Podcast Summary: Money Guy Show – How to Build Wealth with the 3 Bucket Strategy (By Age)

Hosts: Brian Preston & Bo Hanson
Date: April 3, 2026

Episode Overview

In this episode, Brian and Bo break down the “Three Bucket Strategy” for wealth building, illustrating how to allocate your investments across tax-free, tax-deferred, and after-tax accounts throughout your financial life. Using a case study of a hypothetical investor “Manny the Financial Mutant,” they show how following clear steps and maintaining discipline can help you outpace the average saver and set you up for a confident, stress-free retirement. The advice is tailored by decade (20s, 30s, 40s, 50s to retirement), loaded with practical benchmarks and key decision points. The episode is energetic, candid, and motivational, focusing on actionable steps rather than financial theory.

Key Discussion Points & Insights

1. The Three Buckets Explained

[01:35]

• Tax-Free: Roth accounts (IRA/401k) and HSAs. Growth and withdrawal are tax free.
• Tax-Deferred: Traditional pre-tax 401ks, IRAs—contribute before tax, pay taxes on withdrawal.
• After-Tax: Brokerage accounts, trusts—funded with post-tax dollars, capital gains apply.
• Quote:
  “I would argue they’re all pretty important when it comes to building your financial life.”
  —Bo Hansen [01:29]

2. Case Study: “Manny the Financial Mutant”

[02:52]

• Assumptions: Starts saving 25% of $50k salary at age 25, with 5% annual raises, adheres to the Financial Order of Operations (FOO), prioritizes Roth until marginal tax rate exceeds 30%.
• Compounding Returns: Returns assumed to decline from 9.5% at age 25 to 5.5% by retirement to reflect reduced risk over time.

3. 20s: Foundation & Maximum Growth Potential

[05:19]

• Strategic Priority: Fill the Roth IRA and HSA buckets. Employer match goes into tax-deferred by default.
• Benchmark: Target 1x annual income in investments by age 30.
• Notable Points:
  • Early contributions are most valuable due to compounding.
  • Roth IRA has “break glass” emergency provisions:
    “You can always get access to your contributions tax free, penalty free. Now, we never want you to do that, but it is something you should know about.” —Bo Hansen [07:11]

[11:24] Manny's 20s Recap:

• Net worth: ~$91,000 (mainly tax-free).
• Ahead of average; on track to be a prodigious accumulator of wealth.

4. 30s: The Messy Middle

[13:22]

• Challenges: Life complexity increases, but maintaining discipline is crucial:
  “Don’t let this serve as a distraction where you say, you know what? I can let my foot off of discipline. No, I want you to stay the course.”
  —Brian Preston [13:58]
• Rising Income: May need to switch from direct Roth to backdoor Roth IRAs due to income phase-outs (limits for 2026: $153k/$168k single, $242k/$252k joint).
• Potential Shift: As income rises, assess if it’s time to prioritize pre-tax contributions once marginal tax rate >30%.
  “Every dollar that you put into the 401k and the pre tax side could save you 30 cents in taxes.”
  —Bo Hansen [16:45]
• After-tax bucket: Not much growth until savings >25% of income.

[18:40] Manny's 30s Recap:

• Net worth: ~$530,000 ($466k tax-free, ~$64k tax-deferred).
• Benchmark: 3x income by age 40; Manny achieves over 5x.

5. 40s: It Starts Coming Together

[23:20]

• Peak Earning: More capacity to save and optimize.
• Annual Review: Reassess Roth vs. pre-tax 401k each year.
• After-Tax Grows: Start funding after-tax for early retirement/large purchases.
• Using Wealth: Begin thinking about practical uses and withdrawal strategy.
• Notable Quote:
  “I'd love for you to be paying cash for cars and other things because you’ve been around the block long enough...you’re really starting to feel like you’re getting dividends from that early discipline. It pays off.” —Brian Preston [24:58]

[26:06] Manny's 40s Recap:

• Net worth: ~$1.7 million ($1.5M tax-free, ~$200k tax-deferred, $7k after-tax).
• Achieves “prodigious accumulator” status—millionaire by late 40s, mainly via 401k.

6. 50s–Retirement: Fine-Tuning and Withdrawal Sequencing

[29:57]

• Fine-Tune Plan: Consider Roth conversions, assess withdrawal strategies.
• Withdrawal Order: LIFO principle (Last In, First Out)—After-tax first, then tax-deferred, then Roth for best tax optimization and legacy potential:
  “The last bucket you’re going to want to touch was the first that you funded—the Roth. Because these things not only are tax free growth, they're great legacy building opportunities.” —Brian Preston [32:12]
• Early Access: Remember tax-deferred money is expensive to access before 59½; after-tax provides a crucial “bridge.”

[33:07] Manny's Retirement Recap (Age 65):

• Total Net Worth: ~$6.4 million ($4.6M tax-free, $1M tax-deferred, $635k after-tax)
• Final salary: $352k (future dollars), inflation-adjusted equivalent to $107k.
• Sustainable withdrawal rate covers 72%–98% of pre-retirement income when combined with Social Security.

Most Memorable Quotes

| Time | Speaker | Quote | |---------|---------------|--------------------------------------------------------------------------------------------------------| | 01:29 | Bo Hansen | “I would argue they’re all pretty important when it comes to building your financial life.” | | 07:11 | Bo Hansen | “You can always get access to your [Roth IRA] contributions tax free, penalty free. Now, we never want you to do that, but it is something you should know about.” | | 13:58 | Brian Preston | “Don’t let this serve as a distraction … I want you to stay the course.” | | 16:45 | Bo Hansen | “Every dollar that you put into the 401k and the pre tax side could save you 30 cents in taxes.” | | 24:58 | Brian Preston | “I'd love for you to be paying cash for cars and other things … you’re really starting to feel like you’re getting dividends from that early discipline.” | | 32:12 | Brian Preston | “The last bucket you’re going to want to touch was the first that you funded—the Roth … great legacy building opportunities.” | | 36:49 | Bo Hansen | “The absolute best time to start investing was yesterday, which makes today the second best.” |

Decade Benchmarks & Timestamps

| Age/Decade | Segment Timestamp | Key Action & Target Benchmark | |--------------|------------------|---------------------------------------------------------------------------| | 20s | [05:19] | Max Roth/HSA. Target: 1x salary by 30. | | 30s | [13:22] | Backdoor Roth, consider pre-tax if tax rate >30%. Target: 3x salary by 40.| | 40s | [23:20] | Max all buckets, start after-tax savings, reassess pre-tax vs. Roth. | | 50s–Retirement| [29:57] | Fine-tune for withdrawal, consider Roth conversions, plan for decumulation.|

Elements for Success

[36:26] Brian:

• Start early
• Maintain discipline (“margin”—living below means)
• Follow a systemized approach (Financial Order of Operations)
• Recognize “complexity finds you” as you build wealth—seek expert help when ready

Conclusion

Brian and Bo’s energy and real-world advice drive home that wealth-building hinges on a handful of disciplined practices, smart tax planning, and starting as early as possible. The three-bucket strategy isn’t just about optimizing for taxes—it’s about ensuring flexibility and confidence at every stage of your financial life. With relatable case studies and practical benchmarks, the Money Guy Show provides a roadmap from your first job to a fulfilling retirement—and beyond.

Resources Mentioned:

• Financial Order of Operations Guide: moneyguy.com/resources
• Net Worth Tool: learn.moneyguy.com