because of something called inflation which i have made a very detailed video on last week talking about this problem what is inflation and also how come the government don't have it right for the last NUMBER_TOKEN years so if you want to find out more make sure you watch that video but for example sake let's say inflation is NUMBER_TOKEN right now so if you were to draw NUMBER_TOKENk today next year you actually need to draw NUMBER_TOKENk plus two percent so looking at this chart this is actually how much you have to draw out if inflation is estimated at two percent a year now if inflation is bumped up at three percent a year which my last video actually talked about is more like three percent or even four percent lesser inflation is higher than expected from now on this is how much you need to draw per year and if your one meal doesn't grow in value at all i've highlighted at which year your one meal is going to run out of money looking at the couple in the article that we just went through it does seems like they didn't keep inflation in mind because they said they had a NUMBER_TOKEN k of passive income portfolio seven years ago but seven years later they're still producing NUMBER_TOKENk so their NUMBER_TOKENk is actually losing purchasing power every year by not growing and keeping up with the inflation now before we continue if you haven't already make sure you request to join our private facebook group in the description below we have almost NUMBER_TOKEN NUMBER_TOKEN members and you can go in there and ask questions and get extra content all right so speaking of calculations this also brings me to the third most common mistake is people sticking too much to a golden rule so there's always a lot of article a lot of communities built online talking about retirement and different formulas to calculate a lot of people from what i see actually stick too much to one simple rule and they just work around that rule one of the most common rule i hear people bring up all the time is a four percent rule basically means that no matter how big your portfolio is if you only draw four percent per year from that portfolio and that's enough to fund your retirement technically your money will never run out so for example let's say you need NUMBER_TOKENk a year for your retirement your pension cpp oas is going to give you NUMBER_TOKENk a year you need NUMBER_TOKENk more according to the NUMBER_TOKEN rule if you take NUMBER_TOKENk divided by NUMBER_TOKEN this will give you exactly a million and they're saying basically that if you keep a million dollar invested and you only draw NUMBER_TOKENk four percent out every year you will never run out of money because your portfolio will grow over time and it's going to keep up with that four percent now morningstar actually published an article arguing that the four-person rule actually doesn't work anymore and in there the major two argument is that number one the interest rate is a lot lower than before and number two the bond investment return which most retirees heavily invest in when they're retiring is a lot slower at the first couple years which will slow down your portfolio growth making the four percent no longer valid so retirement planning actually involves a lot more variables and if the world is constantly changing these variables is always changing all the time sticking to one rule that has been established many years ago may no longer apply to you and you don't want to find out that it doesn't apply when you're actually running out of money now the fourth common mistake is not accounting for additional cost in the future sometimes i meet new
START_SELFPROMO_TOKEN we continue if you haven't already make sure you request to join our private facebook group in the description below we have almost NUMBER_TOKEN NUMBER_TOKEN members and you can go in there and ask questions and get extra content all right so END_SELFPROMO_TOKEN