Is This “Retire on $42/month” Article Clickbait?

Imagine retiring comfortably on just $42 per month—sounds too good to be true, right? Well, it’s exactly the assertion you might have seen in the headline of a recent article online. So today, we’ll dive into the sensational claim and uncover what it really takes to build your retirement nest egg.

 

Article

https://www.fool.com/the-ascent/buying-stocks/articles/you-can-retire-on-4167-a-month-if-you-do-these-2-things/

 

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Transcript: 

 

Marc Killian:

Retire on $42 a month. Let's talk about that this week here on the podcast. This is Plan With The Tax Man with Tony Mauro. Is the article clickbait or is it possible? Let's get into it.

 

Marc Killian:

Hey everybody, welcome to the podcast. Thanks for hanging out with Tony Mauro and myself as we talk investing, finance and retirement. And we're going to talk about this interesting article that we found here that we want to run through and just kind of see if this stuff, is this kind of stuff just clickbait? Probably is. Or is it something that is worthwhile for people to seriously think about? So we're going to get into that chat this week here with Tony, and we'll share links to the article so you guys can check it out for yourself. And I think that realistically, Tony, this thing probably is clickbait. So I want to jump right forward into the conversation because one of the big things is talking about advisors all across the country for years have been saying, "Hey, you got to put at least 10% away in order to save for retirement."

 

Now, that new number has changed to maybe 15%. And one of the things talks about how it's really difficult for... I mean, it's easy to do if you have a long timeline to retire on $42 a month, but if you don't have that timeline and you haven't started early, makes this really difficult to pull off. Don't kind of walk yourself down that line of, well, I just won't do anything because I'm never going to get there anyway. Something's better than nothing at any age. Would you agree from your years of experience or am I crazy?

 

Tony Mauro:

Nope. I would agree a hundred percent. And when you, even in your scenario, 10 years or no, you said 17 years-

 

Marc Killian:

17, yeah.

 

Tony Mauro:

And you can get to 10% if you can do that, you're going to have a decent size nest egg. Now, it may not coincide with the goals you thought you wanted, but maybe instead of just living off the income, well, you had to spend some principle. Or maybe you need to work a little bit in retirement, but at least you know, but you'd definitely be so much better off than if you didn't do anything that it's never really too late to start.

 

Marc Killian:

All right, so let's kind of look at some more of these pieces here, Tony. The article mentions a 10% average annual return from the stock market on investments. All right. How realistic is this expectation over a long period? I mean, any kind of data you want to share with us over that 10% IED. It sounds great. How feasible is it?

 

Tony Mauro:

I would say I tried to use a little lower percentage. I mean, if you look back all the way back to the beginning of the stock market or the S&P 500, you can kind of get around that, but I think there's much more to it than that. There's tax efficiency, there's some risk factors. Maybe you're not a real risk-taker. So maybe realistically, I always tell them maybe we should start out w