MBA1382 How Much Do You Really Need To Retire? + Free Ride Friday

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To register and secure your spot, go to webinarninja.com AWC Again, that's webinarninja.comAWC My second announcement is of course it's Friday. It's Free Ride Friday, so make sure you hang on to the end of the episode to hear who won this week's Free Ride. Every Friday we give away a lifetime membership to one of our programs. Just leave us an iTunes rating and review to enter our weekly random draw. Listen in on Friday to see if you won. That simple. All right, let's jump into today's episode. Hey O. Welcome to the $100 MBA show. Power to the people. The business people that is every day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher, Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online. And in today's episode, you will learn how much do you really need to retire? As entrepreneurs, as business builders, often we're just go, go, go. And we don't really stop and think, what are we doing this all for? If I need to stop working at some point in my life, how much money do I need to live comfortably? This is very important because it allows us to define a clear vision, a clear goal, a clear number. How do we get to that number? Well, that's what we talk about in today's episode. We're going to talk about how much money you really need to retire so you can live your lifestyle comfortably and enjoy that side of your life. This is going to be a fun episode because we get to dream, we get to think about what we want in the future and we get to set our goals and really find out what is that number. A lot of us don't stop and think about that and we often think it's much higher than it actually needs to be. So let's get down to brass tacks. Let's get to that number. Let's get down to business. Retirement is an interesting concept. This idea of I will not be working any longer. I don't like to see retirement that way. I like to see retirement as when I don't have to work any longer, I don't need to, I don't depend on working. Just because we're gearing up, we're planning for retirement, it doesn't mean you have to stop working. You can still run your business, you can still start new businesses. But I say retirement is a time, it's an age when I know for sure if I decide to stop working, if I decide to step away from the business, decide to sell the business, at any point, from that age on, I'm good to go. I can take care of my expenses, I can take care of my family's expenses. I'm good to go. I'm comfortable. And that's a great state to be in. Last few years, I've been really looking into how to plan for retirement because they say the earlier the better. I highly recommend you check out the book by Chris Hogan and Dave Ramsey called Retire Inspired. It's not an age, it's a financial number. And really that's what it is. Once you get to that number, you can theoretically retire so how do we know how much money we will need and for how long? Well, a lot of people don't factor in is that when you save for retirement, when you have savings, that money isn't just used for a certain amount of years and just use it up before you die. That money is used to fuel your retirement. We'll talk a little bit more about that. The first thing we need to settle on is how much money do you personally need every year so that you can live comfortably? We're talking about personal expenses, rent, food, utilities, outings, clothing, family trips, holidays, emergencies, car repairs, whatever it is. Okay? Look at how much money you're spending right now. And you can easily do this with your bank account. Go to your personal bank account and you can filter how much you've spent in both your checking and your credit cards in the last year. Now, don't tell yourself a story and say, you know, when I retire, I'll have less expenses, or, you know, when I retire, I'll be more frugal. It's better for you to have a generous number to account for inflation and account for other expenses kind of coming up that you didn't expect. So let's say, for example, that number is $70,000 a year. That includes everything, your holidays, your rent, your food, your mortgage, whatever it is. Right. Car payment. And for the sake of argument, let's say it's US$70,000. So a lot of people say, well, that means if I want to live this way for 10 years, I need $700,000. Yeah, that's if you're just spending money and not letting money work for you. So what are we going to do? Well, if you invest a bulk amount when you retire, over time, you're going to make a return on that investment according to the s and P500, over the course of a period of time, over the course of 30 years, the average annual return on an investment in the stock market on average is 10%. Think about that 10% return annually. Now, for many of us, we think, oh, that's not really that much money. You know, If I invest $1,000 in some blue chip stocks in the stock market every year, I'm going to get, what, $100 every year? That's if you only invest one time. So say, for example, you invest $1,000 after one year, it's $1,100. And then a compound interest will be 10% of $1,100. So in this example, if I were to put $1,000 every year, you know, that return would get higher and higher because I'm investing more and more. But let's say we don't do that. Let's say we just save our cash, even though that's not advisable. Let's say you didn't invest as you go and just dropped $700,000 into the market over the course of 30 years, you would get a 10% return annually. So let's say, for example, you'll be retired for 30 years. Let's say from the age of 50 to 80 on average, you'd make that $70,000 every year and live comfortably. And your principal is still there, meaning their original $700,000 is still there in the market.

So.

So you can live off the profits, you can live off the gains from your investment perpetually, even past 30 years, if you like. See how this is actually pretty simple? Now, of course, I'm not an investor or a stock broker or a professional that can advise you on what to invest on. But even if you were conservative and you wanted to go with the safest stocks possible, the stock market's all about over time. So you have to kind of be happy with just putting the money down there even as you save and seeing the returns over time. But just to get back to today's topic on our goal, let's say our goal is we want to hit that 700,000 mark so we have that money so we can have that 10% return, so we can have that 70,000 every year when we retire. Let's say you're 30 years old right now and you want to retire when you're 60. That means you have 30 years to make $700,000 in savings, right? To have that on the side. So that's 700,000 divided by 30, 30 years, you'd have to save around $23,300 every year. And then year over year, that'd be $700,000. The exact number is 23,333. But you might be saying, wow, that's a lot of money to save every year. That's a little under $2,000 a month. That's really hard. Well, that's one way to do it, just to dump it in savings. But a better way to do this is to put it into the market every month for 30 years. That way you can accrue that 10% return annual every, every year. So how can I get to my number without putting so much money in every year? Well, listen to this. If you put $500 a month for every month for 30 years with the power of compound interest, meaning 10% every year. And that 10% gets added to the principal and then you get reinvest that amount. By the end of the 30 years, you'd have shy of a million dollars. 995,689. Yeah, that's the power of compound interest. So Instead of saving $23,333 a year, you're actually just putting away $6,000 a year. You're investing it. So actually $6,000 get pulls out of your pocket every year and it's month over month. It's super simple. And if you can make $500 more or save $500 more every month, this is the kind of retirement you're looking for. And guess what? You can keep that money, that $995,000, just keep it in the market and live off the returns. So, so your goal is to find your number, how much money you need every year to live comfortably and then work backwards. How much money do I need to invest into the market every month so I can get to my goal? If you want an easy calculator, there's one out of Australia that's really easy. It's called moneysmart.gov au and you can plug in your numbers and you can see how much money you'd get after a certain amount of years. The key to investment and planning for retirement is to start as early as possible. Doesn't matter if you're 30, 40, 50. Start today because every day that goes by is a day that you don't get that benefit of the market interest.

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To wrap up Teddy's lesson, it's super important to know how much money you need every year and then to work backwards. How much. You need to invest every month so you can get to that point so you can live off the returns and live comfortably indefinitely. Earlier start the better and use that calculator I mentioned. Smartmoney.gov au really fun. That wraps up today's lesson. But today's episode is not over because it's Free Ride Friday. Let's see who won this week's Free ride and the winner is Romeo APL from the Philippines. Capsule sized business lessons every day. I've been listening to the $100 BA show for the last three months and I look forward to every episode. It's a great partner with my morning coffee just before I grind. Learn so much from Omar and the guest speakers. Thank you. Well, thank you Romeo from the Philippines. You are our Free Ride Friday winner. Your mission is to email me over at omar@100mba.net so I can hook you up with a lifetime membership to easy course how to build your own online course in 30 days. It retails for $500 over at EasyCourse Co but it's yours for free because you left us a rating interview and you won Free Ride Friday. If you want to win a free ride, just leave us a itunes rating and review and you enter our weekly random draw. Listen in on Friday to see if you won. That simple. Before I go, I want to leave you with this. Sometimes money is a scary topic. We don't want to think about it, we don't talk about it. But we're in business here. We got to face it and we want to make sure that that we prepare for the future. And often when you dig a little deep and do the numbers and do the calculations, it's actually not that scary. It's actually surprising and relieving. So go ahead and do the numbers so you can feel inspired to retire soon. All right, thank you so much. I'll check you in Monday's episode. I'll see you then. Take care.

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