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Money Guy Show
How To Get Rich and Stay Rich in 2026 (By Age)
00:42:18
Money Guy Show | Get Rich and Stay Rich
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- [00:01]
Sponsor/Ad Host
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- [00:28]
Brian Preston
If you want to be rich, you got to do the right things with your money. And it's going to look different depending upon your age.
- [00:35]
Bo Hanson
Brent, I am so excited because today we're not just talking about how to get rich, but also the traps to avoid in each stage so that you can stay rich.
- [00:46]
Brian Preston
With that, let's jump right in.
- [00:54]
Bo Hanson
So, Brian, let's level set. Because we have this belief that anyone can be wealthy no matter where you're starting at, no matter where you are today. But you have to understand some basic components. And one of those basic components are the three ingredients to wealth creation.
- [01:10]
Brian Preston
This should feel so simple. But when you hear it all pulled together like that makes complete sense. Because the first ingredient to wealth creation is discipline. Basically, can you live on less than you make? That's right. And then if you can take that living on less than you make, that creates margin in your life, that should be money. That if you do the smart thing with it and turn that money and actually put it to work for you. And then here's the most important component. Give it that sprinkle of time. If you can let your money work harder than you can with compounding growth, amazing things will happen.
- [01:43]
Bo Hanson
Now, no matter what age or stage you're in, the ingredients are the same. It's the same three ingredients, but how you use those and how they manifest in your situation might change. That's what we want to talk about. We're going to go through how to get wealthy and stay wealthy using these three ingredients at different ages and stages. So with that, Brian, let's jump into the 20s and let's talk about tips for the 20s, traps for the 20s, and then goals that you should have in your 20s.
- [02:11]
Brian Preston
Now, let's first just jump right in with the tips on. And look, we put start investing. But the reality is if you do absolutely anything when you're in your 20s, you're going to have success because you are a billionaire of time. That's not a misstatement. You literally are a billionaire of time. So you ought to put that to work in your favor.
- [02:33]
Bo Hanson
And the younger you start. The earlier you start, the easier it is. Think about this, if you're a 20 year old and you want to be a millionaire, all you have to do is start saving $95 a month and you will be a millionaire by the time you reach age 65. That means that 948,000, almost $950,000 of your million dollars was actually growth. It was your money making money. But the longer you wait, the harder it becomes. Where the 20 year old only has to save $95 a month, the 40 year old has to save $780 a month. The earlier you can figure this out, the sooner you can catch on, the easier the path becomes.
- [03:13]
Brian Preston
Yeah, I mean I want, I want to go easy as possible and I love the fact, I mean you just said it, but I think it's worth repeating especially for all the people listening out there in the podcast side of things. That person, the 20 year old, only 51,000 of that is their money. The 950, exactly what you said is all the growth component. Guys get in on the easy stuff early and often is going to be your friend when it comes to saving and building your millions.
- [03:39]
Bo Hanson
But maybe your goal isn't just to have a million. Maybe your goal is financial independence and we have a great tool out there for you. You can go to moneyguy.com resources and check out our deliverable how much should you save? And what you can do is look at based on your age. If I were to start saving X percent right now, 25% right now, 15% right now, fill in the blank. You can determine how much of your pre retirement income you'll be able to replace. And like you can see if you start in your 20s, if you just start doing something, doing anything, your future can be incredibly exciting.
- [04:14]
Brian Preston
That leads to the next tip we want to give for 20 somethings is hey, don't skip on the having the emergency fund and IT guys. This is to keep you from making those desperate decisions. I just had, I was working on another project and I saw a stat that close to 2/3 of individuals that file bankruptcy, it's because of like medical stuff that happens when they weren't prepared for it. And that's why we're not, we're not just boring people that once you have a pot of cash sitting over here instead of working for you, it's a matter of you not getting caught on a Tuesday or Thursday with an emergency or something happening that you're not planned for and not having the money to help you Survive and even thrive going forward.
- [04:52]
Bo Hanson
Another tip in your 20s is figure out how you can invest in yourself. Now, this could mean going back to colleges, could be getting a degree, but it might just mean honing your skill set, adding a skill set that you don't currently have and focusing on, okay, I know what I'm doing today. I know the job I'm doing today. What things can I invest in myself so that I can continue to succeed in the future, have a more bright career trajectory, have a bigger shovel later on in life? If you can figure out how to put the time and the effort and the investment in early in your 20s, it's likely to pay dividends much later in your 30s, 40s, and so on.
- [05:29]
Brian Preston
And then kind of begin with the end in mind. The next tip was have a plan. You know, a lot of people, I feel like they are not taking the lead role in their lives in general. They're just kind of rudderless, just letting life happen to them. And I think you'll find just, just like I talked about, just any type of, you know, participation in investing is going to have huge rewards. I think you're going to find the exact same thing with having a plan. If you will just start thinking about where you want to be in the future, you can start taking steps. You will have tremendous success just from your little bit of preparation.
- [06:01]
Bo Hanson
And we've built a blueprint for you. That's what the financial order of operations is. If you want to go to learn.moneyguy.com you can do a deep dive on the financial order of operations. You go to moneyguy.com resources and download your free deliverable so that you don't have to guess what's the next best thing for me to do with my next dollar. We actually lay it out there for you. So if you do not have a plan, and you need to have a plan in place, let the foo be your guide.
- [06:29]
Brian Preston
Okay, let's talk about. That's the tips. Let's talk about what people actually usually come off the path and they fall in these traps. And the first one is living above your means. Remember I told you the first ingredient of wealth creation is discipline. Living literally on less than you make. But sadly, only 38% of Americans spend less than they make. That means, I'll do the math for you publicly, 62%, which is the majority of Americans, are spending more than they even have coming in and hitting their bank accounts each month.
- [07:00]
Bo Hanson
Now, look, we're not saying that at this stage of life, don't create memories, don't do fun things, don't have experiences. What we are saying is we ought to bedazzle your basic life. Figure out how can I create those memories, create those experiences, create those environments that I can still enjoy, that I can still do without breaking the bank. Far too often people operate in this mindset in their toys. Well, I'm only 21 so I might as well live it up right now. Not recognizing that making that decision is actually robbing from your future self that.
- [07:32]
Brian Preston
Leads to the next trap is being unprepared for emergencies. Remember, I've already shared this for the 20 somethings is the majority of bankruptcies are caused by people being unprepared and having to make desperate decisions. When you find out that less than 46% of Americans report having three months worth of expenses covered for emergencies, you realize this is the norm. And I'm telling you you don't want to be average when it comes to your emergency funds. You need to keep yourself from making those desperate decisions by having enough money to get you through no matter what comes your way.
- [08:04]
Bo Hanson
I think the stats even misleading because this is 46% of Americans don't even have three months. We say three months is the entry level. That's like the lowest level emergency fund. I think those that have less than a fully funded and adequate emergency fund is likely even higher. You want to make sure you have dollars in place that can protect you from those unknown unknowns or they can protect you from falling into the next trap which is racking up high interest debt. We live in a consumption society where it's far too easy to buy anything in the world 20 bucks at a time, 40 bucks at a time, 100 bucks at a time. If you just swipe the card and rack up debt it is going to be nearly impossible to build wealth if you have interest punitively working against you.
- [08:49]
Brian Preston
Well, I think all these things are working together. If you think about this is the typical American story here is that we're spending more than we make. We're also being unprepared for emergencies. And then what happens when you have to make the desperate decision? You pull out the plastic and then you're stuck with racking up all this high interest debt. Guys, there is a better way to do money and that's why we've even tried to give you. If you want to know what is high interest debt, we've got a deliverable for you. We have an illustration that kind of walks you through because look in your twenties you have an opportunity cost that your money that you works in, your army of dollars has a lot of earning potential. So we give you a little more grace. On student loans, it's around 6%. Car loans, look, I'd prefer for you to pay cash, but I know sometimes you've got to have a job to be your first part of the wealth building machine. So we're even willing to say, look, if you have to get out there and you need reliable transportation, it's okay for a moment in time. If you even have to have a car loan up to 10% and then credit cards, you notice it's zero. Meaning I don't care if it's introductory. We don't want you to carry any credit card debt whatsoever. If you're not paying it off every month, you're not a credit card type of person. Credit card use is a okay, but credit card debt, no way.
- [10:04]
Bo Hanson
Now there is a silver lining in this age group. Most surveys are actually showing that Gen Z has less consumer debt than older generations. So it sounds like maybe the pendulum is swinging. We want to see you guys continuing to make those sound financial decisions. So what should your goals at this stage be? Number one, start investing something, start doing something. Start getting some money working for you. Because if you can just start the habit, you can begin to put that money to work. You will be amazed at what it can do for you later on in life.
- [10:41]
Brian Preston
And I know we've already covered this stat on one of the graphs, but it's worth repeating if you want to reach a million dollars by the age of 65. For a 20 year old, all you have to do is $95 a month until you reach retirement. Or if you want to go ahead and get ahead of it because maybe you came into a lump sum of money or a windfall, 11,318 will get you there. The same thing, 25 years of age. But watch this difference. Just in five years, we went from $95 a month at 20 to now at 25, it's $185 a month. Lump sum is close to $23,000 for a 29 year old, you can do it at $302 a month or a lump sum of $38,000.
- [11:19]
Bo Hanson
If you want to know what the monthly amount you need to save or lump sum you need to save to be A Millionaire by 65 is for your specific age. Go download. Are you on track to be a millionaire@moneyguy.com resources and if you're doing this right, if you're making the right decisions that if you want to checkpoint by the end of your 20s, as you round out this decade, we want your portfolio value, your invested assets to equal roughly one times your annual income. If you're doing that, you are well on your way to start your 30s on a positive foot. So, Brian, let's now jump into the 30s. Let's talk about the tips, the traps, and the goals that folks should have in their 30s. And what I think is interesting, as you get into this, like, messy middle phase, if the things that happened in your 20s went unchecked, they become problems in your 30s. And one of the very first things that becomes a real problem is still that debt thing.
- [12:17]
Brian Preston
Yeah. I mean, look, it's everywhere we walk around is all consumption. Whether it's the cars you drive, whether it's the education that gets you your first job, we're walking in a society that just encourages you, get this credit card, do this store loan. You gotta be careful. You gotta keep the debt in check. Because a lot of you, if you made bad decisions in your 20s, your 30s is kind of your last step that you still can get a get out of, get out of jail card is you're young enough that you can recover. So we've got to get that debt in check ASAP.
- [12:50]
Bo Hanson
Yeah. In your 20s, a lot of the debt problems you have are around consumption. I had too much credit card, I did too much, I ate to, you know, whatever those things are. But as you get into your 30s, the debt becomes a much bigger issue because you start to have debt on much bigger things. That's why we put our money guy rules in place to help keep you protected. When it comes to buying an automobile, we want you to follow 23. 8. That means you put 20% down. You don't finance a car for any more than three years or 36 months. And the payments for your automobiles cannot exceed 8% of your monthly gross income. This does not apply to luxury cars. If you're buying a luxury car, you got to pay it off in cash in one year. And we never, ever, ever want your car payments to be greater than your monthly investment amount. Make sure you are saving more for your future self than you are paying for your current self.
- [13:40]
Brian Preston
And then don't forget the 3. 5, 25, because I know in your 30s, a lot of you in your messy middle, you want to get in that first house. That's why we give you the grace that with the 3 is 3% down payment notice. I didn't say 20%. I said 3% because we want to make this as approachable as possible. That's only on your first house. We want to make sure that you can stay in that house for at least five years or more because there's just too many transaction and friction costs. It's not a short term decision. And then we've got to keep those total monthly costs below 25% of your gross income.
- [14:13]
Bo Hanson
So another tip that we want you to do, we said in your 20s you ought to be saving something, you ought to be getting some dollars working for you. But in your 30s it's less about doing something and it's more about doing the right thing. And our goal for you in your 30s is to be saving 25% of your gross income again. You can go to MoneyGuy, you can download our deliverable. How much should you save? Because if you can save 25% starting in your 30s, you are going to give your future self options and flexibility and freedom. If you want to live the life that you want to live on your terms, doing what you want, when you want the way that you want, you got to start saving early for that or else you will get behind the curve and have to continue to play catch up as you're moving along that line.
- [15:01]
Brian Preston
Well, that ties into, don't, don't sleep on the emergency reserves. Once again this is going to keep you from making the desperate decisions. And then more than likely in your 30s, it's not just you anymore. You either have a spouse or potentially you have even children at this age. You need to make sure that you're at least covering the basics so you don't get caught in those desperate decision making traps that are laying out there. So save and fund those fully emergency funds.
- [15:27]
Bo Hanson
So now it's interesting, Brian, we walked.
- [15:29]
Brian Preston
Through, like I said, save fun fully, just have an emergency fund.
- [15:33]
Bo Hanson
So it's interesting. You know, we walk through the tips of the 30s. It's no surprise that the traps in the 30s are the things that catch you if you're not following the tips in the 30s. And one of the very first things that we see people do is we see people overspending on cars. We've already walked you through, we want you to follow 23eight. But so let's ask the question, how good are Americans? How good are car purchasers doing at 23, 8? Well, we think about 20% down that you should put down in a car. But we look at Edmunds and we look at the value of auto purchases. The average down payment on a new Car right now is 14%.
- [16:13]
Brian Preston
Well on top of that, there's usually negative equity too. So people are already blowing this up, not even doing 20%. That's a disaster.
- [16:20]
Bo Hanson
Americans, what about the three we don't want you to finance for more than three years, more than 36 months. When we look at the average loan term for an Automobile, it is 70.1 months or 5.8 years. Almost double the money guy prescribed amount.
- [16:36]
Brian Preston
And by the way, every year that I look at this stat, it's getting longer. And now I'm even hearing that there's 96 month loans out there. Guys, we are going the wrong way with this. There's a reason we have three years is to keep your eyes and your pride away from. We want to be actually be connected to your wallet and what's going on with your net worth statement. Whereas it feels like this consumption society is pushing you further and further at $100 to $200 a month.
- [17:01]
Bo Hanson
And then we want your car payments to not exceed 8% of your gross income. The average new car payment right now is $754 a month. If you compare that to the median household income right now, it is 10.8%. So a lot of folks, a lot of folks in the messy middle, a lot of folks in the 30s are not following these car buying rules and they're falling into this trap. And we believe that there's a better way to do money. If you want to make the decision the right way, we would encourage you to go to moneyguy.com resources and we actually have a car affordability calculator that will help you figure out, based on your unique situation, how much car can I afford? What can I do to prevent myself from, from falling into the same trap that my peers fall?
- [17:48]
Brian Preston
What I hate, bo, is that this is the incremental decision that's going to keep you from being a millionaire. Because more than likely that additional money is going to the car payment. If you're doing this versus following 23, 8 is money that could be funding a Roth IRA, could be funding the emergency reserves, could be putting more into your employer's retirement plan. This is foundational stuff that's now instead of you having wealth in the future, you're literally driving it into the ground.
- [18:12]
Bo Hanson
Another trap that we see in the 30s is high interest consumer debt. We've already acknowledged that that's a problem you have to watch out for in your 20s, but in your 30s, if it's lingering around now, compound interest has been working against you for A long period of time. We know that right now the average millennial has almost $7,000 of credit card debt. That's $7,000 costing you 15, 20, 25% a year. Again, it's going to be so difficult to build wealth if you have compound interest working against you.
- [18:48]
Brian Preston
Well, and these traps are all building on top of each other because you're overspending on cars, you're building up the credit card debt, and then we're even leading into buying too much house. Check this out. 21% of homeowners spend 30% or more. And that's only half the story that's homeowners. So that kind of already jades the stat right there. Because we know a lot of younger people. You've all you've told us, hey, homeownership has gotten so expensive, I can't even get into homeownership. So then we ask the question, well, what percent? For people who are in the rental side of things, are they spending over 30% and it's 50% of the population? Guys, we're in a bad situation where all the money is going towards consumption, that none is actually being saved for the future. And that doesn't allow you to ever build your army of dollar bills.
- [19:35]
Bo Hanson
If you have 30% of your money going towards housing and 10% of your money going towards a car payment, you have high interest credit card debt. You can see that very, very quickly you were getting crowded out of having anything left over. So what should your goal be? How should you structure your 30s differently? We want you to be saving and investing 20 to 25% of your gross income. And we want you to pay yourself first. If you can set it up so that your payments, your automated savings happens first thing, it's going to prevent you from trying to wait till the end of the month and save what's left over in your 30s. 25% is no longer an aspirational goal. We would say if you are behind it is an imperative goal that you need to be hitting.
- [20:19]
Brian Preston
So let's give them some check numbers. What does it take to actually create a million dollars by age 65? For a 30 year old, it's $340 a month. If you're starting from 0 lump sum 40, a little over $43,000 for a 30.
- [20:32]
Bo Hanson
Just pause there for a second. You know what's great about that number? Do you realize if you are 30 years old and you have saved $43,000, that means that you're already on track based on the work you've done to this point to be a millionaire by retirement. It's just worth noting that.
- [20:47]
Brian Preston
Yeah. Because it ties into our net worth goal of having one times your salary by the time you reach 30, by the time you're 35, $606 a month. If you're getting a little bit of a later start that's like most Americans, lump sum needed at that point is little under $79,000. And for the 39 year old, quickly about to approach crossing into being 40 $943 a month or a little over $122,000 lump sum requirement.
- [21:13]
Bo Hanson
So if you're thinking about a checkpoint where you should be by the end of your 30s, by the end of this decade, we want your total portfolio value, the value of your investments to be roughly three times your annual gross income. If you can be at that place, if you can have your portfolio there, then you're going to be well on your way to starting your 40s in the right position.
- [21:35]
Brian Preston
So you're saying basically come into the decade one times your income, but if we've done this right, we'll come out of the decade at 39 to 40 at three times your income.
- [21:44]
Bo Hanson
That's exactly right.
- [21:45]
Brian Preston
Great goal. Close your eyes. Exhale. Feel your body relax and let go of whatever you're carrying today.
- [21:53]
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- [22:01]
Brian Preston
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- [22:02]
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- [22:10]
Brian Preston
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- [22:26]
Bo Hanson
Prices and participation may vary. Prices may be higher in Hawaii, alask in California and for delivery. All right, Brian, let's talk about the 40s now because 40s are kind of interesting. It's sort of a tale of two stories. Either you've done what you're supposed to be doing and you're in the right spot, or you've not done what you're supposed to be doing. You have to start playing catch up. Either way, one of the things that we want you to do in your 40s is we want you to get specific about your plan. We've given you all kinds of guidance around, like save 25% and follow this rule and do this. But as you get into your 40s, we want you to begin putting some teeth into okay, this is what I personally am actually trying to accomplish with my dollars.
- [23:05]
Brian Preston
Well, this money is actually turning into a lot of money at this point. So you better be paying attention to asset location and if it gets to a certain level, we often talk about index target retirement funds, but once you cross over about a half a million dollars tax location, like what's in different accounts, whether it's retirement, whether it's Roth, whether it's your after tax brokerage, that location matters for you. And you also should have a good idea of where you're trying to go and figuring out are you ahead of the curve, behind the curve, right where you're supposed to be? This is exactly why we created the know your number course and tool. It's because we want to give you some functionality to where you can figure out, hey, these are the variables that I'm trying to play with so I can figure out if my head of the curve behind the curve with rate of return, savings rate, inflation, you name it, we put it in here. If you go to learn.moneyguy.com we will help you figure out exactly where you are in this process.
- [23:56]
Bo Hanson
What's fantastic is once you have defined the finish line, once you defined what your number is and you have an accurate understanding of where you are today, you can then reverse engineer into okay, well how much should I be saving? Do I still need to be saving 25% or am I out ahead of the curve? Or perhaps maybe I'm not exactly where I need to be. So I need to be investing 25% or more to make up the difference. Because one of the truths that's happens in our 40s is a lot of folks reach your peak earning years. This is where your shovel might be the largest that it's going to be in your career. And while you may not still have the 88 time multiplier, you may not still be the billionaire of time that your 20 year old self was in your 40s. Your dollars still have a lot of.
- [24:44]
Brian Preston
Well that's why we have the wealth multiplier. And look, without a doubt you know the prime time to start investing is in your twent and even thirties. Because we see that wealth multiplier for the 20 year old is 88. The wealth multiplier for the 30 year old is 2340. It's still 7. But here's the thing, you just said something That I want people. If you're mad at yourself because you procrastinated on saving and investing, both said something really magical there is that the fact that these are your peak earning years, turn that into fruit for your future self by actually starting to save and invest. This is. But you have to get serious. More of the weight falls on your shoulder now this is we're past still compounding growth can do a lot for you, but it's not easy street anymore. So take it serious. You still have enough time on the calendar to make the money work for you.
- [25:32]
Bo Hanson
And then in your 40s, we want you to keep following the food. You've, you've lived life at this point. You've recognized that your financial life is not likely straight up and to the right. There are fits and starts and setbacks and that's okay. Even if those things happen before this stage, even those things happen in your 40s. The financial order of operations should be your guide to let you know what you should do with your next dollar. And if you can do that, you can use it as your litmus test. And you're going to put yourself in a position to not fall into some of the traps that we see people in their 40s fall into. And the first trap that we see people, a lot of folks do, Brian, is they just don't know where they are. They have no idea where they stand from a financial standpoint.
- [26:15]
Brian Preston
Well, I mean this is, this is bad. We, we've seen the stat. One in four Americans have no idea how much they've even saved for retirement, by the way. I think a lot of times that's because they haven't saved enough.
- [26:25]
Bo Hanson
That's right. They don't want to know.
- [26:26]
Brian Preston
We see the stats and they stick their head in the sand. They say it will get better. I'll just let them know it will not get better because time is actually working against us at this point. So you've got got to start taking an active role of knowing what you own, what you owe, where you are. And that's why we strongly encourage you guys. If you're in your 40s, don't be a rudderless ship. Because every 1 or 2% more are focused in on your direction, the easier it's going to be to reach your goal. And that's why you better be doing a net worth tool. If you're not using a net worth statement every year to kind of use the dashboard as the CEO of your enterprise, you're missing out. And we've tried to give you Several ways you do this. If you go to moneyguy.com resource you can download a free version. But if you're. If you need a little more guided approach, and I think somebody in their 40s definitely needs the dashboard view to kind of know exactly where you are. This is not just a little habit that you're trying to set up. This is something where you got to start making decisions off of this. I want you to go to learn.moneyguy.com so you can actually get the more powerful tool that we've created. So you can actually. This is the same one that we use for our net worth so that you can actually take a more active role in the management of where your money's going.
- [27:35]
Bo Hanson
Another trap, Brian, that we see people in their 40s fall into is that for some reason they arrive at this conclusion that now I got to take a huge risk. Maybe I didn't make all the decisions I was supposed to. Maybe I bought too much car, maybe I bought too much house. Maybe my savings rate wasn't where it was supposed to be. And so now I need that home run. I need to hit that grand slam. I need to do that thing that's going to right all of the wrongs. And oftentimes people in the 40s get involved in stuff they have no business getting involved with, with the goal and idea that it's going to help them to catch up. Just recognize this, even if you're behind in your 40s and you're not exactly where you should be, you have enough time that you can still build it back without having to hit a home run, without having to figure out something that no one else has figured out. You can exercise the three ingredients of wealth creation in your 40s and still put yourself in a fantastic spot by the time it's time to retire.
- [28:32]
Brian Preston
Well, a lot of times that high income can become a curse because if you make enough money to become like an accredited investor, you lose a lot of the safety stuff.
- [28:41]
Bo Hanson
That's right.
- [28:41]
Brian Preston
Don't think that you have to fall in that trap. A lot of times the index funds and the things that got you there still going to be extremely successful for you going forward. Don't feel like you have to get into that sexy sizzle of this is what rich people do. There's probably huge risk that you might not need. And the next thing I see people fall into bottom. And we just had a call on one of our live streams in with this is putting too much money in the kids accounts first before they've even funded retirement. We had a six figure 529 question and you can't help but ask yourself I hope if they had that much money in the 529 that they fully funded their retirement. And this is kind of like when you get on the airplane and the flight attendant gets up there with a safety briefing and says hey, make sure if you're sitting next to that child that you put on your safety mask first before you put it on your child's. Because you're not going to do anybody any good if you save them. But you're way gone. So it's the same way with your own financial life. Make sure you're doing what you need to and then let it be in step eight of the financial order of operations before you start really taking care of the kids.
- [29:41]
Bo Hanson
But a lot of people aren't doing this. We know that right now 56% of Americans said that given the choice they would choose to save for their kids college instead of their own retirement. Well, when your student gets to, gets to college, there are going to be scholarships, there's going to be grants. They can work, do it. They, there are ways they can pay for it. When you get to retirement, there's not going to be anyone there to help subsidize or give you an outlet. It is on you. So make sure you are prioritizing that in the right order. So as you move through this decade, what are your goals or what things should be thinking about? Again, you should have assessed where am I in my journey and what is my appropriate savings rate. If I'm not saving the way that I have been, maybe I need to increase that to 25%. Maybe even at this stage 25% isn't enough. You need to understand what do I need to be saving to get to the place that I want to be when I get to retirement.
- [30:35]
Brian Preston
All right, let's throw some numbers at them. Let's tell them what the goals are to reach million dollar status by the time you're 65 starting at age 40. A little over $1,000 a month. That's right. We went from 88 at 20 to now 1050amonth, lump sum, 130. A little over 136,000 for a 45 year old. $1,806 a month or a little under a quarter of a million. 224,000 for a 49 year old. $2,812 a month. That seems like a ton. But good news, this is peak earning years for most people. Out there. So you probably, if you're going to have a chance of being able to save $3,000 a month, it's going to be in your late 40s, so let's make good with that. And the lump sum needed would be $320,000.
- [31:21]
Bo Hanson
A thing I want to remind you is in your 20s, in your 30s. It's a great idea. Hey, I want to be a millionaire. What would be required to get me there? By the time you get to your 40s, it should be less about what does it take to be a millionaire? And it should be more about what is my number, what am I working towards? So maybe I need another million dollars. That would mean increasing at age 40 your savings by a thousand dollars per month or at 49 by an extra $3,000 per month. We want you to be able to hone in on how you can impact your savings rate that way because by the time you finish this decade, by the end of your 40s, we want you to have almost six and a half times, 6.4 times your annual gross income saved in your portfolio. If you can do that, you are well on your way to financial independence.
- [32:08]
Brian Preston
All right, let's close this thing out with something that I resemble. That's for the 50s and beyond. And by the way, I look nothing like the image that I thought this.
- [32:17]
Bo Hanson
Was a self pack portrait they said of you and Colonel Sanders mixed together.
- [32:19]
Brian Preston
But let's jump right into these tips is by the guys. If you don't have a plan for landing your retirement airplane, you are missing out. This is one of those things. You've got to be stress testing. You've got to be figuring out, you've got to be. There's a lot of variables that are going to be changing in your life. It can be a smooth landing or it can be a crash landing. You get to choose this. And here's the reality of it. I think a lot of you get to your 50s and beyond and you say, hey, I know I've done pretty good at saving and building this wealth. I've been listening to Yalls content, but I've only done this once and I just don't know where my blind spots, I don't know where things are going. I don't know what variables I should be considering. That's okay. This is why I can give you so much free advice for all these years is because our day job is, is that we actually help people all across the country make these decisions. And you don't have to be the only person Making these decisions. We've done this hundreds. If you take the whole firm thousands of times for retirees, so you can know where the blind spots, know what you just don't know, and make sure you don't fall into any traps that are sitting out there. As you approach this increasingly powerful and important threshold of your financial life, people.
- [33:32]
Bo Hanson
Ask all the time, hey, why haven't you guys built a financial order of operations for retirement or for decumulation? And the answer is, the financial order of operations is a great general guide for accumulation. How do I build my assets? How do I get to financial independence? But once you get there, the art of being able to live off of those dollars and have them sustain you for the rest of your life is very individualistic and very specialized. And so that's why there's not a one size fits all. So you want to make sure that you measure 2, 3, 4, 5 times before you make that decision. It's why we think that taking the relationship to the next level could make a lot of sense. Another thing that I want people in their 50s to focus on is we talk a lot about money and a lot about finances and a lot about the dollars. But it does you no good at all to have a huge pot of money saved up when you get to the age that you can actually use it to live the life you've already dreamed of and you are not healthy enough to enjoy it. Make sure that you recognize that health is wealth. And so taking care of your body, taking care of your mind, doing the things necessary so that you can enjoy the rest of your life is just as important as building up the dollars in your 20s, 30s, and 40s.
- [34:45]
Brian Preston
And then I want people to think outside of, you know, so much is spent on the saving lifestyle. You know, you spend decades, but there needs to be thought of what's next. If you think about your next endeavor, what do you actually do for fun? What do you plan on doing once you leave the workforce? These are things, guys, that you need to be spending some time being very intentional on what your hobbies, what the goals, where you're hoping your money will take you. Because if it's just a dollar amount is your goal, I think you're gonna find that that's quite empty. So you've got to actually do some preparation, figuring out what is the next thing I'm going to do. And that's another thing. We spend a lot of time with that. When we work with clients all across the country, this is another thing we try to help them Hone in on what that hobby, what the activities are going to be that still give them the happiness and the fulfillment when you get out of the bed, that you're doing your own little part to be excited about this world.
- [35:37]
Bo Hanson
When we think about traps that people see in their 50s, one of the traps we see in the 50s is very similar to something we saw in the 40s. And this is the way that it goes. Man, I didn't quite end up where I thought I was going to end up. I didn't save the way I thought to. I spent more than I thought. And so now I'm in the position. I got to make up for lost time. I got to do something to get the ball across the finish line. There must be something else out there. There must be some magic pill I've not taken yet. And they begin looking for some sort of speculative, crazy, over leveraged, over risk type investment as a means to bridge a gap that should not be there. Don't let yourself fall into that trap in the 50s. It is not a magic bullet to make up for lost time. Nor is it that thing to take a lifetime of solid, steady saving solid, steady, sound financial decisions and then risk it all because you're trying to shoot for the moon.
- [36:32]
Brian Preston
And another one is just keeping debt around. Look guys, we talk about financial freedom and that word freedom is just something, it's good for the soul, I think when you hear that. But are you really free if you're still indebted, if you have obligations sitting out there? That's not freedom to me. So I want to encourage you. Even if it's low interest money, mortgage debt, I'm hoping you're creating a plan by using our financial order of operations to figure out how you even get to step nine where it doesn't matter if it's a low interest debt, if you can be completely debt free, there is some something magical that happens when you don't owe anybody and you control your time, you control your resources. That's where we want you to be.
- [37:13]
Bo Hanson
So what should your goal in your 50s be? Well, it's a mix of both qualitative and quantitative. Qualitative. What is my next endeavor? What's the next stage that I'm moving into? And then it's also quantitative. What steps do I need to be taking to finish this last chapter well and begin the next chapter? Well, if you can start to define that sort of figure out what that looks like, there's a really good chance you're going to set yourself up for A very happy financial independence.
- [37:44]
Brian Preston
This is also the last stop with the next one is keeping, you know, look, we say save and invest 25% of your gross income, but at this stage, 50 and beyond, it needs to be more, you know, specific to your financial life. Don't skip out on that step of actually figuring out where you at. Are you behind the curve, ahead of the curve, or right where you're supposed to be? Because it might be more than 25%. Good news, you're still in good earning years before you cross that threshold of retirement. But just don't sleep on this last chance to really let your army of dollars do magical things for you.
- [38:16]
Bo Hanson
What's crazy is that even though you might not sell the time to side, think about this. If you are a 50 year old and you've saved up $351,000, that sum of money has put you on track to be a millionaire by 65. If you're 55 years old and you've saved up 523,000, you're on your way to millionaire status. And if you're 59 years old, you saved almost $700,000. Even just that $700,000, if you can let it work for the next six years, has the ability to turn into a million dollars. It's not 88 times over like it was back at 20, but there is still an opportunity for your dollars to grow, for you to end up in the spot that you want to be in. And if you're thinking about true financial independence and what your benchmark should be by the time you get to the end of your 50s, we want your goal to be to have 13.7 times your annual gross income saved in your investment portfolio. If you can do that, financial independence is likely right around the corner.
- [39:17]
Brian Preston
Well, you can, you can do quick math and realize, hey, we've already told you, peak earning years is somewhere between that 48 to 52. And then you multiply that by close to 14. This is a large sum of money we're talking about if you're doing this right. Guys, I know we talked, we've already pulled the work with us slide, but it really is. The reality is that you probably have quickly seen that your simple financial life has now gotten much more complex. But yet you're still going to long for the simplicity of what's the best way to manage this? How do I can get as few moving parts as possible? We're here to help out on that and I love creating this type of content because we essentially are bowling it down to the key things that you need to know about money by each decade that you walk through so you can maximize those tips that we shared avoid the traps, but then also know exactly what those goals are. And we'll keep creating this type of content, but in the meantime, if you're younger and you watch the entire show, go download some of our free stuff. MoneyGuy.com resources will be your friend to help you accelerate and take that relationship to the next level in the not too distant future. I'm your host Brian joined by Bo.
- [40:26]
Bo Hanson
Money Guy Team out the Money Guy show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisor firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss.