How to Become a Millionaire! (By Age)

who wants to be a millionaire paige it's brian preston the money guy i feel like we should have had that what's that sound effect was like yeah yeah so i think the question who wants to be a millionaire the answer is everyone like everyone has this desire i think it was set many many moons ago that like the the creme de la creme of reaching financial independence like the goal of saving and investing is to become the elusive millionaire so the answer to who wants to be that is probably everybody right it is but it's people don't do the steps they don't they don't follow let's talk about this because i have some ground rules some traits you guys know big fan millionaire next door there are seven goals or traits that that he talks about that these are the things that millionaires do better than the typical um american and the first one was they live well below their means so they spend less than they make number two they allocate their time energy and money efficiently in ways conducive in wealth building they're not wasteful they make smart decisions with purpose they believe that financial independence is more important than displaying high social status more about how they are not how they look their parents did not provide economic outpatient care so they're possibly self-made or have built some of this on their own number five their adult children are economically self-sufficient they've taught their kids how to build something on their own number six they're proficient in targeting market opportunities they recognize opportunities well i didn't have a lot to add to that and value and value number seven they chose the right occupation they know what they were put on this earth to do and they're doing that in a way that makes a difference so what i want to make sure everybody understands we're going to talk through there's several things that i'm building today we want to talk through the traits the steps the financial planning pyramid everybody out there who is in the financial planning space i know we have students i know we have practitioners you guys are going to absolutely love that we bring the financial planning pyramid into today's shows and then we are going to also load you up in numbers we had somebody on our comment section say it's great that you give the monthly amounts to become a millionaire what about if i got a late start and i want to know what the lump sum is to invest at each age i need to have done to be a millionaire we've got you covered today and then all my inflation hounds all you that say a million dollars is worth nothing anymore we got you covered too because we got a financial mutant number that's twice a millionaire status so let's jump right into this the first the 20s not throwing away my shot i mean that is the thing i mean this is the thing when you're in your 20s you have all the opportunities of the world you're going to see in a minute when we talk about how much you have to invest on the monthly basis by the lump sum basis there is no excuse that you're not going to be successful financially yet the unfortunate part is we can fast forward 45 years from now and the lion's share the majority will not have the money we're talking about if you're out there listening to the show or perhaps if you have children or folks of influence in their 20s you have to get through your head that this right here is the most powerful stage of your wealth building journey it's not hard you just have to recognize it and so you get one shot to be a 20 year old or in your 20s to build these assets don't blow it so we have hamilton and then i think you just brought in some eminem and i tried to do it so it's interesting but here's the things i would tell you to think about this is a busy decade focus on building foundational knowledge money guys show you're at the right place absolutely number two fight all the emotional and behavioral distractions you'll see that is a big problem that i think the majority of people there's actually industries that cater to taking you off track with your your consumerism or trying to tell you what you should be spending your money and then try to focus also on setting up automatic wealth building yep that's if you can set it up early on and you can build those habits and build those traits you're going to set yourself up for success and that's kind of a perfect segue into the financial planning pyramid for 20 year olds and if we're going to think about the pyramid the very first thing we have to think about is that bottom level cash flow how do we think about the money that we have coming in what are the things we ought to be cognizant of in our 20s well i think there's a millionaire next door echo here is the first one is don't spend more than you make it's it seems like common sense but if you make 30 000 a year don't spend 35 000 a year if you can practice that habit early on you're going to set yourself up for huge success well i think that leads into the number two which is understand how dangerous debt can be if you're spending 35 because that is here's the typical american you make 30 000 a year when you're in your early 20s if you have a lifestyle of 35 000 the only way you can bridge that difference is likely through debt you're not getting a hedge you're actually digging yourself a hole every time you have that unhealthy relationship it's hard enough for all of us to get our own foothold out in the financial world we get our first job and we start getting out there we try to start progressing in the right direction it's hard enough starting from zero if you begin making decisions to put yourself below zero that start from negative it's just a huge amount to climb so understand the debt can be a great tool but it should be a tool that you are scared of and you only use the right way now bo you said we were talking about this in show prep that there's you heard somebody use this saying because a lot of people you wait to see what's left over at the end of the month and that's what you plan on saving what was the adage that you you said is a much better mindset about much better way to do it yeah don't don't uh save what is left after spending spend what is left after saving go ahead and pay yourself first so if you know that you ought to be putting money in your raw through your 401k or whatever the thing is do that first don't wait till the end of the month to see what's left over because if you're like me by the end of the month that money just has a way of disappearing and look i'm not the type of person that picks on the latte factor meaning that if you love good coffee you like going out to eat i i can't stand somebody who focuses on the minutia or the little stuff though that gets on to you and makes you feel bad about your lifestyle because usually it's the big things but i will tell you in your 20s this is the only i put a little asterisk symbol this is the time in your life where you can focus on every dollar that you can save in your 20s because realize we're going to talk about in a minute with investing 88 times over is what that money can become it is okay to cut back this is where discipline is your friend if you'll take a little bit of today it turns into a great big beautiful tomorrow later respect that every dollar you spend now is really hurting yourself in the future there's nothing wrong with living cheap in your 20s and if you can do it and do it well your 30 40 and 50 year old self will for sure thank you for it yeah kind of give you sloppy hugs and kisses in the future why you're into it that's the visual i want you to think about is if you will do it right now your 50 and 60 year old self will just basically break down into tears when they are so happy that you've done it right when you're in your 20s and you're not blowing your shot all right so if i'm a 20 year old and i've got my cash flow now what if i want to be a millionaire what are some of the risk management things i ought to be thinking of well that immediately makes me think of the financial order of operations where do i start what's kind of the first thing i ought to look at number one is deductible covers deductibles covered i want to have that small pot of money that's going to keep my financial situation from completely going into the ditch well the whole power of deductibles covered is you're worried about the big stuff that can really blow up on you and that leads to number two which is you gotta make sure you have health insurance because that's what's gonna catch you off guard is if you have an auto accident or some weird help thing happens to you and you end up with a million dollar hospital bill that you weren't planning on you don't want that debt hanging over you so deductibles covered is going to bleed into also making sure you have health insurance coverage so you're not taking out by by the unexpected and it's not even just health insurance it's also property so like if you drive a car you need to have auto insurance or else you will get in trouble if you are a renter you need to have renter's insurance make sure you keep yourself and your property protected and that leads to because you're you know i want you as your 20s i know you don't have money you're you know a little goes a long way when you're building assets but it is one of those things you do need to start thinking about building emergency reserves as well that's kind of step four of our financial order of operations three to six months will serve you well but there's a lot to cover risk management that stuff will just keep you safe you want to plan for the unexpected so we've talked about how the 20s is really that decade that is the most powerful the reason it's the most powerful is because when it comes to investing when it comes to taking a little bit of today's earnings and putting it to work for you the compound interest effect gets absolutely insane and if you can grasp this idea of every one dollar you save as a 20 year old can turn into 88 by the time you're 65 it is going to be transformative and life changing so it goes for expenses and what the opportunity cost is so put that money to work by investing a lot of you now are saying okay i'm sold i know that if i can put this money to work it's going to be worth a lot exponentially worth a lot more what do i put it into we always tell you when you're young and you're trying to figure out it's much more important to focus on the behavior of saving than to focus on the asset allocation other things so we like simple index target retirement funds yeah very simple if you can answer two questions how much can i save and when do i want to retire if you can answer those two you've got investing figured out in your 20s it is really that simple if you're not a 20 year old and you want to know what your wealth multiplier number is go to moneyguy.com resources click on our how powerful are my dollars deliverable and you can actually go see if you're a 26 year old this is what every dollar you save can turn into by the time you're 65 let that be fuel for your financial independence fire and if you want to take a step further go benchmarking some of the bigger providers of index target retirement funds i'm talking like the fidelity investments maybe vanguard something like that low cost no commissions go put that money to work get the army of dollar bills building yep that leads to tax planning let's see i'm kind of nerdy in the tax area the first thing is and this is hard for somebody who's like a cpa or whatever so take this because i come from complexity but i'm telling you don't make this harder than it actually is your life is actually probably pretty simple you probably just have a w-2 and really not much more than that maybe some slight interest or investment income but you don't have to make this hard consider turbo tax and then also don't forget there's actually a lot of free resources you could actually file through turbo tax and other things for free in a lot of ways if you'll do the research or go look for some of those volunteer vita i know you did some vita when you volunteer income tax assistance program when we were coming through the financial planning program the university of georgia we would set up on saturdays during tax season a local credit union you can actually have a student come in and file your 1040 or 1040ez it's a great resource i remember the first time when a lot of my friends were graduating like bro i've never done a tax return what i do and i kind of show them like oh wow that that wasn't that hard i just put in my w2 and i took the standard deduction that was yeah it really can be that simple don't make it harder in your 20s than it has to be and then we closed out with kind of estate planning that's the tippity top of the financial planning pyramid this one because you're starting out on the investment process you probably don't have kids you might not have a spouse so it's it's a lot simpler so the biggest thing you want to focus on here is if you do have that first 401k or the ira make sure you focus some time on beneficiary designations yeah basically you're saying if something were to happen to me where do i want my assets to go and i remember when i first set up my first roth i wasn't married i didn't have any kids so it's like okay well i want this to go to my brother to my sister mom and dad just make sure you update that and you let your family know hey just so you know if something happens to me this is what i want to happen also this is a time since you don't have as much going on complexity is not there yet you can the the back of the napkin or the online estate or wills is is not a bad choice because you can keep costs down and keep it simple as your friend when you're in this stage of life so again the the whole the sort of the the theme of the 20s is it doesn't have to be hard but boy is it powerful if you can get some of these small relatively easy things right in your 20s it can set you up for success and when we talk about like just how easy it is if you listen to us for any amount of time you know one of the things we like to encourage people to think about is how much do i need to save if i want to be a millionaire well we put together the numbers for you and if you started saving at 20 you only need to save a month each month to get to a million dollars by the time you get to 65 or if you're 25 years old you need to save about 158 dollars a month well that tells how much you need to be saving but you already said brian some folks asked us how much would i need to have saved at that age if i wanted to be a millionaire well here's what's really amazing if you're a 20 year old and mom and dad just started kind of saving money for they say hey junior i've saved up some money for you and here is 11 318 happy graduation take this and do what you will if you can just leave that money invested just let it keep working for you we just assumed a 10 rate of return for a 20 year old that 11 000 can turn into a million dollars without you saving a dime well i even i'll go even earlier you know i have a 17 year old daughter that started saving i can't remember when we opened up her roth investment accounts either 14 or 15 years of age if you look at what it's worth now we're almost right at halfway to that point and she's 17 right now it's not hard to bridge that and all i do and by the way parents if you're paying attention for dollar-for-dollar match whatever she and that's what i love is whenever she works odd jobs and things it's come back and she's even given me birthday and christmas money now realize it's earned income so there is babysitting income and other things she has to offset this you got to file a separate tax return to qualify for this custodial roth but it can be really powerful even to start at a young age and imagine if you said to her you said hey sweetheart by the way guess what you're already a future value millionaire you've already done the hard work of becoming a millionaire you just have to let time pass the other thing i think is interesting is it's pretty if you did the math now i don't have my calculator in front of me but we've done shows on this where if you look at well you can see it you've got on a 20 year old eleven thousand dollars turns into a million it doesn't take a lot to realize that close to 98 to 99 of the growth of the account is all from all the compounding interests of the army of dollar bills now i know a lot of you guys you're already getting your um your negative comments out and you're thinking you know million is just not going to be the same thing you got to take into account inflation we have the count argument we financial mutants we do things just like the millionaire next door has prodigious accumulator of wealth by taking their formula multiplying it by two we did the same thing if you don't think a million dollars is enough how about two million others so if you can see it's just a doubling of the numbers for a 20 year old you need to save 190 a month 25 year old 316 dollars a month and then bo if you if you go ahead and look at 22 636 for the 20 year old on a lump sum that's needed for 25 year old 45 416 if you want to have two million dollars by the time you're 65. what i get so excited about is brian as we sit here recording the maximum roth ira contribution you can do is six thousand dollars a year that comes up to about 500 a month if you are 20 to 25 years of age and all you're doing is maxing out your roth ira you are setting yourself up to be a millionaire multi-millionaire multi-millionaire by the time you get to age 65. it really is that easy that's how powerful your dollars can be get excited put the army of dollar bills to work make it simple just do a target an index target retirement fund don't overthink this thing just open it up and let that money do the work for you okay let's talk about the 30 year olds this is your decade of your 30s for me when i think about this i think of the messy middle uh when i think about this i just think about every single day because i am living this like every single moment for for the ease and simplicity that was the 20s boy has it met and met hard with the complexity and the messiness of the 30s well bo you have a way of saying this and i thought we wrote this down because i liked it and i don't know if it's yours but it's still incredible it's really good i'll take credit days are long and the years are short i did not come up with it but boy is that true i mean because it's true i mean you're if you're in the messy middle you know you wake up 5 30 in the morning and then you're laying your head down at nine or that's not even what's happening you're laying your kid's head down at night you get to tap out you finally get to take a few hours for yourself because the the hours just disappear we've joked about once you have your you're married once you have kiddos you look at your spouse you go what did we do when we were in our twenties because we had that conversation weekly time is just moved so quick um also this is because you have so many commitments yeah like i said you likely have a significant other you might be you know procreating and growing you know having more children and having children you know so work-life balance becomes more important and then you know this is also where i think you have to pay attention to lifestyle creations trying to keep up with the joneses that is definitely these are legitimate issues that are definitely a concern yeah and i think even when we think about lifestyle creep that's sort of a perfect segue into thinking about in your 30s how should you think about cash flow well realistically this is probably the first time in your life that you begin to have some discretionary cash flow for the first time it's not just about survival anymore you're recognizing oh i have a little bit extra well one of the things you have to keep in mind is that your 30 year old self is very different than your 20 year old self so just because that 20 year old that you were got so excited about maxing out the roth ira at 20. now that you're in your 30s you actually have to improve upon that you can't just rest on your laurels of what you did in your 20s you actually have to get better don't let the discretionary cash flow just allow your lifestyle to creep in your lifestyle to expand well you've talked about it is that you know we've we've shown the stat that if you want to be a multi-millionaire in your 20s well if you're 20 year old all you have to save is a little less than 200 a month that's right but the problem is you fast forward to when you're in your 30s you probably need to be saving more than a little under 200 a month because you're making more money because remember the goal is 20 to 25 is going towards the long term so so watch out for that you don't want to also let lifestyle creep because this is the part we talked about we know that the average house purchase occurs when you're 33 years of age that's right when you're in your 20s i told you i i don't pick on the latte factor because i typically want people to focus on the big decisions like the car purchases the houses and those type of things that are whittling away well this is you're not the little stuff's not eating you up anymore and now it really is keeping up with the joneses instead of little oopsies man i got a coffee today that's certain things now you're like oh my goodness how did i get strapped with this 800 a month car payment did i go buy a house that's way too much for where i'm living that i can't save for the future this is the stuff that will get you in trouble yeah i remember in my 20s ouches were like hundreds of dollars in my 30s it seems like ouches are thousands of dollars another thing you'll probably recognize in your 30s from a cash flow perspective is you're probably beginning to understand am i just working a job am i just showing up and clocking in and clocking out waiting for my thing or am i actually into the career am i settled into what i'm going to be doing for the long term i think that's an important thing i mean you want to be planning ahead we always want to have kind of a vision for what the next five years looks like what the next 10 years looks like so don't just take it for granted if you are just putting in the time you wake up and you just feel like you're on groundhog day over and over great movie by bill murray by the way but it is if you're on that that that treadmill of life and you're not happy because it's not a career you don't see a career path pay attention this might be the time to figure that all out this is because look there's great performing investments out there but nothing is going to do better for you than how the size of your shovel if you can make your shovel bigger meaning the amount of income you can create for yourself pay attention that because that's going to help out with a lot of the other financial things that we discussed and i think we even said one of the one of the seven traits of millionaires is they chose the right occupation well if you're in your 30s you should start recognizing did i choose the right occupation or did i not and if you want to be a millionaire which is what we're coaching you through make sure you make that decision well let's talk about risk management sure when you're talking about 30 year olds this is i've talked about you're starting to get the trappings of life meaning kiddos spouses there's a likelihood that these people are starting to count on you for your income that's right so you'd if you left early you always talk about a bus hitting you i like to think that death is going to come much softer and quieter nicer to me but it is one of those things i think you need to plan ahead and that's where term life insurance disability insurance those things definitely should be on your radar um and then bo we talked about emergency funds yeah you know an emergency fund i'm gonna in your 20s perhaps you can get by with just saying your job was covered or maybe maybe operating lean because maybe you can go ask mom or dad for money or maybe whatever there is once you start having other human beings depending on you once you start having uh significant others and children and that's something an emergency fund is a non-negotiable it's something that you have to have in place because it is going to be that thing that protects you from that uh oh hvac went out uh oh my kid broke their arm uh oh the car has to go into the shop your emergency fund is the thing that make sure make sure your financial life does not come to a screeching halt and just because all your friends are swimming naked out there in their lifestyle and and really not keeping cash reserves and building up assets doesn't mean you should because there will be believe me every decade there's going to be some type of crisis there's going to be something that pulls on your wallet unexpectedly you need to have margin to make sure you navigate that well and that leads to because let's talk about this i had a client now this has been a while back their child who by the way was in kindergarten at the time who now is this is how long i've been doing this graduated from college married so i've been managing money for a long time really really so this is a kindergarten when this thing threw rocks at a bus oh because that's a great idea went through the window of the bus or the down window hit a girl she had to get stitches it turned into some litigation guess what covered it all umbrella insurance so guys good time to have insurance that sits on top of your auto policy your homeowner policy it's pretty cheap look into umbrella insurance you can get a million dollars worth of coverage for just a few hundred bucks yeah if if you have assets that you've begun building or if you have current healthy income or future healthy income umbrella policies are just too cheap not to have you want to have roughly the equivalent of your net worth rounded probably to the nearest million so for someone in the 30s starting out a million dollars of umbrella coverage is a great great solution let's talk about investing okay can those army of dollar bills work for you this i'm kind of counting on you look in your 20s you're broke i get it i give you some grace by the time you get in your 30s i really really want you saving 20 to 25 of your gross income that's a non-negotiable at this point and remember uh in your 20s your army of dollar bills was so stinking powerful 88 times over 66 times over in your 30s you start to lose a little bit of that juice now it's still powerful and it's still going to work for you but you better be saving that 20 to 25 because 95 a month in your 30s isn't going to get the job done well think about this when you're 20 years of age one dollar turns into 88 dollars by the time you're 65 has the potential to do that just 10 years later 30. it's now only has the opportunity to turn into 23. big difference that's a huge difference still incredible i mean look as a 40 soon to be 47 year old i'm looking at 23 as a great multiplier but you just need to be paying attention that here's another thing kiddos you're going to start having kids focus on your retirement savings that 20 25 is for you and your spouse and their retirement you only get to look at saving for the kids college and other things after you take care of your stuff so you do need to be saving 20 25 for yourself and then you can think about the kiddos and their college savings 529s yep and other things after that i also think here's something to pay attention to just be on the lookout for it a lot of you some of you might not graduate to this but if you are a hyper accumulator as soon as you cross over about a half a million dollars 500 000 of investments you probably are reaching the stage of have i graduated from index target retirement funds if you're under 500 000 i still think they're great for you it's a simple thing bo talked about it earlier just have two decisions how much can i save hopefully it's greater than 20 25 and what year do i need the assets that's all you have to do with an index target retirement fund once you get over 500 000 you might want to get a little more sophisticated because you'll care about tax location you care about loss harvesting you'll care about gifting appreciated assets for charity there's a lot of powerful things you can do there's just some different uh weight to the decisions you make once you get that asset level can have and just anecdotally we've kind of seen this brian with our clients it usually is in sort of that mid 30s to late 30s when that starts to happen but even though the gravity of your decisions is getting bigger and the size of your portfolio is getting bigger your savings rate i would argue in your 30s is still exponentially more important than your rate of return so rather than focusing on trying to finagle your investments to squeeze every bit of return out of there you ought to look at your cash flow and figure out how can i save just a little bit extra 30 because again the work that you do in your 30s your 40 and 50 year old self will thank you for it no doubt and that leads to tax planning here's something do you do roth contributions into your you know employer retirement plan do you do traditional pre-tax meaning you get a deduction on it now these are all decisions that you're trying to make when you're in this stage here's what we think about it once you combine your federal marginal rate your state income tax rate and it's you know somewhere in that 30 to 35 percent range you know that's area that's kind of gray zone that it might make sense to more take the deduction now than it is to do the roth where you get the tax-free growth so that's why i'm saying if you're under 30 and you're young especially sure consider the wrath but as soon as you get into 30 35 you know you've even said beau 25 to 30 might be in the gray zone you may want to split it it depends on your specific age and account structure and that sort of thing but certainly if you're in lower bracket we love tax free higher bracket we love getting the tax benefit and that's kind of how we think that 30 is that kind of and the reason this is also playing out is that look your income while you're working is going up so your tax rates will be going up your goal or hope is is that if you do this correct and we'll talk about the bucket strategy later sure is that by the time you reach retirement you actually have the ability to manipulate what your tax rate is in retirement because you'll have options and that means that potentially your tax rate will crater down into the lower rates so that's when you can do some roth conversions and other things at that point the other thing that happens in your 30s is that again messy middle you're pulled in a thousand different directions with family commitments and work commitments and community commitments you may just find that when it comes to like doing taxes and that sort of thing you just don't have the time i think a lot of folks recognize in their 30s man instead of me doing my own taxes trying to figure it out trying to piece that together this might be the time from a tax standpoint where it makes sense to reach out and get professional help there's nothing wrong with doing that again you have to figure out where you want to focus your time and effort and i'm of the opinion a tax professional might make a lot of sense if you've got a thousand things going on what's interesting i did taxes professionally for over 16 years sold my tax practice i mean it's been a it's been i guess we're getting close to a decade almost a decade um i still am paying that because that part of the deal when they bought my tax firm was i'd continue to use their professional services so we'd have a smooth transition for my tax clients i'm still using a paid preparedness anymore because it's kind of fun i mean i know fun's probably a weird word for people to hear but from a financial mutant standpoint i like being the quarterback of the situation i write up all my notes all the things i'm considering i fill out the tax organizer completely but man is it cool to see that thing come back already done and now i just have to review it and then actually going through and scrambling around to figure out which box to put where i would argue that reviewing a tax return is way more fun than preparing a tax return no doubt no doubt so it's also a better use of my time yeah i mean me reviewing my tax return after a professional's done it much better than me poking around for hours on end to get the tax return done so let's move on to estate planning i told you you're likely at this stage you get the trappings of life you have a spouse significant other that leads to kiddos you're going to need wills if you have kids because you want to make sure that the state is not determining who takes over the kids if you think a conversation's hard while you're living with your spouse about the family because we all have family sure and i know those are some weird conversations think about how hard that conversation's going to be when you're not even here that's right and then the state's trying to figure out where your kids go make sure you have wills that's a no-brainer and then also as your life circumstances do change you get married and you have kids make sure you're keeping the beneficiary designations on your accounts updated when you get married it probably makes sense to switch it from your brother or sister to your spouse when you have kids it probably makes sense to add contingent beneficiaries or start thinking through that you just want to make sure that as your life changes in your 30s your financial plan adjusts to reflect those changes and let me give you a head start so you lower your legal bill when you get these wills done go ahead and talk to your spouse this is going to be the harder part of the conversation who do you want to be the guardians of your kids if you both died at the same time who do you want to be the executors in case you're not here because it's easy to say you want your spouse but what happens beyond your spouse trustees if you're creating any trust in there you're going to need name those as well these are the hard conversations you ought to have as well as what type of health care you would like and just in case it was a bad accident or something this seems obvious but i'm going to say it because it makes sense don't let this be a surprise to the people that you've selected to fill these roles meaning if you really want your brother and sister-in-law to be the one to take care of your kids if something were to happen to you guys make sure you have that conversation with them if you really want your uncle to be the executor of your state and to carry out you make sure you have that conversation so they know to be expecting that if something were to happen it's a great hollywood plot not a good life plan when you just let the kids you know you die tragically and your kiddos go to somebody because there's been so many movies where the ditzy single relative you know inherits the kids and then you know has this transformation over life great movie horrible life so don't do that that's not what you want to do let's talk about some hard numbers so here's how powerful your dollars can be in your 30s if you're a 30 year old you only need to save about 270 dollars a month to get to a million dollars by the time you turn 65. for a 35 year old the number is just over 450 dollars here's the thing i know you're going to keep going but i think people look at those numbers and go that's doable so doable that i bet your car payment for most people is higher than those numbers that's a no-no guys your savings and investing needs to be bigger than your monthly car payment so pay attention to these numbers this is important this is where i get excited this is where i think my friends get excited though if you're a 30 year old and you've been doing the really hard work in your 20s and you've saved 43 000 without saving another dollar if you can earn on average nine percent from now until the time you get to 65 you're already on pace to be a millionaire if you are 35 years old and you've saved about 78 79 000 you've already done the hard work of becoming a millionaire but you've already said this brian a million dollars in the future may not be worth what a million dollars just today so what if you want to be a financial mutant and you want to double that well for a 30 year old now you're just barely doing more than maxing out your roth ira you're saving 540 a month to get to 2 million or for a 35 year old you're saving just over 900 a month to get to 2 million by the time you turn 65. well here's something i think because you've got the the 2 2 million you brought up the financial mutant for a 30 and 35 year old it's 86 thousand dollars a little under 87 000 for the 30 year old 35 year old it's 157 000 i want i want to look squarely at my doctors my attorneys all the professionals who unfortunately were in school a lot longer than the rest of us sure you're probably getting out of school close to 30 years of age and you're you're excited you're like hot diggity dog i'm headed towards a higher paying job but a lot of you guys you also come out with six figures worth of student loans and no assets built up so i want you to think about this if we're on the financial mutant side of things you come out of college because you're a doctor or you're some other type of professional like a an attorney you come out of school with a hundred thousand dollars of student loan debt and then your peers who have been done doing it right are getting right at a hundred thousand dollars in assets with eighty seven thousand to be a millionaire you are down by several hundred thousand dollars let that sober you up do not go buy yourself that european luxury car just because you got through with your residency it doesn't you you're behind get scared get it motivated you can reward yourself later i'll talk about that when we get in the 40s but this is the time you've got to play catch-up brian you've told me this before the the 30s is the messy middle and it's hard but if you can survive it because a lot of the messy middle frankly is just surviving especially having little kids you will be happy about the work that you put in and that's not just on the financial side that's on the live side so if in your 30s you can take a second and pause and take a deep breath and not have a nervous breakdown you're going to set yourself up for some pretty happy 40s 50s and 60s i look at the 40s and i realize i'm coming to a close on this decade man how in the world does that happen but it's um but it does happen and i consider this really is a fork in the road moment and what i mean by that is this is when you start celebrating that the plan is coming to coming together you've made it happen or you're jumping on that bitter train and what i mean you're poisoning the well for future generations and telling them how the system's against them how nobody's got money you know you had to be born with it you are on the bitter train if you're doing that stuff and there's also a reason in your 40s when do this when does the midlife crisis say that's that's typically the people are trying to figure out here's the way the middle life crisis happens you've either done so well that you've lost reality to what you're not connected to who you are that there's an entitlement that you can do things that you're not supposed to and you forget who you are or you're on the bitter train and you just can't figure out what's going on in your life and you end up making horrible desperate decisions that end up blowing up a lot of the good things so let's talk about this because i said fork in the road i don't say that lightly positive if you've done this well and this is the conversation i've had with my wife is if we just do things in a deferred way while we're younger when we got in our 40s i would go easier on the savings and we'd start living life a little more because you had built up your army of dollar bills you wouldn't have to focus so much you could actually start the process of living like someone so if you are on the positive side you might become a little more sentimental instead of bitter you're like me where you know oh yeah that's a big crier but i will tell you i get goosebump moments all the time you're a big getting excited about things um you also get wisdom from all the experience you've now put in enough time that you can start sharing this you know you're thinking of all the things you wish you could have had a beer and told your 25 year old self don't bottle that up when you're having those shower thoughts go share those with a younger person so that that actually benefits somebody and then also you kind of have really you can reflect it's that deep breath moment you mentioned where you can take a deep breath and think of how you've respected the time that's required the investment into your army of dollar bills and you're starting to get some dividends from it but you said the 40s is a fork so you just described all the positives i'm assuming then then therefore that means there's a negative mindset going into the 40s as well the negative is you have questions about life are just top of the mind we're talking about man i hate my job i don't know why i'm doing this and this doesn't even have to be a bad job i've seen a lot of successful people that are in good paying jobs it looks like they have everything going for them but then they just they're kind of questioning why they're doing it there because it's just it feels more like a job than a career second they're questioning their marriage they're questioning what's going on how do kiddos and life i just this i thought it would be different this is what i see and and then you're also seeing this is the part where i think like i said middle life crisis happens because the path to success does start to narrow when you're in your 20s when i was talking about not blowing your shot and the fact that you can do there's so many ways there's hundreds of thousands of roads that will lead to abundance sure unfortunately the older you get there is going to be a narrowing down that you better have done the right things because your your opportunities are slimming down so pay attention and reflect on that um there's a lot of thing because failures are going to be amplified and it's going to emotionally make you a harder person i think so you're saying in your 40s you kind of get to choose am i going to have that negative uh pessimistic mindset that's going to emotionally harm me or is it going to be this positive thing where i recognize i've done some things right i'm on the right path and i'm at the middle of life but i'm happy about being there this hit me though because i had the thought a few days ago but i didn't bring this up in context as i was presenting this i was like man somebody in their 40s is going to watch this and go man he's really down and out on somebody who might be behind i am somebody because in a minute you guys are going to show me the number i have to invest at 40 or 45 to be a millionaire what does that look like and i'm going to tell you guys guys it's doable but here's the other thing i think if you get here you're just now finding the money guy show and say you're 45 years of age and you you don't have anything in savings and you're feeling kind of down and out because maybe you're not going to do it lump sum you're going to do this thing monthly it doesn't mean life has changed you know completely are ended for you i get excited i will tell you focus on the career because there is nothing wrong if you have to give it five extra years maybe your retirement's not the traditional 65 maybe it's 70 you can still let that army of dollar bills create opportunity for you this is not cause loss you just need to recalibrate and create opportunity so if you are that person in your 40s and you're thinking about okay i want to be a millionaire what are the things ought to be doing we got to think about it in context the financial planning pyramid again sort of the first area is cash flow now brian you've always told me something i thought was so so interesting you said in your 40s is really the first time in your life you didn't feel like you were broke yeah i don't you know because of the messy middle i've always been healthy with my financial goals but because i automated my savings goals because i've practiced for scarcity meaning that every time i got a pay raise i didn't just let that fall into consumerism i actually expanded where the money was going so it was going to serve me well in the future i haven't felt like i had money or felt comfortable where i had breathing room until really the last three years and look i think on paper if you saw my tax return if you saw you know all the things the balance sheet you'd be like if that guy doesn't feel comfortable who does but i'm just telling you it's on purpose because i do think if you will do this right understand what your why is i had a goal i was trying to get my army of dollar bills to a point that i could essentially i'm not doing financial independence retire early i'm doing financial independence so i can unlock to think way outside the box so i'm not having to do things because i'm paying bills and that's always been the goal and i think the other thing i would encourage at 40 year olds people in their 40s to think about i see this with my neighbors is quit moving the goal post meaning that i think people as they get big promotions they think well people in my station in life they should drive this car people who make this much money man they probably live in this neighborhood and that societal kind of peer pressure that i think that a lot of people put on there blows it up you gave great advice from a mentor that i'm sad it's not me you have other mentors in your life who said visualize the house your dream house if you're in your 20s visualize the house you want your dream house when you get it just be happy don't try to do more than that just picture that one and go get that goal but once you have it hold on to it don't feel like you have to advance brian i want to give you a compliment i feel like you've done this i know that you drive a model 3 tesla right and you love that car and you still love that car as much today as any other but you don't have a desire to go buy the model x right now or to go buy a maserati or to go buy some fancy super car because you know you really want the tesla you love your tesla yeah my my 11 year old daughter she reminds me of this because my neighbor he got a new model x and it does the cool doors that open up it does this rudolph the reindeer light show that she loves when he shows it off and she's like dad when are we getting the the model x i'm like honey we're not we're not doing that because daddy someday maybe when you get to be rich we can do that and i love it because she just doesn't she doesn't understand and i will love it if you can be stealth wealth to your kids that's showing that you're setting the right example and i do know what makes me happy and i don't move the goal post and then it lets me transition to the last thing i think you ought to focus on cash flow cash flow was be generous you know there is something about being good with giving money um you know i've always tried to focus on being charitable tithing giving a lot paying it forward i think that advanced charitable giving comes into play at this stage and we're not just talking about advanced strategies like charitable giving accounts and that sort of thing it's thinking outside the box in terms of how you do give back i've heard you say all the time brian that once someone kind of gets in their 40s not only have they done the 10 000 hour thing but now they're sort of in leadership roles whether it be in their community or in their workplace or whatever this now might be the time where you want to pour into the lives of younger folks so maybe your charitable plan and your charitable giving is giving of yourself and your time and your expertise into those you have influence on no doubt so um and also make use of those appreciated securities if you've got them and you're charitably minded great planning opportunities there um risk management i had a a friend a pastor that you know we were got to be friends and he shared with me hey you know um when i turned 43 i had a fork in the road moment that if i didn't start running or exercising i couldn't my my health was going to go a different path so i always paid attention that just like i said 40s is a fork in the road it's not on just wealth creation and if you're going to be better and celebrate your past success successes it's also are you giving respect to your health because it's not if you just take it for granted this is the stage where it will start going downhill you know i think brian i've been hanging out with you since you were in your early 30s and i will say i think the most serious you've gotten about your health and your eating habits and your exercise and that's what it has been your 40s right and i think one of the reasons you said is uh although i recognized in my 40s mortality wasn't just the thought that was way off in the future it actually became real it's something that i actually had to like stare face to face and you made the decision i am gonna let it be a fork in the road where i'm going to have an enjoyable pleasant 50s 60s 70s 80s and 90s not neglect that in my 40s and check out i think a lot of 40 year olds this is the thing i see when i find out how old somebody is i'm like man okay you know look i don't look like an adonis at the the beach anymore but i do think i still am going to be able to go if i need to go hike 15 miles when i'm in my early 50s i'm going to be able to do it and those are the decisions i think you have to choose where am i where am i fitting into taking my health i'm not taking it for granted i'm going to focus on this and that's such an important thing um i wanted to talk about oh but this is also last stop on the train if you go about a long term i mean if you're going to do like life insurance there's a reason when they do advertisements on tv they do a healthy 40 year old great time to be looking at life insurance so if you have if you're in your early 40s you haven't bought term life insurance for the kiddos um you know to get them through college and let you build financial independence this is one of the last easy stops on that while you're healthy so pay attention to that no i think an interesting thing that happens in the 40s as it relates to investment planning is in the 20s and 30s we're just focusing on accumulate accumulate accumulate accumulate accumulate well in your 40s this is the time where you ought to do a spot check am i ahead of the curve am i behind the curve i not know where the curve is and figure out is this the time in life where you really need to start hyper saving to make up for lost ground yeah and this is a pretty easy exercise take your safe withdrawal rate if you plan on retiring before 55 i would say use like a three and a half percent safe withdrawal rate take what you think you'll need at that age you know in annual living expenses divided by that number that's going to give you what you're kind of shooting for if you're retiring you know 60 you know you could probably use a 4 withdrawal rate to 60 to 65 and if you're waiting until you're you know 70 you can get up into the fives and sixes so pay attention to that do a spot check i think your your future self will thank you so if you know if you need to accelerate and even save even more of your income you know we said the 30s was a time for you to start thinking about maybe i should have a conversation with a professional tax preparer well something happens in your 40s now that the gravity of your decisions is pretty substantial this may be the time in life where you do want to begin the conversation with a professional financial advisor reach out to professional if you don't know how to spot check yourself well maybe you should contact an advisor to help you figure out am i on track not on track and what do i need to do to course correct engagement and a lot of people think financial planners are only investments that is not it's not the investments are important get me wrong tax location diversification those type of things but it's also making sure you have the retirement plan making sure the estate plan tax planning wise i'm always trying to minimize people's taxes because i feel like it justifies our fee if we're adding that type of value and then it also you just don't know what you don't know so don't let you outsmart yourself as well as keep you away from like dumb doctor deals and i'll tell you like this whole election we just went through can i tell you how many clients i talked off the ledge of doing completely ridiculous things and i'm not talking about democrat versus republican it doesn't matter both sides works concerned and differently rational and i was i've talked so many people into respecting what they need to be doing from a financial planning perspective versus getting caught up in all the noise that we deal with on a day-to-day basis and so the psychology or the behavioral stuff is just as powerful as some of the big concepts of actually creating an estate plan or will uh in your 40s is probably that point in time where you're starting to actually build up healthy assets you're building up healthy income you've got some good things going on so from a tax planning perspective don't don't screw it up with irs don't start getting aggressive or getting greedy or doing things or ignoring things you ought not be ignoring because they are the folks that can come and take your stuff and you've worked so hard to build up this stuff don't allow yourself to get careless and lose it because you got a little too greedy or a little too careless yeah i mean everything's deductible until you get caught that's an adage that i've i've shared and i i think bo we i've told this story is that when i did taxes professionally i have watched grown men cry because they just made bad decisions and then they continued to to not do it well with the irs so respectfully you know pay legally what you're supposed to but you might want to consider working with a professional to help you figure out what you legally can also avoid paying too another thing i think is really interesting is that as it go as it relates to tax playing in your 40s a little bit can go a long way there are a lot of folks in their ford as i talked to who have never heard this idea of after tax ira conversions to roth like okay yeah that's great but it's only six thousand dollars like yeah it's only six thousand dollars but if we do that every single year from now until you get to retirement you're talking about hundreds of thousands of dollars of tax-free dollars in retirement in your 40s a little bit of tax planning can go a long way to reduce how much you pay in tax in your 50s 60s 70s 80s and for the rest of your life but also this is the time where you can roth versus traditional or even after tax so you can do the mega rocks i mean those type of things come into play remember we think somewhere between that 25 30 35 tax rate you want to do you do want to have a transition from doing roth which grows tax-free to consider looking at traditional so that when you retire hopefully at that time you'll have opportunities to do roth conversions or be in a lower tax bracket um and you can kind of work through that absolutely let's talk about some some actual estate planning this is where your kids are getting older you might be a little more complex so so pay attention to if you need to go back and see the estate attorney and tweak that estate plan just a touch more yeah you know early on in life you're worried about who's going to take care of your kids why as you get into your 40s and your late 40s your kids are probably getting close to reaching the age of adulthood so now you're not so much thinking about who's going to make sure they get fed every night you're thinking about man if my kids come into hundreds of thousands or millions of dollars i don't want to go buy a sports car so those are the kind of conversations you just start having as you think about advanced planning with adult or soon to be adult aged children well what are some numbers for 40 year olds let's get them excited about saving so if you are someone who's behind and you still have this desire to be a millionaire by 65 and you're 40 you can save 780 a month or if you're a 45 year old you have to save about 1351 it's not impossible it's just a higher hurdle but here's what's really exciting if you're a 40 year old and all you've done is save 136 000 thus far and you can earn eight percent on average from 40 until 65 you're already on pace to be a millionaire if you're a 45 year old and you've got about 224 000 saved and you save nothing else you're already on your pace earning about seven and a half percent per year to be at a million dollars by the time you get to 65. well it's even better because i always tell i want you to think like a financial mutant i want you have twice that number a million dollars is not what it once was so for two million you can see for a 40 year old you need to save if you're starting from zero you need to save and sixty dollars a month for a 45 year old to have two million dollars by the time they're 65 is 2700 a month and if you just want to have a lump sum twice as much as what beau shared 40 year olds is 270 2 000 to have 2 million 45 year old 448 000 here's what i think is incredible that's you know that's only giving you 20 years but it still shows how powerful your army of dollar bills you'd only have to have a little under a half a million dollars and it will do the rest of the work you know 75 percent of it's going to come from your army of dollar bills and you've already heard us say that you know really we think a professional advisor makes sense once your assets at a critical level of like half a million dollars 500 thousand what's so amazing for that 45 year old is they've been able to get themselves on the trajectory to move towards two million dollars and we think you can do a lot of that just using very simple target retirement funds very simple index funds without getting too complex no doubt let's transition and let's talk about 50 year olds celebration or panic so this is really you go to you at this point we're going to measure your emotional temperature okay and when i'm talking about this this is when you know if you've been well prepared your your vision planning you're thinking about what you want to do you want to stress test the plan you want to you know save like your life depends upon if you're behind yeah i think that was interesting and pre-show prep for like you know a lot of folks ask oh well i'm in my 50s and i wish i would have heard you guys when i was in my 20s and 30s but i didn't so what do i do now well the unfortunate truth is you got to work hard you have to work exponentially harder in your 50s if you're behind than you would have in your 20s that's okay though it's still possible but you have to check yourself and go into it knowing i've got to make up some time or i do need to move that goal post maybe 65 isn't my exit point maybe it's 67 or 70 or something in the along those lines and i also think this is a part where you've got to balance the risk versus reward a lot of people i think you're so used to being you know a person that's growing maximizing i'm accumulating i'm building but when you are in your 50s you also you you don't want to run up the score and take on more risk to where you run the potential it's not just risk tolerance just because you can handle it's also risk capacity could you recover if you really blew things up that's what you need to be very careful of and then you need to be reticent of the fact is is this the time i need to get with a professional right if i'm if i'm landing this plane do i know that my landing gear works do i know that all my instrument panels are working do i know that i can actually have a safe smooth landing into retirement this is a great time to start talking to an advisor to see if there are some advanced planning ideas you may ought to begin investigating well let's talk about the financial planning pyramid sure so the first thing cash flow what you're thinking about here is adult children look we unfortunately it's gotten to the point you love these kiddos but they're not leaving the nest they're not leaving the nest so you are giving them economic outpatient care your goal with cash flow is to try to get those kids off of your payroll asap once they're out of the house the other thing that we see in the 50s is this probably is that decade where you're completely debt free you don't know anybody anything no debt probably including your mortgage this might be when it falls off what a great place to be we think that you're not really financially independent unless you are completely debt free and i think for a lot of folks that happens or the ability to make that happen is in this 50 year old decade from a risk management standpoint this is when maybe you want to look at long-term care insurance no look i'm not the biggest fan of this thing because i do think it's kind of it's it's not like it's changed a little bit you know you used to say we had this donut hole method where if you were under a million dollars you didn't really need long-term care as much because you had a big safety net with you know between medicaid funding medicare and all the other things the assets yes it's a decent chunk of money but it's just not enough to pay the heavy premiums because it's expensive to do long-term care people over three million in assets you probably are getting into that threshold of that you might be able to self-insure you have enough assets that you can cover whatever is coming your way it's that one to three is really the sweet spot that they want to make sure they create a plan or buy protection coverage that they did those assets might have something that backstops them but if you are thinking about maybe i'm going to pick up this premium for long-term care insurance it might be okay to let other types of insurance fall off perhaps you bought that 20-year policy when you were 30 or 35 years old and you've been saving and you're at the doorstep of financial independence maybe you don't need life insurance anymore maybe you can let that fall off and that's going to be one less expense that you're going to take into this next stage of life with yeah i think clients because you know you bought a you bought a 20-year level term when you were in your your 30s and now you're in your mid-50s you're like do i go get more insurance i'm like if you're financially independent it's okay if it goes away after that 20-year period is is and that's that lower premium disappears from an investing standpoint the 50 decade is really when you want to make sure that your retirement runway plan is sound it's not oh okay i just want to save a million bucks because somebody told me a million bucks is what i need to retire no no you actually tested it you know that you're going to be able to land this plane and no matter what the world throws at you your retirement your financial independence plan is intact and this is an echo this is probably a you said this earlier a time to consider going pro this might you don't know what you don't know so you might want somebody that's going to help you out you know with how you're man handling your assets and stress testing it and that leads to also it is diversification asset location these are all benefits also a good financial planner can help you out with and then i've mentioned already also risk reward are you taking too much this is the time to kind of figure out what that balance and where it relates to you yeah we see 50 year olds 55 year olds 58 year olds all the time that come in they've been so successful investing they built this great portfolio because they were so used to having a 90 10 portfolio and while they will feel comfortable with that and they may have the risk tolerance that they can sleep at night no matter what the market does if they're retiring in the next three four or five years their portfolio might not have the capacity for that to take place in the world's worst downturn so just make sure you understand the difference in risk tolerance and risk capacity tax planning bo okay roth conversions are powerful here especially for early retirees um the other thing i think is you got to pay attention to some huge key dates these are something you know when you're in your 20s 30s these things look in the distance and then one day you wake up and you're here but these are powerful dates when you turn 50 and it's just the year you turn 50. so if you're 49 this also pertains to you if you know you're turning 50 in the calendar year you get to do what's called catch-up contributions both on your iras on your 401ks or employer plans pay attention to those extra thousands of dollars that you can save for yourself 55 is another pretty important date that happens in your 50s because as you know most iras most retirement plans have a 59 and a half date before you can start pulling it out well if you're employed with your company and participate in the 401k on the day that you turn 55 and then you retire you can actually begin drawing distributions out of your 401k before 59 and a half so 55 is a pretty important date it also is going to affect whether it makes sense for you to roll assets into an ira or if you want to stay participating in your employer or former employers 401k that's exactly right so if you are retiring early be careful before you just automatically open up that rollover ira there's definitely some choices there 59 and a half we all know that's the age that you can get access to your retirement assets without doing some crazy advanced strategy where you annualize you know by turning it into an annuitizing it you can do this at 59.5 you get access to your retirement accounts without the early payment penalty so so pay attention to that that's a key date that you do want to know when that is for you transitioning into estate planning yeah so one of the things you have to think about is as you get into your 50s you're kind of sort of thinking about what does life after me look like what are the ways i need to structure so this is potentially where i need to think about titling my assets differently maybe i need to have trust set up maybe to have trust language in my estate documents you just want to make sure like every other phase and stage of life that your estate plan matches where you are in your financial journey where your family is in their financial journey and ultimately what your wishes are long term for your assets both while you're here and then also after you're gone and also make sure that your wills and your estate plan with the with what's drafted by the attorney ties in and works well with the ira beneficiaries your life insurance beneficiaries those things all need to be all on the same sheet music because by the way to the government they are treated a lot different you know because assets that are going through probate and your will are treated one way beneficiary designations are a completely different thing they need to be coordinated so you don't have any oopsies when you have such a big a lot of your assets and your legacy riding on this so okay let's look at some hard numbers in your 50. if you're a 50 year old that's not started saving at all it's a little daunting to get to a million dollars by 65. you got to save 2500 a month if you wait till 55 you got to save about 5 000 a month but if you've been saving or if you've been building assets and you've got 350 000 saved by the time that you reach 50 and you can make about 7 on average until 65 you're on track to be a millionaire for a 55 year old if you have 523 000 saved that will turn into a million over the next decade still pretty powerful before you pull up the financial mutant stuff i think it's so powerful to share that just a 10-year runway half of your money still is going to come from your army of dollar bills so guys it's not a bad time to start saving you're going to you can make this happen and for my financial mutants who are kind of getting a start on this a 50 year old who wants to have two million dollars at retirement at 65. for a little right under five thousand dollars a month i know that you gotta have a really big shovel but you're in catch up mode 55 year old 9 932 dollars a month for a 50 year old who wants to know what the lump sum needs to be to have 2 million dollars at retirement at 65 it's 702 000 55 year old it's a little over a million dollars right at a million 45 to to reach 2 million by the time you reach 65 years still incredible that those dollars have some juice remember it's not like at 65 your money stops getting invested it's still going to keep growing past there it's just amazing if you have the time your dollars can do some pretty amazing things let's close out the show with our 60 year olds this is game time you've been building on this path for all these years this is the culmination of your journey into a success story so let's talk about what are we doing here this is when you do life how you want when you want and no way you won't i mean it's really an incredible thing hopefully in your 60s you've not just figured out what you're retiring from what you're going away from what you're moving away from you've thought about what am i retiring to what's the next phase and stage of my life going to look like if you haven't figured that out by your 60s you need to start spending some time thinking about that because that in addition to the financial piece is going to be a huge uh piece of whether you're successful in retirement or not it's also time to start collecting those life dividends when i'm talking about life dividends i'm talking about grandkids i'm talking about you get to travel when you want and then the last thing you get to go to shows you get to go to the shopping centers you get to go do sports while the rest of us work you kind of get to be that contrarian did you put the show notes empty costcos and targets that's on the weekends and it's bedlam i mean when i go to get my five dollar pumpkin pie that will feed you know essentially my family for two weeks i mean it's bedlam there you are pushing people out of the way to get to the pumpkin pie i i think life dividends why the 60 year olds they're not dealing that they go they're like who goes to costco on the weekends no suckers that work the 60 year olds don't have to do it this is game time so let's talk about the financial planning pyramid from a cash flow standpoint there are some really big decisions you have to make in your 60s decisions on retirement distributions where am i going to pull money out of what accounts am i going to pull from when am i going to start taking social security how am i going to handle my pensions am i going to start drawing them now am i going to wait how am i going to do my pensions am i going to do 100 joint and survivor am i going to do a single life annuity there are a lot of big decisions you have to make in your 60s that are going to affect your 70 80 and 90 year old self well i think it's important to say financial planning pyramid this is something any good financial planner was taught when they're getting this cfp training a lot of things are going to be you're going to see an umbrella element here is that a lot of this stuff you might need a professional because let's face it when you're doing retirement distributions your social taxability social security is impacted your pensions you know all these things are going to come in your medicare premiums you'll see you need to pay attention to cash flow planning because it's so important with the unintended consequences be careful of the things you just don't know or your blind spots and that leads to cash reserves remote remember most people we talk in terms of three to six months for cash reserves once you're living off these assets in retirement that number expands out to 18 to 36 months of very safe secure assets so any fluctuation any volatility in the financial markets it doesn't impact you you're okay you have a plan for it that's one of the best things you can do for risk management is make sure that you do have that cash reserve in place but you can also look at other things like medicare making sure that you have your health insurance covered the right way and we've already talked about this long-term care insurance if you are someone who thinks you might need advanced age planning hospice care skilled nursing care this is not a bad time to just revisit does a long-term care policy make sense for my situation yeah and it's one of those things you might be able to self-insure if you're three million or greater if you're somebody who's in that one to three million range might be something just to go out there and check out investing bo this was yours i thought this was brilliant the show meeting don't turn into a turtle what did you mean by that just because you turned 65 doesn't mean that all of a sudden you take all of your investment assets and you bury them in a coffee can and you put it under your mattress no it's still part of your portfolio has to pay for your 70 80 90 year old self just because you retire just because you move to financial independence a bigger piece of your pizza pie might be in risk off or conservative assets but you still need growth assets don't think just because you're retired now you got to jump in the shell you got to hide you got to be a turtle so when you turn when you hit financial independence when you're in your 60s don't turn into a troll no that's that i will flip the script on you you don't want to be just a hair either you don't want to be the rabbit that's running wide open too because i see we have people especially adult i mean adult children who are clients that bring us their elderly parents they sometimes i'm like whoa they bought that portfolio in 1997. i mean that's a 1999 i mean that looked like it was right before the dot com bubble pay attention to that stuff and then that leads into when when you're thinking about don't let fear lead you into some bad decision-making yeah don't get sold annuities or cds or bad decisions because you're afraid there's going to be a psychological shift when you go from working with your hands and your back and your feet to letting your army of dollar bills work for you don't allow the emotions associated with the decision to make you make poor financial decisions that are going to have a long tail throughout your whole retirement and then this is kind of an echo from something we talked about earlier in this section was on tax planning pay attention to the taxability of social security medicare surcharges also the your medicare premiums will be impacted on where your income levels come in pay attention to all those things because those are the unintended consequences that you will be really need to be zoned in on when you're doing tax planning yeah and at this level you probably should have a financial advisor if you are doing advanced strategies like roth conversions because there are so many trip wires like social security like medicare you probably want a professional in there to help you navigate that and navigate it well because there's some big stuff that's going to happen in your 60s all the way until you get to age 72. and that leads to our last section the estate planning this is where go ahead and have those open conversations good conversations healthy conversations with family members so you can share what your wishes are and then also start working on that legacy plan what do you want all that you built kind of what's the long-term vision it's don't keep that a secret go ahead and share that stuff so that it can kind of work its way also into your loved one's plan as well now if you're in your 60s you're not really spot checking anymore right you're not really trying to say how much should i start saving but here's what's really interesting even a 60 year old who saved 740 000 by the time they get to 60 if they just wait till 65 to start living off of those assets and we can assume a six percent rate of return that 741 can still turn into a million by the time that they get to 65. that's really incredible if you think about it you three quarters of your money yes comes from you if you're trying to get to a million dollar status in five years but the other 25 army of dollar bills even with only five years that's powerful and if you want to be a financial mutant you double that number it's about a little under a million and a half dollars will still give you the propensity to get to two million dollars by the time you get to 60. so here's what i'm looking at i get a visual of a person comes to a financial advisor with a little under a million and a half dollars we're gonna be able to if you were meeting with somebody it's not unrealistic to think you're going to have two million dollars or greater in just five short years man that's powerful that shows let your money let your army of dollar bills work just as hard as you as you do with your back your brains your hands take the load off man and let your money do the work for you i think you'll see a lot of these decisions you've made early in your life really will serve you well and let this be a celebration moment for you as you do reach that that point of starting to get those life dividends being a millionaire even a multi-millionaire is attainable it is incredibly simple but it's not easy and you have to understand that as you age as your life circumstances change the things that you focus on change the things that require your attention change and that's okay if you can make sure you're staying on top of these things you can set yourself up for long-term success and we're going to be the team that helps you get there if you have not had a chance to go to our website moneyguy.com resources there is a plethora of free resources available for you out on our website go check it out use that and let that be the fuel that lights your fire to get you into financial independence status and i i think it's worth repeating you know a lot of the things especially in the more advanced you know stages are you getting your 40s late 30s 40s 50s and 60s a financial advisor was really you need teammate you need a co-pilot you said it best i mean all through this show there's this theme of you need help you need a financial advisor and i think we would be horrible business people if we didn't share this is exactly what our day job is we are fee only financial advisors who work with clients all across the country we are blessed that we get to do what we call the abundance cycle where you come here we give you away free we give tons of free information you learn apply grow there's gonna be a whole group of you go watch this show you say i need a co-pilot just like that that can help me from my blind spots work me through all those things we hope you'll go to a bound wealth practice the abundance cycle that will make us so happy another way you can help us out we are so close to a hundred thousand we're trying to get to a hundred thousand by year end love to have you go to our youtube channel subscribe even if you're listening to the podcast go check us out moneyguy.com aboundwealth.com i'm your host brian preston mr bo hansen money guy team out you

Channel: The Money Guy Show

Views: 422,500

Keywords: money guy show, debt, budget, cash, real estate, insurance, how to make money, save, credit card, compound interest, buying house, buy stock, success, personal finance, How to Become a Millionaire! (By Age!)

Id: 4GW_XqhJC5Y

Length: 73min 51sec (4431 seconds)

Published: Fri Dec 04 2020