Jessica has a question. She says, ‘Hi, Bo and Brian. Love your show. It’s the best thing. The best thing was discovering it this year. Um, I’m having trouble figuring out what I need in retirement because I’m not sure what my future will look like. I just turned 27, I make about $300k a year, save 50%, and my net worth is about $400k. I want to do FIRE (Financially Independent, Retire Early) movement but don’t know what my number is because I’m not married, and I’m not sure if I want kids. How do you plan for retirement when you don’t know what the future looks like?”
‘She’s 27, making $300k, net worth is killing it. You are the cream of the crop. You are the financial mutant. That is incredible. I don’t know where you live, I don’t know what your friend group looks like, I don’t know what your peer group looks like. But take it from two guys who can see people all over the country, Jessica, you are absolutely killing it. And I want to tell you this too, you’re not alone. It’s difficult. A lot of folks who are young, especially in their mid-20s, late 20s, early 30s, it’s hard to think about what do I want my 50-year-old life to look like, or what all my 60-year-old life to look like, because so many things can change. Even something as simple as where do I want to live? Maybe I want to live in a coastal town, maybe I want to live internationally, maybe I want to go live in the Midwest. You don’t know the answer to that question likely. So until you are able to lock in some of those variables, it’s difficult to put together a very specific and detailed retirement plan.
So this is what we encourage young people to do, and you’re already doing it. When you don’t know exactly what the end looks like, you kind of have to come up with just a general idea. You have to come up with what the horizon looks like. You don’t know what the desert island looks like, but you can see the horizon. You can see the direction that you’re going. And what you want to do is make sure the decisions that you’re making are moving you towards that horizon line as quickly as possible.
And for you, who has a $300k income and is able to save 50% of that, what you’re doing is you’re giving yourself future opportunity to figure it out very quickly because 35-year-old Jessica, who has been saving this way and building these sorts of assets, may begin to understand, “Okay, what’s life going to look like? Am I going to get married? Am I going to have kids? Do I want to have a single-family home? What part of the country do I want to live in? What’s my full-time career going to look like?” And as some of those variables begin to become more clear, you’re going to say, “Holy cow, because I did that hard work early on, because I did that crazy high savings right early on, now that I know what I want, I have the dollars built up to be able to fund those goals.”
So you don’t necessarily have to have the goals figured out on the front end, but if you know the process to build the wealth that will allow you to achieve those goals when you do figure them out, your future self is going to thank you.
If you want to know exactly how much you need to be investing each month in order to reach $1 million by your target retirement age, check out our free Wealth Multiplier deliverable here.