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How Much Will I Need to Retire? | Kris' Famous Financial Freedom Formula - YouTube
Channel: Kris Krohn
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How much money are you actually going to
need to retire? It's mind-boggling to me
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how so many people really don't know the
answer to this question. And there is a
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science to it. But today, I'm going make
it super simple. I'm going to give you four
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specific questions. And if you can answer
these 4... Which a pretty easy to answer.
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You're going to have a really solid idea
of exactly what you're going to need for
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retirement.
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This is the most important financial
question that you can be asking. In fact,
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you need to know how much you're going to
need for retirement. But no one really
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ever knows how to answer it. No one can
give you a formula until today. Without a
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formula, you're just going to default to
society's game plan. And for just a
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moment, look at what society's game plan
actually looks like. They're going to
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tell you that you should put your money
in 401Ks, IRAs and then you should work
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on paying off your house. And what that's
going to do is that's going to leave you
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with very little money in the bank and
that's gonna leave you in a really broke
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financial mindset. Because if you got no
money in the bank and all your money
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goes into places that you're told, "Don't
touch or else you're going to get penalized."
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It really messes with the brain. I had a
unique opportunity and experience as a
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very young man that really gave me the
answer to this at a very young age. As 22
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years old, I was in college and I got
this telemarketing job. And I was talking
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to people who 30 years earlier was
following society's game plan. They were
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saying "Go to college. Get good grades",
right? "And then get a career. Work for
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somebody else." They had all done that. So,
it was weird. It was like this Time Warp.
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In my early 20s, talking to people in the
early 50s. And you know what I noticed? I
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noticed that they had been successful
putting money in the 401Ks. Some
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of them had 50 grand,
some of them 150 grand. Some of them more.
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Some had put some money in IRAs for some
tax benefits. And then the rest were
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working on paying off their house. Some
people put some money in the stock
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market. But for the most part, that's what
people did. And after 30 years, do you
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know what they had to show? They had a
net worth anywhere from a 100,000
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to 3, 4, 5 hundred
thousand dollars. Now, here's a crazy part:
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Most of people were living off because
they had kids and families. They were
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living off of 70, 80, 90, or $100,000 a
year.
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So, after 30 years, they had saved enough
that if they had to spend it right now,
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they'd be able to live for another 3,
4 or 5 years. And then they would
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run out of money. As an early 20-year
old, I thought "This is crazy". My dad told
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me that I need these good grades to go
to college. And now I'm in college and
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when I decided I couldn't be a doctor it
was kind of midlife crisis for me
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because I ultimately became super clear
with the fact that I'm not going to be the
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doctor that I wanted.
And I'm not smart enough to get because
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I just can't rock the chemistry stuff.
Which means I got to find another degree.
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And most of the jobs... You know you get
degrees for paper 30,000 year or $50,000
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or $80,000 a year. I'm like, I knew the
math. You can't save enough money. In fact,
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if you make $300,000 a year. And you're
not disciplined to save half your money,
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you're not going to save what you need for
retirement. And it it became this
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impossible mathematical equation that no
matter what, you weren't going to make it.
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That caused me to basically say, "I need a
functional plan that's not broken under
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this garbage 401K, IRA crap." And the other
thing that I realized... I'm going to have to
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figure out a plan of how to get there.
This led me to the information I'm going to
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share with you in today's video which is
ultimately how do you actually know how
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much you need for retirement. There's
4 questions I believe you need to ask
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to figure out that number. I've never
made a video sharing this information
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before. I think it's something that
you're going to appreciate. And let me jump
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in right now. Number one, the first thing
that you need to know when you're asking
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the question. What do I need to be
financially free? The first question that
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you should be asking is how much money
do I need to replace my current income?
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Now, the reason why I start with this is
that your current income is a part of
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the lifestyle. You've built a life for
yourself. And a style around that life
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for how much you make. So, for some of you
it's $50,000. For some of
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you, it's a $150,000. For some of you it's
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$20,000. Whatever the amount is,
there's 4 questions for you to live
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the life that you want on your terms.
Number 1, it's going to include
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replacing your current income. Now, just
for argument's sake, we're going to say
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that this is $60,000. This
is important later. Question number 2:
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"How much do you need to live where you
want?" And I'm talking about what's that
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house that you want to live? What does
that dream house really look like?
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There's a payment that is associated
with this. You see that $60,000
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on replacing your income is $5,000 a month. But let's say
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that you want to live in a beautiful
million dollar house. And maybe it's not
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just a million dollar house. It's a
location or it's in the country or it's
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on a beach or or something like that.
You find out that that house and the
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mortgage of that house is going to cost
you $8,000 a month. So, we
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have 5,000 replace your income
then there's $8,000 to
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live in your house the way you want. And
here's the third question: How much
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travel do you want to do?
Because once people have money, do you know
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what we want to do? That I've been to 40
different countries. I get it. I love
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world travel. Like travel freaking lights
me up. So, how often you want to travel? I
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find if most people have the money that
they would want to travel 2, 3, 4,
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or 5 times a year. And depending on
whether you want to travel with a
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backpack or whether you want to travel
like lavishly in style. If you're going to
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pay out 10 grand a trip and take 4
trips a year, that's $40,000. And that's
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going to cost you somewhere around $3,000 a
month in travel. And then the last thing
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that people typically want is how much
do you want to get where you want to go?
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Transportation, right? Does it require you
to go by boat? Helicopter, plane, car? A lot
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of people in the beginning they just
want a really nice car. If a really,
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really, really nice car that would
satisfy you or cars. Let's say that you
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needed a $3,000 a month budget for nice
cars. Then look at what we have just
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found out. To replace your income is $5,000 a month. To live in a house that
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you want is 8,000 a month. To
travel the way you want is
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3,000 a month. To drive the car you
want a $3,000 a month.
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3 plus 3 is 6 thousand plus 8
is 14 plus 5 is 19. This person needs
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$19,000 a month to produce the
lifestyle that they want. Well, guess what
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we can reverse engineer? $19,000 a month. How much money are you
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going to need to be able to produce that?
Let's just assume for a moment that
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you're doing real estate with me as one
of my partners and I can show you how to
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earn pretty easily 25% annual ROI?
Question is how much money would you
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need producing that? This is the math
that I want to show you: $19,000 a
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month.
How much does that a year? Well, I'm
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opening up my calculator right here. My
calculator looks like that on my phone.
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And I say $19,000. If I need that for 12
months out of the year, that's
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$228,000. So, here's the story problem: How
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much money do I need if it's earning 25% to produce 228
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thousand dollars a year.
Well, to actually get that number, you've
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got to be able to multiply that number
by 4. So, if I multiply that by 4... If
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I had $912,000... This number you can see on the
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screen right here. Earning 25% a year, it would produce
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$228,000 dollars. So, if your investments were
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producing 25% cash-on-cash ROI, you would
only need $912,000
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to produce this lifestyle to
live the life that you want. If your
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investments are for example producing
only 5%, then you're not going
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to multiply by 4.
You're going to multiply by 20. And so
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$228,000 if you're on society's game plan,
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if you're earning 5%, you need
4.5 dollars to live
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that lifestyle. This is at 5%
ROI and this is at a 25%
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ROI. What a wild dramatic difference. So,
in today's video, I really wanted you to
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start realizing, "Wait a second. There's a
certain number of deals or homes for me
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to buy that will give me the lifestyle
that I want, let me drive the car that I
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want, live where I want, travel the way I
want. Be with who I want and not have to
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have that job anymore." It's a number and
you can learn what that number is. No,w I
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know we covered a lot in a very short
period of time. You can re-watch this
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video again. You can share it with
somebody. Sit down with someone who's
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good at math. If you don't feel like you
are, break it down and watch it. And break
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this math down and realize that for you
to make enough money to support your
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lifestyle, you're going to have to figure
out how to do the math. And math
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ultimately comes down to you knowing
"what do you want?" Today, I shared four
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questions with you. Number 1, how much
money would take to replace your current
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income? Because you don't want that job
anymore, right? Number 2, what kind of
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house do you want to live in? Number
3, how much you want to spend on
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traveling a year? And number 4 how do
you want your transportation look? Friend,
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if you add all of that up, that's going
to help you understand how much residual
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income you need. And you know the
ultimate vehicle for producing residual
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is... Its real estate. Listen, I wrote this
book years ago. You've heard me share it
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on other videos before. If you don't have
this yet, get yourself this book. If
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you've gotten the book, do yourself a
favor, read the book. The book comes with
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a free game plan. Someone from my team
will contact you and say, "Hey, what is
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your game plan? Or do you need help with
the math? Or do you not understand it?" You
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can talk with a member of my team and
they can show you how many homes you
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need to buy and this will show you how
to do it. So, thank you so much for
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watching today's video. I also have a
video showing how I retired by the age
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of 26. if you click on that over here,
that's another great way to understand
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took the knowledge in this book and how
I put it into practice. So, between that
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video in the free book, I hope that
today's video helped you get clear on... If
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I were to meet Kris live and you were
to say, "What's your number?" And then just
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on those 4 questions alone you could
say, "That's my number. That's what I need.
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That's what my investments are driving
towards." And then we can reverse engineer
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how much real estate you need to do how
fast you want to do it to live the life
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of your dreams now.
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