Okay, I want to talk about the 40s. I resemble this. I'll be leaving this decade and they're not too distant future. It is one of those things where I think we titled this top of the mountain because if you've done it right, this is going to be the decade where you get to kind of celebrate a little bit because I've heard about, we talked about the messy middle in the 30s. This is the first decade I actually felt like I had some affluence where I could actually go spend money in a way that wasn't just all about how to make sure I'm saving and not sacrificing for the future. I want to make sure you guys are on the right path with this because if you do it right, it is a celebration. But I think a lot of people will actually look at their 40s if things aren't going right. This is actually where you start second guessing.
There's a reason we have middle-life crises occurred during this period. Where people start questioning their career, their relationships, it can be a heavy thing if you haven't done it right. I want you to be on the positive side of this so you're that sentimental person that's looking back with some happiness and fondness of the memories and the good decisions that you celebrate. There's two options. You could be on the positive side or the negative side in your 40s. We want to tell you how to be on the positive side, the things that you ought to focus on. When it comes to cash flow, you just said this, Brian, in your 40s, this may be the first time that you don't feel like you're broke. What we hope is, it's because you've been saving so well that you're pot of assets and your portfolios building up. If however you're someone in your 40s and the reason you don't feel broke is just because your income has gone up, but you don't have assets to show for that, don't have a fall sense of security. Make sure that when you're in your 40s, your net worth statement is where it actually should be so that perhaps you can begin taking your foot off the pedal if you so chose.
I also think the 40s is where you can focus on the why more because you are fine tuning your plan. You don't have to keep moving the goalpost. I think a lot of people, since you are making some of your peak earning years in your 40s, a lot of people will say, well, just go buy a bigger house, buy a nicer car. If you don't know the why, that's why we have to know your number courses and some of the other resources we have, you can quit changing this. I think focus on what actually gives you happiness with your money. That's the thing that actually gets you excited about planning for the future because I can tell you, it's not going to necessarily be the nicer car, the bigger house. Those things might actually be delaying you from being where you want to be in the upcoming next decade or so. I think the more clearly you can understand that, the more enjoyable those next decades you're talking about are going to be. Because in reality, in our 40s, mortality becomes more of a consideration. We start to recognize that maybe we are not invincible. Maybe there is going to be an end to this thing. We want to make sure we're taking that seriously, both in terms of how we're protecting our family in terms of the health insurance, life insurance, the sort of things we have in place, but also in the way that we're taking care of our bodies. Are we exercising? Are we eating healthy? Because Brian, you tell me all the time, the decisions that we make in our 40s and that special decade are going to have huge impacts on the quality of life that exist in our 50, 60, 70s and so on. I mean, I've been in this decade getting close to a decade now and it is interesting because I still remember the advice I got in my 30s from a pastor of mine who said, hey, in your 40s, you've got to go down that fork of the road, you go stay healthy and exercise or you just go let it go. I do feel like coming out of this decade now where I'm still exercising that I am. I feel a younger version of a lot of my peers and that's all because it's the dividends of still staying active because I mean, that's something I think don't take your health for granted.
You know, a good part of risk management is keeping yourself healthy because it's going to serve your loved ones best. It's going to serve you well in your career, but it's also just going to let you experience the full part of having a life where you get to do it all. From an investing standpoint in your 40s, you may need to reassess, am I where I'm supposed to be? Am I on track? And if not, I may need to kick it into high gear. Again, we know that $1 for a 20-year-old can turn into $88 by the time they get to retirement. Well, when you get to 40, that $1 can only in air quotes turn into $7. That's still powerful, but not powerful in the same way it was for your 20-year-old counterparts. So, if you are behind, if you've not been saving the way that you ought to have been saving, the 40s might be the decade where it's time to really, really kick it into high gear. And maybe 20, 25% isn't enough. Maybe you have to shoot for that 30, 35% savings rate in this decade. I appreciate you taking the pessimistic path because it is the optimistic for me. It's because this is the decade where the majority of millionaires are minute. And I love that because it happens somewhere between that 47 to 49 years of age is where most millionaires are. And a lot of you are being rewarded for all of your discipline in saving and investing and letting the compound growth happen. This is also the time where you might be outgrowing the basics. So, don't overlook if you have started finding that you're more complex than you even desire to be because even though you sought out to be very simple and very organized with your finances, complexity just happens to follow behind as you reach a level of success. Don't overlook that. But don't allow that complexity to cause you to outsmart yourself. Don't think that you have to make things more complicated than they are. You have to start getting into private equity deals and doing all these complex structures. The complex you need may just be hiring a professional, having a second set of eyes, letting someone else step in and help you. Don't think just because you're getting older just because the dollars are getting bigger. That something super complicated has to be the solution now even when it wasn't the solution previously.
Let's talk tax planning. This is something I find interesting. I told you, this is your decade where you are making some of your peak earning years. You're starting to see some wealth accumulate. This is also when people go to pitch you with some crazy IRS schemes and other things that can supposedly save you tons of taxes. Don't be dumb. Remember the IRS is the government. The government is the people with the guns that can just take your stuff. Don't work so hard for all these decades to make some silly decisions because you're trying to minimize taxes in the wrong way. Actually pay attention. Do not mess around with the IRS. Pay what you owe. You'll be in a good place. It also uses time to do good tax planning. This is where you probably should be focusing on tax location and the things that really will in a healthy way help grow your assets in an efficient way. It's amazing. These small little marginal decisions can have huge impacts. A little bit of tax planning can go a very long way. A real easy example of this is just thinking about asset location. Not asset allocation. How we allocate or spread out our assets. What types of accounts do you hold? What types of investments? One of the things in your foreland you may be thinking about is, man, I know that all these different tax structures are taxed in a different way. Maybe I should hold my assets based on the tax structure that is available. I can tax deferred accounts. These are your 401k's and your IRA's. I might want to hold in their assets in an ordinary income. Inside of my Roth, their tax free accounts, my Roth IRA's, Roth 401k, HSA's, I want the high-flying growth assets that I know I can maximize the growth potential. Inside the after-tax bucket, that third bucket of the three bucket strategy, we want to hold assets with more favorable tax treatment. We want assets that are liquid that we know we're going to have availability to. If you can even think through little small marginal decisions like this, a little bit of planning can go a long way over the long term inside of your portfolio. Without a doubt, don't skip out on all the tax planning because it's so important.
That leads to also a state planning. This is something I think is I've had more success. You would think is your kids get older, like my oldest daughter is actually an adult now, which is so weird to say. It still means the estate plan actually can get more complex. This is, and I was just talking to a client in the last week and a half, and I said, look, a lot of the estate planning rules are going to change at the end of 2025. You're probably having to make decisions now. I would ask you to please go ahead and start thinking about these things because I don't want you to wait until 2025 for us to pull the trigger on some of this stuff because I think you'll find you need to have time to process some of these big decisions on trust putting things into revocable versus irrevocable trust and just the permanence of the decisions, the slats, grats. I mean, there's all kind of crazy terms that you have never heard in your life that is you get into more complex estate planning because of your success. This is a good thing. It's going to need processing time, so please do not neglect your estate plan just because your kids are getting older. Well, and you know, earlier on in your life, some of the really hard conversations were around, okay, if something happens to us, who's going to take care of our kids? Well now, as you think about estate planning as you age and as your children age, you have to have other unique, difficult conversations around, hey, here are our wishes. This is what we want in our life to look like. These are the people or the person that we want to be making decisions. You want to make sure that you have those decisions early on this side of health because you might not have the chance to have on the other side of health. So make sure that you are at least thinking through that as you age through your financial plan.
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