This is a YouTube video titled "Retirement Income: Why 4% Safe Withdrawal Rate ISN'T Actually Safe" created in July 2025. The content is a detailed financial explanation about retirement income strategies, focusing on the risks of withdrawal rates, annuities, Social Security, and investment portfolio management during retirement. It is a monologue or presentation style without multiple speakers or conversational elements.
So what we know, giving you more facts here, is the moment they retire, all of that 7433 goes away. So when he retires, all active income will stop. So all this goes away if we literally person calls tomorrow, says, okay, I'm done. So income goes to zero. What does that do? That puts me in a negative cash flow of 7447, 74. Okay, now 62 years old. We could turn on Social Security at 62. That's how much they will get. Let me give you some more facts, give you the breakdown of their mortgage. And I actually lied to you. The 370 is actually made up of a mortgage and a car loan and one credit card. So that was my mistake. Let me give you the breakdown of their mortgage. 350,000 is the balance. Mortgage payment is 2,242. The other mortgage, which is the rental, 277, 428, 61 payments, 2,043, 74 1. I'm going to share with you the steps that Daniel, who is my retirement specialist for this community retirement expert, some of you might have already spoken to him and are working with him. And he's awesome and I respect him a lot. He's very good at solving for this better than me because I don't have the experience in this. But we came together and put together this strategy here. So I'm just going to explain, explain what it is and then what the estimated result could potentially be if all these moving parts come together. So out of everything you see here on the left hand side with the investments, all different investment accounts, Daniel was focusing in on this 818 and was providing the education about annuities. In summary, annuities are like pensions. They pay a guaranteed amount of income for the entire lifespan of an individual. That is what annuities solve for. They can also solve for other things as well. We're focusing right on here. We're solving for income. So we already said turn on Social Security. That's an easy one. So now I go from zero to now collecting 2,140 from no longer actively working. And if we purchased two annuities, 175k each, if it's an immediate income annuity, means that this person dumps in 175k each into two policies, that'd be 350 grand total. And we pull it from here, that's about less than 45% of this 818 that we're basically rolling over out of risk, out of the investment, into an Income producing asset for the person on a guaranteed basis for the rest of their life. The number would be $2,085.50. So we got two and two so far. That's 4,000, almost $4,200 so far. We left the 401k alone, we left the Roth IRA, we left the stocks, we left the cash. Left it all alone for now. The value of doing an annuity when you have all this money that you build up is you're able to, you're able to guarantee portfolio success and you're able to prolong these dollars. Right. This number that I wrote right here at the bottom, $152,773.73 of this 818. This person has 152 grand sitting in bonds, cash. Cash and bonds. An annuity will outperform cash and bonds inside of this account and will reduce fees inside of there. So you're able to reduce fees, reduce costs, and create a higher, what's called withdrawal rate. A key thing for all of you to keep in mind. When you reach retirement or you're in retirement, this word becomes very important. Distribution rate. So when you're, when you're retired is no longer about where can I get the highest rate of return? What you want to be asking is where can I get the highest distribution rate on my assets that I'm ultimately going to be draining, liquidating to live my life efficiently and still have some to pass on. So in the financial world, many of you have heard this before, they call it the withdrawal rate. In other words, distribution rate on 818,000, the safe quote, unquote. It's not really safe, but the standard withdrawal rate is what the standard safe withdrawal rate is.4%. Reason why is according to the stock market s and P500, over any 30, 40 year plus period, the stock market will on average, with dividends grow somewhere around 8 to 10%, right? So if you've got 800 grand in an investment account and it's 100% invested in the S and P and you're earning say 8% on average every year, you could safely, quote, unquote, withdraw 4% of your account, total balance without the money running out before you pass away. So for example, if ALMA was withdrawing 10% of 800,000, let's run that real quick, that's 81,800 a year. How long would her account last if she was withdrawing 10% every single year? Depends on how much she's earning. So if she's earning 8% every year, that's 65,000. So let's say she earned 65,000 on top of the 818 and then withdrew 81. Now she has 801. Now what I just did is funny math to make her numbers look better. The reality is this 81,800 is not coming out all at once. It's coming out typically on a monthly basis, so about 6,800amonth. Let's say she withdraws. So if you're withdrawing 10% over the span of a year, and over that same year you earned 8%, you're going to have lesser dollars. Each and every year that the account progresses in retirement to, eventually AMA will run out of money. And if there's one year and this happens roughly every five years, let's say roughly every five years, the S and P loses money. No. Or does. This doesn't gain anything. So either your account stays at 818 or it goes down or maybe slightly up. That's what happens every year. So say, for example, in the first year Amma retires, she pulls out 81,807. 36 is what her account goes down to. But Instead of earning 8%, what if she loses 8% of her account value in one year? She's at 677,304 in just one year. You're like, whoa, how did. How to go from 818 down to 677? Like that can happen. Imagine if you were retiring during 2007, 2008. Imagine retiring during COVID right? This stuff happens. People lose massive amounts of money in their retirement account. So if somebody retired during COVID and they had 800 grand, the stock market literally, like, tanked, right? It tanked dramatically. Yes, it recovered. But if you were taking income while the account was losing money, you. You exaggerate losses in that account. So again, if you're doing 10% or 7 or 6 or 5, the chances of your 800 grand lasting for even 15 years goes down dramatically, Right? So can you imagine if you, you know, retire at 65, 67 and live all the way to 90? That's a lot of years. 800 grand not going to get us there. Okay, so that still doesn't, you know, really help you, right? All I did was scare you right there, right? Basically. So now to help you say, well, what is the most efficient way to make that money last as long as humanly possible? You could say, all right, well, I'll just only withdraw 4%. Let's. So 4% of 818 is 32,720. That's $2,726.66 a month. Okay, but we still have a problem. If I'm withdrawing money out of this account that has fees in it, right? There's a financial advisor managing that account. So I got to pay admin fees, administrative fees. And I have to hope and pray that my account earns more than 5%, earns more than 4% so it could at least match the balance of where I started at the 8:18 so that it, it doesn't shrink too fast. And that's just simply not what happens. What, what happens a lot is the account loses value because you're investing to try to earn what, a high rate of return so that you could, what, withdraw a little less? And then the spread keeps the account growing. So even though you're taking money out next year, instead of it being at 800 grand or 790, 818 went to 830, right? 845. So it kept going up.
