Here's Why the 5 Years Before Retirement Are So Important

I'm going out on a limb and say, that i disagree with the last five years are going to be the most important.
This is coming from someone who is a regular hardworking blue collar worker. The most important years of getting to your goal , is the first five years. In those first years you will develop and define your mental state in contributing to your retirement. I'm was building up the percentage to contribute to my 401k. Took me a couple of years to get up to putting away 20-30% of pre tax from my paychecks. Setting up with most aggressive funds for my Mutual fund choices.
From the first five years to the last years, everything was on cruise control. Everyone who contributed to a 401k, already knows about compounding interest blah blah. Many don't need stories how the last few years can almost double your retirement account.
Do i know what i am talking about? I just retired two months ago after hitting 60. I have almost 2$ mil in my 401k, and another several hundred thousand in a brokerage account which i plan on using my first couple of years during retirement, so i can maximize my 401k even more, before tapping into it.

This is great 👍

I thought for sure that sequence of return risk would be on this list. The last 5 working years and first 5 retirement years are when you are most vulnerable to a major downturn in the market. Maximizing your savings during your last 5 working years makes sense. Investing very aggressively to try to double your nest egg in this time does not make sense. Don't run this risk of losing the money you will need to live on in your first 5 years of retirement.

It’s always good to have a financial plan. I work with a licensed planner and fixed-income strategist in LA. The fixed income portion of your portfolio won’t simply serve as a buffer to the volatility of the equity portion of your portfolio, but will provide legitimate income

Didn’t really explain where the compounding comes from.

Who matches 30000

Problem: The S&P500 has been flat over the last 2 years. Not even pension funds assume an 8% growth rate when the real economy is only growing 2-4% a year. You are assuming you are fully invested in equities when a lot of people at late in their career shift more to bonds.

Interesting you say that .My state pension system calculates your pension, based on your 5 highest years.

Nice 😊

I've been retired 22 years and I started to save when I started work. The principles you talk about are true. The eighth wonder of the world is power of compound interest. But our biggest expenses were paying for my wife to enter a nursing home for the last 3 years. She had MS for 26 years. The nursing home costs were $1000 per week. She has now passed and I can start to do a little travel.

Several of the biggest market experts have been voicing their opinions on exactly how awful they think the next downturn would be, and how far equities may have to go, as recession draws closer and inflation continues well above the Fed's 2% objective. I'm trying to build a portfolio of at least $850k by the time I'm 60, therefore I need suggestions on what investments to make.

I'm in the 4-9 year window to Retire by full retirement age . My steps to prepare are living debt free including no mortgage no auto loans. Lessening expense as in NEM 2.0 Solar last year + whole house fan adder to secure electrical costs . Looking at my long term investments and taking the initial buy in of some higher fee/lower performance mutuals out to then fund a very low fee index SP500 fund with that money yearly to hopefully double my pretty good retirement by the time I do retire. Lots of what this video states is real, you simply have more money and options than you did when younger. I wish everyone luck in building that retirement nest egg. Do some Roth conversions when the Market is down to ride it back up tax free and to get athe RMDs under control with a 5yr+ Roth

I do plan to get a new vehicle one day and pay mostly cash payoff after the first month financed to get a better deal. I also plan to do some Kitchen renovation and fence work with the extra money coming in now. That should keep my wife happy. Perhaps a battery and solar car charge one day. Glad you mentioned take on some bigger projects before retirement.

James is so much wiser than his age. I wish I had known him 10 or 15 years ago (I am now 76), especially that I used to live less than 10 miles from his office at the time!

Your videos are fantastic. Thank you for the great advice.

I’m 43 now.. I’m already preparing to retire by 57

Hello From Finland . I am Retired in Helsinki , can go 55 age. Now I am 58 age. Money & Business is not my Time anymore ! Retired in Finland is ok !
I have a Plan , is Retired in Finland & Thailand about 50 /. 50 .
This is good idea !
Thank you for good Video & all the Best to You !
Retired 4 You.

Brilliant analysis ❤

I’m listening to retirement advice from a someone who looks like he just graduated from high school. Good advice though.

It doesn't help when a stay-at-home spouse of 33 years decides she must have a divorce from their nearly 64-yr old mate.

Warren Buffett became a millionaire when he was 32. I think that was in the 1950s. See his Wikipedia page and multiple other sources. Adjusted for inflation this is the equivalent of $11 million in 2023. So, he grew that over 58 years to billions.

A guy 5 years off of his mother's teet is giving advice about retirement.... hmm...A little young for this kind of advice bro....

you lost me at maxing out your 401k

39 and I’m obsessed with retirement

Rule of 72!
Multiply the # of years x Interest that your getting!
If:
For 7 years you earn about 10%!
Using the Rule of thumb above: 7x10=70!
(No, it’s not 72 but, remember this is a rule of thumb!)
(Please note, this doesn’t account for the money you save or any inflation!)
But, I think you should make this a Last 7-years leading to retirement!

Reason number 6- Social Security will take the three highest years of your income history.
Maximize those years at the end of your career to be the highest earning. 👍🏆😉

Speak for yourself, I'm gonna have 100 billion

Nobody should have $110 billion dollars in my opinion!!

Wait, I thought the general rule of 72 in Economics says at X% rate it takes Y years to double. So, if 8% return, it would be more like 9 years (72/8) not 5 years. For doubling in 5 years it would be 72/5 or something like 14-15% return right? What am I missing?

The downfall of Silicon Valley Bank has caused significant damage to the worldwide financial markets. As a result, investors are scrambling to revise their projections for interest rate increases and hastily selling off bank stocks across the board. As someone who has invested 200k in stocks, I find myself at a pivotal moment, wondering whether it's wise to cash out my depreciating portfolio. What strategies should I adopt to make the most of this bearish market?

.My spouse and I are adding a variety of stocks/ETF to my present holdings for the long term, We've set aside $250k to start following inflation-indexed bonds and stocks of companies with solid cash flows, I believe it is a good time to capitalize on the market for long-term gains, but it wouldn't hurt to know means of actualizing short term profit.

With markets tumbling, inflation soaring, the Fed imposing large interest-rate hike, while treasury yields are rising rapidly—which means more red ink for portfolios this quarter. How can I profit from the current volatile market, I'm still at a crossroads deciding if to liquidate my $125k bond/stock portfolio

I’m 65 years old and retired last year. Under Trump my savings soared to new heights. Under Biden I’ve taken such a hit I”m going to have to go back to work. Folks, stop voting demoCRAP!!!!!! Everything they think say and do are wrong, dangerous and EVIL!!!!!! All demoCRAPS are dangerous and evil. They will destroy your savings and give it to the lazy and worthless.

Thumbs up!! I always watch and listen to you cus im working on my retirement savings. Thanks for your vid

Then what do you do with all this money? Sorry in a few years and end up back were you started lol

Can you tell us where to get 8% interest rate?

Tôi không ngại loại bỏ nếu sự thật 10 năm tôi sai khi chọn,nhưng không ...toii không chọn vì tôi chẳng chọn kẻ tiểu nhân hay ngụy quân tử như China ,and Aapl

This assumes capitalist markets don't tank. Since 12/31/2021 my 403b has not grown a penny. It's treaded water while my employer and I pour money in and the markets continue to go sideways. And we haven't even hit the recession everyone is saying will happen soon.

Let is what we are doing. So true to every point 😂. Thank you 🙏!

James, this video is spot on coming from someone who just turned 60 and planning on retiring at 65.

I really enjoy your recommendations are you a Dave Ramsey recommend?

This is exactly what happened to my wife and I. We went from years of working, saving, investing and wondering if we’d have enough to retire- to now knowing that we will pretty much never run out of money. This allowed us to retire last year at the age of 60. Thanks for your great videos James!

Very well thought out. Perhaps what would be helpful is a 5 year checklist.

Another insightful, thought-provoking video, James. Thank you!

Overall I enjoy your presentations, however your presentation of item 1 is ONE sided as you only look at the sunny side (positive 8% returns for those 5 years). You should also present the caution that is needed because one could also be in a -8% downward spiral that could devastate that nest egg one has built for 40 years.

"If you get an 8% growth rate" feels like a gigantic wish right now while I'm fussing around with tbills, ibonds etc trying to keep asset value with inflation!

This is very accurate in my case. I'm 71 and still working. The past five years my net worth doubled even though that is still well under $500k. Over my career I made very little from interest and practically none from compound interest due to being too conservative in investing. However because of a good job I was able to work from home at good pay with zero work expenses, save much more, and max out my Social Security by not taking that until 70.

Well explained 😊

Thank you for this! I am 58yo and had planned on going part time at 60yo and pull some from my retirement funds. I have been thinking more and more about staying full time until 65yo. The idea of continuing to let my money grow and compound is another reason to keep working. I recently changed jobs and can see myself easily staying her 6.5 more years and benefit from the compounding. Thank you for the insight and motivation! Love your channel!