

All our investment plans are based on your Income Plan. The two work in unison. 

The traditional retirement planning industry commonly decides how to invest your money based on your “risk tolerance”. We think this a deeply flawed approach that leads to higher than needed worry during major market corrections. 

Instead, if we can find the right cashflow needed from investments, we can map out the next 10 years need and design the income plan so you don’t market fluctuations do not affect your income plan. 

3. Tax Plan

Whether you are retired or not, you better believe that you will owe your dues to Uncle Sam. However, it is important to plan for this, and to ensure that you will never end up paying more than needed in your taxes. There are a variety of strategies that we can implement in this plan from withdrawal strategies to Roth conversion strategies.

4. Healthcare Plan

This is the less glamorous, but unfortunately common, side of retirement. Healthcare costs tend to rise pretty consistently upon retirement, and therefore, a healthcare plan is an essential aspect of an overall retirement plan. There are a variety of factors that will impact your healthcare plan. One of the main factors people face is medicare planning in addition to any supplemental and long-term planning.

5. Legacy/Charitable Plan

This is the part of the plan that most people prefer not to think about, however, it is a part that requires thorough consideration. When a person passes away, their money and assets will have to go somewhere. It could end up at any of these three places: to their heirs, to a charity, or to the government. It is important to put consideration into where you would like for your own assets to go, and to set up a plan to ensure that your wishes are granted when that time comes. In addition to estate planning, is the wealth transfer plan. This plan simply alerts those who will be receiving assets upon your death so that they can be prepared to receive it when the day comes. 

There are a variety of essential parts to a retirement plan, and at times this can seem overwhelming. If you are looking to increase security upon retirement, our team of experienced financial advisers is happy to help you develop a plan that best fits your unique needs, income, and interests. Contact Streamline Financial Services today, to meet our team and learn more about our unique approach to each of these essential mini plans. 

INVEST IN KIDS ILLINOIS: Step-By-Step Walkthrough

Today I’m going to be talking about how to qualify and to actually get the credit for the Invest In Kids Act program.

I’m going to walk you through what to do step by step:

  1. Request a letter ID with Illinois;
  2. Activate your account;
  3. Reserve the Invest In Kids credit; and finally,
  4. Make the donation.

If you’re not familiar with the Invest In Kids program, click to see my previous video on what the program is and some of the benefits, then come back here to see how to take the steps to make it happen for you this year.

STEP ONE: Request a letter ID with Illinois

If you don’t already have an account at

  • Click on the “Individuals” tab at the top
  • “Request letter ID” from under the Miscellaneous heading
  • Enter your social security number and ONE of the following:
    • Your most recent, adjusted gross income (you can find this on last year’s tax return)
    • Your driver’s license number
    • Your Illinois state ID number
  • Click “Submit”

In 7-10 days, you’ll get your letter ID in the mail. Once you get that, you can go to step two.

STEP TWO: Activate Your Account

After you receive your letter ID, it’s time to activate your account on

  • Look for the section titled: Login to MyTax Illinois, and click “Sign Up Now”
  • Enter your social security number
  • Click “yes” to activate your MyTax Illinois account
  • Enter the letter ID you received in the mail
  • Enter EITHER:
    • Your individual Illinois PIN (there will be a link on the page where you can look it up), or
    • Your most recent, adjusted gross income (you can find this on last year’s tax return)
  • Fill in your name and email
  • Pick a username and password and fill in the reminder for that information
  • Click “Submit” at the top of that screen, then “OK” on the next screen

You will receive an email confirmation that your account was activated.

STEP THREE: Reserve Your Credit

There are different Scholarship Granting Organizations (SGOs) and you should be able to use any of them for each school, but some schools have preferences on who they’re using. So to be safe, and because you’re giving money, I would recommend confirming with the school on which SGO they prefer. In this example, I’m going to use the Bright Promise Fund.

  • Enter your username and password on the login screen, click “Log In”
  • Under Account Type, select “Individual”
  • Under I Want To … , select “Contribute to Invest In Kids”
  • Read the overview of the program and click to acknowledge
  • Choose your region (if you don’t know it, you can either ask the school or look it up)
  • Choose the Bright Promise Fund (or your preferred SGO)
  • Put in whatever amount you’re choosing to donate
  • Confirm and authorize the amount to give
  • Enter your email
  • Click “Submit”

On the next screen, you will receive a confirmation. Print and save this confirmation to get credit when you give the actual gift in the next step.

STEP FOUR: Make the Donation

Again, for this example, I am using Bright Promise Fund. Your preferred SGO may be slightly different.

  • Navigate to
  • Click “Donate Online”
  • Next to SGO ILL Tax Credit Donation, click “Here’s How”
  • Read and confirm that you have done the three required steps shown on the screen
  • Write a check in the amount you determined in step three
  • Mail the check to the provided address, along with your contribution certificate

Rather than just use USPS, I actually did FedEx, just so I could track it to make sure that it arrived. And if you want to really be sure that they’ve received it and they get it counted for the correct year, call them up and make sure they’ve received it.

One more thing to mention, you’ll want to write on the check the name of the school to designate the gift to them, and then also write it on the actual certificate that you print out and include with the check.

And there’s actually one step more. Once you’ve sent the check and the certificate to the SGO and you know that they received it, come back to and look under “requests” and you’ll be able to see if your contribution authorization certificate has been processed, or is still waiting. And once it’s processed, you’ll have a tax form available under that tab which you can print out or save for when you file your taxes next year.

I know that was quite a few steps. If you have any questions, leave a comment or send me an email and maybe I’ll be able to help you out. But good luck on using this great program; one that helps the kids, helps the schools, and gets you a pretty good 75% tax credit in Illinois.