Today I'm going to show you the three very simple steps that you can take to know exactly how much you need in your portfolio to retire.

Now, even if you've gone through a very comprehensive process to determine that number for yourself, this is still a great process to go through just to gut check what you've done and make sure that you're looking at things from all angles.

So I'm going to walk you through these three very simple steps and then at the end, I'm also going to walk you through some nuances

to this that could change things a bit. So stay tuned for both the core process to go through,

as well as some of the things that could potentially change this or derail this if you're not

careful. This is another episode of Ready for Retirement. I'm your host, James Connell,

and I'm here to teach you how to get the most of the life with your money. And now, on to the episode. The first thing that you need to do,

when determining how much money do you need in your portfolio to retire, is you need to determine

your retirement expenses. Now, before we talk about what your retirement expenses are, let's first

talk about what they are not.

A lot of people fall into the trap of thinking, what I'm earning today, that is the expenses

that I'm going to have in retirement.

And let me walk you through an example to show you why that's not the case.

What you're earning today, you have a lot of deductions, you have a lot of taxes, you maybe

have a lot of expenses that aren't actually going to be there when you retire.

Let's use an example. Let's assume that you are earning $100,000 today and you're trying to

figure out how much money do you need in your portfolio to retire. Well, start with that $100,000,

but don't use that as your retirement expenses. Even if you want your lifestyle to stay the same,

there's some things that are going to change. For example,

on that $100,000, you are paying payroll taxes. Payroll taxes are also called FICA taxes.

This is what's used to fund Social Security and Medicare, and that is 7.65% of every dollar that you earn up to a certain cap that is going to pay that tax. So in $100,000 of income, that's $7,650 of expenses that will no longer

be there for you when you're retired. So that's something that we can back out. Let's also assume

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