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want to share something interesting that happened to me recently. I was talking with someone, not a client of mine, about retirement. And it really opened my eyes to something important. This person has done incredibly well for themselves financially. They’ve saved diligently, invested wisely, and built up what I’d assume is an impressive net worth.

They have all these wonderful plans and dreams for retirement, things they are genuinely excited about. But here’s what surprised me. They were actually terrified to actually retire. And it got me thinking about something crucial. Sometimes, even when everything looks perfect on paper, there’s a huge disconnect between where someone is financially and their ability to actually take

that big step into retirement. Hey there, my name is Danny Gudorf, financial planner and owner of Gudorf Financial Group, where we help individuals and families over 50 plan for a limitless retirement. Today, I wanna make this episode really practical and straightforward. We’re gonna talk about exactly what you need to do to make 2025 the year you actually retire.

And even if retirement is still years away for you, or you’re already enjoying retirement, these fundamentals are going to be incredibly valuable. Think about this as your guide to ensuring your retirement is not just financially secure, but also fulfilling. All right, let’s dive into the first crucial step. That is going to be assessing your current financial condition.

This is like taking a snapshot of where you stand right now. And it’s a more detailed approach than most people realize. You need to start by reviewing all of your assets, and I mean all of them. Think about your checking accounts, savings accounts, 401ks, IRAs, Roth IRAs, and any taxable brokerage accounts you may have. And also those health savings accounts, if you’re lucky enough to have one.

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Over our working lives, we tend to accumulate quite a collection of different investment accounts. Maybe you’ve got a 401k from a job you had 15 years ago that’s still sitting with your company. Perhaps you’ve got another one with your current employer where you’re actively contributing to those retirement plan contributions. Or maybe there might be a Roth IRA you started back when you first learned about retirement planning.

and your spouse might have their own set of accounts too. What I’ve noticed is that many people are doing the right thing by saving money, but they don’t actually have a clear picture of their total net worth. That’s why the first step is taking that complete inventory of your assets. But here’s the important part. You need to identify which accounts are actually gonna count for your retirement income calculation.

the cash that’s sitting in a savings account, unless it’s a substantial amount of cash that you’re planning to invest, you might not want that to be part of your retirement portfolio. Maybe you’ve got money in a health savings account, but you’ve already planned to use that for a specific medical expense that might be coming up. When we talk about retirement assets, we’re typically looking at accounts that can generate income for you.

via your IRAs, Roth IRAs, or 401Ks in retirement. Getting this total number is crucial because it’s gonna be the foundation of your retirement plan. Think of it as knowing exactly what resources you have to work with to turn into retirement income. The second part of assessing your financial health is understanding your monthly income and expenses. This is where a lot of clients often make mistakes.

When I talk about income, I’m not talking about your gross salary that you’re earning at your job. I’m talking about what actually hits your bank account after all of the deductions from your employer. This could be federal taxes, state taxes, social security taxes, Medicare, and any 401k or any other deductions like health insurance that may be coming out of your paycheck. This number typically is significantly lower

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than what you might think of as your salary. Let’s work through an example to make this crystal clear. Say you earn 10,000 a month gross, which comes out to about $120,000 a year. That sounds great, but after all of those deductions I mentioned, your actual take-home pay or the net amount that hits your bank account every month is closer to $7,000 per month. This is the number.

that really matters because this is what actually is your living on. That’s the net amount that you have to either spend or save. Once you know your actual monthly income, it’s time to take a look at your expenses. Using our example of $7,000 a month hitting your bank account, you are spending more than that and gradually accumulating any debt or

You could potentially be spending less than that, say $6,000, and saving an extra $1,000 a month. This is crucial information because that net income number, in our example of $7,000, is what you’ll need to replace in retirement. But here’s what gets interesting. If you’re only spending $6,000 of the $7,000, you really only need to replace $6,000 in retirement.

because that thousand dollars you’re saving. You won’t need to keep saving once you’re retired. You’ll already have reached your savings goal. The third aspect of assessing your financial health involves looking at your debts, particularly your mortgage. Let’s stick with an example of your spending of $6,000 per month. Well, if 2000 of that goes into your mortgage payment, just the principal and interest portion, and your mortgage will be paid off before you retire,

Well guess what? You don’t actually need to replace 6,000 in monthly retirement income. You only need to replace 4,000 because that mortgage payment won’t exist anymore or maybe only exist a few years into retirement. This is where retirement planning starts to get really interesting. You’re not just looking at your current expenses, you’re looking at how those expenses will change in retirement.

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Maybe you’ve had a car loan that’s a few hundred dollars a month. Unlike your mortgage, which will eventually be paid off for good, you might plan on always having some type of car payment, either because you’ll finance a new car or save monthly for future car purchases. That’s an expense that will need to stay in your retirement budget. Now, let’s talk about a visioning your ideal retirement, because this is where many people get stuck.

I’ve seen plenty of folks who have their financial numbers completely dialed in. They know exactly where they stand with their portfolio. They know exactly what they need to spend in retirement and everything is set and ready to go. But I asked them what they actually want to do in retirement. And that’s where they draw a blank. They’ve been so focused on the numbers, they haven’t given any thought.

to how they’ll actually spend their time in retirement when they’re not working 40 to 50 hours a week. This vision is crucial because nobody wants to retire and find themselves bored without purpose or without any meaningful way to spend their time. Start by thinking about what you truly value. Is it health? Is it faith? Maybe you’re family and friends? Do you love to adventure? Or maybe…

You love serving your community. For each of these areas, think about one or two specific things that you could do in retirement to pursue these values. Maybe you’ve always wanted to train for a marathon but never had the time. Perhaps you love to volunteer at your local food bank three or four days a week. Or maybe you dream of spending too much each year visiting your grandchildren.

who live across the country. The transition from working life to retirement is more dramatic than most people realize. When you leave the workplace, you need to find new ways to create structure and purpose in your life. You could spend your days watching TV, but is that really what you want to do? Most people I talk to are looking for something more fulfilling. Think about how you’ll maintain your friendships, how you’ll stay active,

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and what hobbies you’ll pursue. What kind of travel do you like to do? Do you like to travel exotically across Europe or Asia? Or do you like to stay more low key and travel across the United States? This vision isn’t just about having a plan for your time. It’s also crucial for understanding the financial requirements of your retirement. Someone who wants to spend their retirement

Hiking trails locally will have a very different financial need than someone every few months who wants to take an international trip. You really can’t know what your retirement will cost until you have a clear picture of what you want it to look like. The third step is where everything comes together, connecting your financial reality and your retirement vision together. This is where most people struggle.

Some are great with the numbers, but can’t really envision their retirement lifestyle. Others have beautiful dreams for their retirement, but can’t grasp the financial aspects. The key is bringing the two pieces together. Once you have that vision for your retirement, you need to work backwards to calculate those costs. What will it take to travel the way you want, to pursue your health goals?

or to give to the causes you really care about. This takes time and some effort, but it’s essential work if you really want to dial in your retirement. If you skip this step, you might never fully enjoy the financial security you’ve worked so hard to build. Let’s go back to our earlier example. Remember, we determined that while you’re bringing in $7,000 per month after taxes and deductions,

and spending $6,000 with the $2,000 of that going to your mortgage that will be paid off by the time you retire. So you really only need to replace $4,000 in monthly retirement income. The question becomes, does that $4,000 budget align with your retirement vision? Maybe it does, maybe it doesn’t, but you have to really figure that out. But for this example, let’s assume that it does.

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Now, we need to look at your income sources in retirement. Will you have a pension, maybe Social Security benefits, or maybe you’ll choose something that has some part-time work doing something you really enjoy. But let’s say your Social Security will provide $1,500 per month. That means you need to generate roughly $2,500 monthly from your investment portfolio, or

$30,000 annually. And this is where the math gets really interesting. There’s a number of different investment retirement income strategies. In our office, we use something called retirement income guardrails. For this example, we’re going to go with a more traditional approach to this calculation using something known as the 4 % rule. While there’s nothing magical about the 4 % rule, it comes with research showing

that if you withdraw 4 % of your portfolio annually adjusted for inflation, it gives you a good chance of never running out of money in retirement, regardless of what happens in the stock market. Using this rule, if you need $30,000 annually from your portfolio, you would need roughly a portfolio worth $750,000. We take that $30,000 divided by that 4 % withdrawal rate

to get that number. Now, let’s take a look at these numbers. And these are just examples. Your actual figures will be different. But this is a framework that gives you a clear way to evaluate if you’re ready to retire. You can compare your current portfolio value, which you’ve calculated in step one, to this target number, and you’ll see where you stand.

Maybe you’ll discover you could have retired years ago, or maybe you’ll see the need that you may need to keep saving and growing your wealth. This brings us back to that conversation that I mentioned at the beginning, that person who was afraid to retire. They’ve done everything right, saved well, invested well, had clear dreams for retirement, but they got overwhelmed thinking about tax strategies, maybe estate planning.

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withdrawal rates, and all the other complex aspects of retirement planning. They had what I call analysis paralysis. When we walked through this simple framework together, understanding their desired lifestyle, calculating the income needed to support it, and comparing that to their resources, suddenly retirement didn’t seem so scary. Having a solid plan does two important things.

It gives you confidence about your future and peace of mind about your present. It helps you strike that crucial balance between preparing for tomorrow and enjoying today. For those of you who love your work and find it fulfilling, that’s wonderful. Keep doing what you love. But for those who are feeling bummed out and ready for the next chapter, I hope this framework helps you move forward with confidence.

As we head into 2025, I know some of you watching are still on the fence. You’ve done the math, you’ve got the vision, but something still is holding you back. If this is you, I encourage you to watch the next video right here, which is the five reasons you should consider retiring right now. Have a great day.