Money Guy Show: Net Worth By Age (2025 Edition) – Detailed Summary

Release Date: January 3, 2025
Hosts: Brian Preston and Bo Hanson

Introduction: Embracing Net Worth Tracking

In the premiere segment of the episode, hosts Brian Preston and Bo Hanson express their enthusiasm for discussing net worth benchmarks by age, highlighting its significance in personal wealth building.

• Bo Hanson [00:10]: "We love how powerful, knowing your net worth and tracking it through time can be to your overall wealth building journey."
• Brian Preston [00:29]: "This is the tool that will change your direction, that will give you the personal accountability and let you build your great big beautiful tomorrow."

Understanding Net Worth

The hosts delve into the foundational concept of net worth, clarifying its components and importance.

• Bo Hanson [01:13]: "Net worth, quite simply, is what you own minus what you owe. It basically tells you what you’re worth when you factor in everything in your financial life."

Brian further elaborates on the types of assets and liabilities that constitute net worth, emphasizing the need for accurate valuation, especially concerning real estate.

• Brian Preston [02:27]: "We recommend valuing homes at the purchase price to avoid inflating your net worth. This ensures your net worth reflects assets that can actively fund financial goals."

Net Worth Tools and Resources

To aid listeners in tracking their net worth effectively, the Money Guy Show offers various tools and resources.

• Brian Preston [04:17]: "If you want the free stuff, go to moneyguy.com/resources. We can hook you up with a net worth template. For a more advanced approach, visit learn.moneyguy.com for our comprehensive net worth tool."
• Bo Hanson [04:57]: "We actually use this very tool every single year when we do our annual net worth statements. It’s a powerful tool to track your financial journey."

Revising Net Worth Benchmarks

Critiquing existing benchmarks, the hosts introduce their refined approach to net worth by age, aiming for more realistic and impactful financial goals.

• Brian Preston [06:06]: "One of the big updates this year is we've adjusted Fidelity's income multiplier benchmarks to better reflect what’s needed for a sustainable retirement."

They emphasize the inadequacy of traditional benchmarks, particularly for those approaching retirement, and propose a revised multiplier method.

• Bo Hanson [07:02]: "If you make $100,000 a year at retirement and have 10 times that, you get $1 million. Using our method, you should aim for 20 times your gross income for true financial security."

Decade-by-Decade Financial Guidance

The core of the episode dissects financial strategies and net worth targets across different life stages, offering tailored advice for each decade.

1. 20s: Mastering the Mindset

Focuses on establishing strong financial habits and leveraging the advantage of time.

• Bo Hanson [10:24]: "In your 20s, mastering the mindset around money sets you up for long-term success."
• Brian Preston [10:55]: "You're a billionaire of time. Small incremental decisions now can lead to massive results later."

Key Takeaways:

• Live below your means and save diligently.
• Utilize tools like the Wealth Multiplier to visualize savings impact.
• Aim to have net worth equal to your annual income by the end of your 20s.

2. 30s: The Messy Middle

Addresses the challenges of balancing family, career, and financial responsibilities.

• Bo Hanson [18:24]: "It's easy to put your financial life on the back burner with so many immediate responsibilities."
• Brian Preston [19:37]: "Be intentional with how you're using every bit of that powerful resource of time."

Key Takeaways:

• Simplify financial strategies to avoid overwhelm.
• Increase savings rate to 25% as income grows.
• Focus on disciplined saving and investing to bridge the gap between current assets and targets.

Benchmarks:

• Bo Hanson [25:25]: "By the end of your 30s, you should have three times your annual household income saved. For a median income of $85,780, that's approximately $250,000."

3. 40s: A Fork in the Road

Marks a pivotal decade for assessing and realigning financial goals.

• Bo Hanson [27:06]: "This is a bit of a turning point where you have one of two places you can go."
• Brian Preston [27:57]: "You're not old. You're just hopefully a little wiser, ready to take control of your financial future."

Key Takeaways:

• Reevaluate and optimize investment strategies.
• Focus on tax efficiency through diversified tax buckets.
• Consider professional financial advice to avoid common pitfalls.

Benchmarks:

• Bo Hanson [34:53]: "By the end of your 40s, aim to have six and a half times your annual income saved. For a median income of $101,000, this equates to around $650,000."

4. 50s: Setting the Glide Path

Prepares for a smooth transition into retirement by fine-tuning financial strategies.

• Brian Preston [37:30]: "Asset allocation becomes crucial to manage risks as you approach retirement."
• Bo Hanson [38:30]: "By your 50s, you should have 13.7 times your annual income saved, which for a median income of $111,000, is approximately $1.5 million."

Key Takeaways:

• Implement a glide path to adjust asset allocation towards lower-risk investments.
• Define clear retirement goals and timelines.
• Utilize tools like the "Know Your Number" course to determine precise retirement targets.

Benchmarks:

• Bo Hanson [39:08]: "By the end of your 50s, your portfolio should be around $1.5 million, a stark contrast to the median $70,000 in financial assets."

Tax-Efficient Retirement Planning: Ivan vs. Manny

A practical illustration of the importance of tax diversification in retirement planning.

• Bo Hanson [30:26]: "We have Inefficient Ivan and Manny the Man Mutant to show different approaches to retirement income."

Case Study:

• Inefficient Ivan:

  • Relies solely on tax-deferred accounts and Social Security.
  • Faces higher tax burdens on retirement withdrawals.
  • Taxes Paid: Approximately $26,000 on $200,000 income.

• Manny the Man Mutant:

  • Utilizes three tax buckets: Roth, tax-deferred, and taxable accounts.
  • Manages withdrawals to minimize tax liabilities.
  • Taxes Paid: Approximately $4,000 on $200,000 income.

Insights:

• Brian Preston [33:38]: "You can legally manipulate how much you pay in taxes by structuring your retirement withdrawals."
• Bo Hanson [34:35]: "Building tax diversification allows you to optimize your retirement income and minimize taxes."

Conclusion: Take Control of Your Financial Future

The episode wraps up with a strong call to action, encouraging listeners to utilize the provided tools and seek professional guidance to achieve their financial goals.

• Bo Hanson [40:41]: "If you can take control of your financial future, you really can have a great big beautiful tomorrow."
• Brian Preston [41:01]: "You’ve got to own your financial future or it's going to own you. Take this seriously."

Resources Mentioned:

• Net Worth Template: moneyguy.com/resources
• Net Worth Tool: learn.moneyguy.com
• Wealth Multiplier Tool: moneyguy.com/resources
• Know Your Number Course: learn.moneyguy.com

Key Quotes with Timestamps

1. Bo Hanson [00:10]:
   "Knowing your net worth and tracking it through time can be so powerful to your wealth building journey."

2. Brian Preston [02:27]:
   "Value homes at the purchase price on your net worth statement to ensure accuracy and prevent overconfidence."

3. Brian Preston [06:06]:
   "We've adjusted Fidelity's income multiplier benchmarks to better reflect what's needed for sustainable retirement."

4. Bo Hanson [10:24]:
   "Mastering the mindset around money in your 20s sets you up for long-term success."

5. Bo Hanson [18:24]:
   "It's easy to put your financial life on the back burner with so many immediate responsibilities."

6. Brian Preston [27:57]:
   "You're not old. You're just hopefully a little wiser, ready to take control of your financial future."

7. Bo Hanson [30:26]:
   "Inefficient Ivan and Manny the Man Mutant show different approaches to retirement income and tax efficiency."

8. Brian Preston [33:38]:
   "You can legally manipulate how much you pay in taxes by structuring your retirement withdrawals."

9. Bo Hanson [40:41]:
   "If you can take control of your financial future, you really can have a great big beautiful tomorrow."

10. Brian Preston [41:01]:
    "You’ve got to own your financial future or it's going to own you. Take this seriously."

Final Thoughts

"Net Worth By Age (2025 Edition)" serves as a comprehensive guide for listeners aiming to benchmark and enhance their financial standing across different life stages. By offering practical tools, revised benchmarks, and actionable strategies, Brian Preston and Bo Hanson empower their audience to take charge of their financial futures, ensuring a path toward sustained wealth and fulfillment.

Whether you're in your 20s just starting out or approaching retirement, this episode provides valuable insights to help you navigate your financial journey with confidence and clarity.