Smart Money Tips: How Much Money Do You Really Need to Retire?
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FULL TRANSCRIPT:
Hello, friends, DaRayl Davis here, best-selling author and founder of the Smart Money Academy. And I'm here to share a Smart Money tip with you.
You know, often I'm asked the question "How much money do I really need in order to retire?" Now, while that's a very subjective question, it's going to vary from person to person, there is a formula and an approach that you can take that sort of gives perspective to reaching a number that works for YOU.
The first thing is to determine the standard of living that you want to maintain in your retirement. Often there's a misconception that oh yeah well in retirement I'll have less expenses and I'll just downsize. Well, that may be the case, but not necessarily is it always automatically the case. What do I mean? In retirement, we are retired from the need to have to work. That gives us time and availability to do things we prefer to do, that we enjoy to do, that we worked hard to do so now we can enjoy the fruits of our labor. Well, sometimes enjoying the fruit of your labor costs money. If you want to go out and spend time at the theater, if you want to get involved in the arts and even philanthropy, that's a given, if you want to travel and see the world or travel and see friends and relatives and family, that can cost money. So while many people don't have the same expenses in retirement, say your mortgage may be paid off, there are other expenses associated with enjoying the fruits of your labor. That's kind of unique. Since wealth in itself is a responsibility. So if you retire wealthy, there's even responsibility in that. But that's another conversation.
But the ideal scenario is to figure out the standard of living that you are accustomed to, that you want to maintain. If, for example, your standard of living requires $50,000 a year, you can then say, well, if I accumulate through my savings and investments $1 million, or through a business sale or otherwise, have $1 million in my possession... if you earned 5 percent a year, you can have $50,000 paid to you without touching your principal. And when I say earn, I mean passively earn. From your investments, from savings and your other activities. That million dollars is invested and returning 5 percent, then you would have $50,000 a year to sustain that standard of living that you're accustomed to, without touching the $1 million.
So that's just a formula you can use in approaching. But keep those things in mind. The myth of I'll have reduced expenses may or may not be the reality. But determine the standard of living and figure out the amount of money that you want to come from your passive investments, hopefully, without you actively having to work in order to sustain that standard of living.
Until next time, learn to prosper, strive for mastery and share your wisdom.
I have always believed that finding a mentor is a critical part of any journey toward success.
I have the distinct pleasure of being part of the upcoming the Black Women Millionaires Virtual Salon, which will bring together 16 black women millionaires and five of their mentors, including yours truly, for a discussion on how women can level the financial playing field. As we well know, women, especially black women, face many unique challenges in the marketplace, including overcoming the glass ceiling that often blocks women from reaching the same financial success as men. This virtual salon seeks to change that by introducing women to millionaire mentors who have made it big and can tell them how it’s done.
This amazing online experience will be held March 5 through March 7. If you’re interested, there’s still time to sign up!
The virtual salon was organized by Dr. Venus Opal Reese, CEO of Defy Impossible and known as the “Black Women Millionaire” Mentor. Dr. Venus started as a 16-year-old street urchin and eventually earned her way to a Stanford University PhD. She has made $7 million for her clients in five years by systemizing her way of survival.
I first met Dr. Venus in Dubai, India during the course of a mastermind in which several successful entrepreneurs and business professionals were all brought together by one of the leading brand strategists in the world, Lethia Owens. I was immediately impressed by the commitment Dr. Venus has to serving those who are and are aspiring to be millionaires. The fact that she is constantly seeking to deliver world class, cutting edge and actionable content to her audience of ambitious, talented, committed, enterprising women is inspiring. And when she later asked me to participate in this virtual salon because she believes that my message of Financial Transformation will resonate with her audience, I was humbled.
On top of that, Dr. Venus isn’t the type of woman you say no to.
While participating in this event, I was reminded that there are few things more fulfilling than adding value to the lives of other individuals, especially women, who in essence, give life to all of us and the environment around us. I learned the joy of working with an all-star cast of Black Women Millionaires and their Millionaire Mentors. In my previous experience, whenever you get a group of achievement-oriented, accomplished entrepreneurs, experts, and thought leaders — like the people involved in this virtual salon — together, amazing things happen. People’s lives are impacted for the better and progress happens.
The most important thing I think women should take away from this virtual salon is one specific nugget that will help them make a quantum leap towards achieving their individually defined success. This nugget can take the form of an idea, inspiration, a specific action or instruction, a new habit practice or discipline, a new coach, mentor or accountability partner. I believe the adage that says the burden of learning is on she who wishes to learn. The burden of teaching is on she who wishes to teach. I believe that from any forum or learning environment we are able to extract at least one nugget that can change our lives for the better. As such, I think women should expect to experience a transformation as a result of this experience. They should expect their minds, their perspective and outlook to be changed and expanded.
I applaud Dr. Venus and many others who make bold strides to teach others and help propel them to success. I encourage anyone looking for great “millionaire minded” insights to join this unique online experience March 5 – 7.
Smart Money Academy is proud to partner with JuniorAchievement of Greater Washington on the upcoming Finance Park in Prince George’s County. The park is scheduled to open Fall 2015.
