We have another question. The question is, if you are someone still decades away and don’t know exactly what you might need in retirement, is hyper-accumulation considered met once you’ve reached that 25% savings of your gross income? Yeah, hybrid, what hyper-accumulation is, is saving 25% of your gross income. Now, some people run into this place where okay, I’m doing that, but I’m doing it inside of all my retirement accounts. Let me put it inside of my maxing out my employer plan and my Roth, my HSAs. I’m not building that after-tax bucket. Am I still hyper-accumulating? Absolutely. You’re still hyper-accumulating once you get to that 25%. That’s what we want you to do.
Now, as you move through time, Brian J, and as you begin to have some clarity around what that future might look like, you can begin answering questions like, okay, where do I need to have my pots of money? Do I need to start building some after-tax bucket because I know that I want to leave the workforce before 55 or before 59 and a half? And you can develop some clarity around those things. But I think if you’re hitting 25%, even if you’re still decades away from retirement and you’re just following the financial order of operations, I would still say that Brian falls squarely into hyper-accumulation mode. Yeah, I mean, I want to think about what’s the why here, because when you’re in your 20s and 30s, your world changes so much, as I’ve shared with you guys. Going back when I was 16, I thought I was buying a Corvette when I was 25. When I was 25, I thought I was retiring by 50. Now that I’m close to 50, what’s your goal at 50? And now my goals have completely changed. So I’m just telling you, but I will tell you something.
I’ve always been proud of having that discipline, that ingredient of wealth-building, that I was going to live on less than I made, and I was going to create margin that led to saving for the future was always something that was driving the big part of my why. When you’re in your 20s and 30s, it’s too hard to know what the end game is going to be because you don’t know potentially who your spouse is, you don’t know who, if you’re going to have kids, you don’t know how many kids, you don’t know if there’s going to be some medical condition even with the kids or yourself. I mean, there’s all kinds of question marks that your whole life is a big question mark. So you need to save in a purposeful way because what the 25% saving investment rate does is it creates margin in your life to where you’re building up enough assets while you have the big component of time to start building in the background and nurture your future crop. When you get to your 40s, it starts spilling over because you’ve now done the hard work so that if you get these curveballs of all these things so that if you get these curveballs of all these things I’ve said between the spouses, the kids, the special needs, or the medical, or whatever else, it doesn’t matter because you did the heavy lifting while you were younger. It was so gray on what you were trying to figure out that it all became very purposeful and gave you more of your time.
So, if you want to leave early from work, you can. If you want to leave the field of study to go do something more that you feel like you know you were put on this earth to do, you can. Because you have the margin, you have the ability. But I would tell you, while you’re in your 20s and 30s, it’s okay to set a percentage goal so that you can be firming up the wealth-building apparatus in the background, you know, that army of dollar bills that I’m always talking about. As you get a little bit older, in your late 30s and 40s, this is when you should start spot checking. This is when you have started reaching a level of success that if you’re focusing on your one best life, why not bring in resources like a financial advisor or somebody? That’s why we always talk about the abundance cycle, where we can help you figure out where your blind spots are, figure out your why, figure out where your soft landing is, and your risk assessment of what you’re doing. That is exactly the graduation point of the abundance cycle and that’s why we do have the Financial Order of Operations because it’s going to happen right around that same period of time with the financial.
If you go to moneyguy.com resources or you go to learn.moneyguy.com for our course on the Financial Order of Operations, you go see this is where you kind of start graduating out where you need a little extra direction to know what I need to do to be successful. And I would remind you, please do not confuse a really stellar savings rate with financial security. Daniel, I want to put a link in the comments for me. We recently did a show called the 5 Levels of Wealth, where we walk through the way that we view up well. A lot of young folks, we hit these crazy savings. We’re saving 20, 40, 60. I saw some of them that 70% of their gross income, which is incredible and that’s awesome if you can do that. That does not necessarily mean you’re at financial security.
So, I’d encourage you to go listen to that show. Just because you are hyper-accumulating does not mean that you have yet arrived. You got to do it for a while to actually build up that financial foundation. The final point, because I know we’re running long, but I had somebody who was in their 40s who was like, “My family’s starting to pick on me because we don’t do nice vacations. I’m saving this. I don’t even know why we’re saving all this extra money.” That’s another reason I tell you to do the spot check because you have to really refine with the why. That’s why the Know Your Number course is also really valuable because it takes you beyond just a saving percentage to filling in the goals of what you’re actually doing this for. A lot of people, if you are in your 40s and you haven’t spot-checked, you might be leaving this life of scarcity and not making memories and building things in the best possible way. You kind of start resembling more of the Miser Ebenezer Scrooge versus the maximizer of the person that gets into their 50s and 60s goes, not only do I fulfill my financial independence goals, but I also make the best of those years that I was raising the family in the messy middle and all the other stuff. Make sure those things are the intersections. It’s hard to do that in your 20s and 30s. That’s why we give you a percentage. But as you get older and you’re trying to make sure you don’t transition into a miser who has all this money but is not actually utilizing it to build memories and other good things, this is a tool that can do for you. You might be blowing a really good long-term thing to know where exactly you are in your journey.