3 Phases of Wealth Building by Age (Where Are You?)

Introduction: The Three Phases of Wealth Building (0:00)

Brian: Strap in. Today’s exciting. We’re going to cover the three phases of wealth building by age.

Bo: Brian, I am so excited to talk about this because where we sit, we get to work with wealthy and successful people through all courses of life from those that are just starting out to those who have reached financial independence. But what I love is over the years of us doing this, we have been able to distill some commonalities, some interesting things that we see permeate all of those individuals. And in today’s show, we get to walk through and share those.

Brian: We have been covering this phases of wealth building for years. But I was shocked when we kind of had a content meeting and we were like, we haven’t done a full show on this. We’ve done shorts, we’ve done other things. There’s been clips of us talking about make, maintain, multiply wealth, but never have we actually shared how this is going to impact and intersect with where you are by age in your wealth building journey. So, I’m super excited to kind of get this going. And what we want to help you do is figure out where you should focus. We know that your time, your energy, your resources are limited. And so when it comes to which area of these you should focus on, we want to equip you to know the ones that are going to have the biggest payoff when it comes to building your great big beautiful tomorrow.So with that, Brian, let’s jump right in to explaining what each of these phases are.

The Three Phases Explained (1:29)

Brian: The first is the make wealth. Now look, this one has the sexy sizzle. I mean this is the one where we get exciting we focus on this is because this is where you are literally trading your job or your time that you spend at your job for building and saving assets and that in itself is important but I do think we ought to bring it back to two key things: how big is your shovel, meaning how are you focusing on what your career looks like, how much of an income you have, and then the second thing is what are you actually doing with the shovel, meaning how much of that money when you are trading your time for money. How much of that’s actually showing up on that annual net worth statement?

Bo: And the make phase is really the phase of wealth that most people have the most focus on for the most part of their career. So that’s the very first phase, the make phase. Now Brian, let’s jump into the second phase of wealth building, the maintain phase.

Brian: Yeah, this is where you have to think about how do we actually keep when you build wealth, there is going to come a part of your life to where you’re going to say, okay, we’ve made wealth. How do we maintain it? But even for people who are at the beginning of their journey, living on less than you make is also a behavior or an exercise and making sure you’re respecting the maintain wealth phase.

Bo: Yeah. It’s about keeping what you have, even if it’s small or if it’s seemingly insignificant. A lot of people think, “Oh, well, I don’t have to worry about maintaining wealth until much later on in the journey.” That’s not true. Maintain is something you might be interested to find out is going to show up very early on in the journey. So, it’s about living on less than you make, but it’s also about looking at the other ways to keep your life out of the ditch. Do I have appropriate insurance? Am I diversified appropriately? Have I paid off my debt? These are all the types of things that come up in the maintain phase.

Brian: So, then that leads to the third phase. Now, this one actually is two-pronged. If you think about the multiply wealth phase, it is exactly what the name implies. I do hope you have enough success that when you get to the multiply phase, you can start thinking, hey, do we want to do real estate? Do we want to do some alternative investments? Some of those sexy sizzle things that you perceive that rich people do. But it’s not just that. What I love, and this is actually what I consider more important about the multiply. This is where hopefully you get to be more generous. You get to actually donate your time. You get to donate your resources. You can be volunteering. There’s all kind of ways that you can actually be generous and multiply the resources you have. And it may be the case that at this stage or when you’re thinking about having a lot of focus on this phase, it may just be about supporting your loved ones. This is the phase where now I get to focus on not just me and my well-being, but I get to think about my loved ones and their well-being and what that looks like.

How the Phases Really Work (4:17)

Bo: And again, I think it’s kind of interesting how these phases work together, Brian, because I think the ways that we’ve described in the past have always been accurate, but I think people have received it differently. I think they have a different understanding of what they think the phases look like as opposed to what they actually look like.

Brian: I say it ain’t so. You mean us humans think in linear formats, meaning that we only think that you put A before B and then you one, two, three. No, it’s this. Look, if you think about we actually created a slide. This is what people think is that you’re going to start off your journey right out from jump street and you’re going to be in the make wealth phase. And then once you have a little bit of success, maybe in your 40s, you’re going to go into the maintain wealth phase. And then down the road before they put you out to pasture, at some point you’re going to be able to take all these resources and think in this generous way of multiplying and even doing the fancy sexy sizzle stuff. This is false. This is not the way it works. You do not have to be that human that’s trapped in linear only thinking. We think there’s actually a glide path to where you are going to focus on all three phases throughout your journey. It’s just the focus over time will shift depending upon which phase of life you’re actually in.

Bo: That’s exactly right. Depending on where you are in your financial life and your financial trajectory will dictate which area gets the most amount of focus. So, a lot of people are amazed to hear that, okay, at the very beginning of my journey, when I’m just starting out, I still have some focus on multiplying my wealth. And then at the very end of my journey, when I’m in financial independence, when I’m at retirement, I still have some focus on actually making wealth. They are not phases that go away. They’re not phases that you graduate out of. They are focus phases. They are attention grabbers. They’re where you should spend your time and attention. And we thought, okay, what’s the best way to figure out how to lay this out? Like, how should I think about this depending on where I am in my trajectory? And so, we wanted to lay it out in sort of four stages. We’re going to lay out sort of the early career stage. These are folks who are really in, you know, from age 25 to 35, starting out and beginning to get traction. Mid-career, which is ages 35 to 50. Late career, 50 to 65 or 50 to retirement. And then retirement, we’re going to use as age 65 and beyond, actual financial independence. But we want to walk you through what phase you should be focusing on and how you should focus on that phase in each of these stages.

Early Career (25-35): Starting Out and Getting Traction (6:40)

Brian: Yeah. And I hope that you will see yourself resembled in a lot of the things we’re about to cover. And we’ll jump right in and let’s talk about the early career that 25 to 35. And I love how we titled this. We said this is when you’re starting out and getting traction. I can’t help but think about our own journeys. Bo came out of college broke as a joke. You know, you barely have two nickels to rub together, but man, you are so just bright-eyed bushy tailed on the world of opportunity that you know is before you. But unfortunately, you might also have debt. You might have some student loans because to get all this opportunity or all this education to make yourself a better version of yourself. You probably had to go out there and leverage some of that through this debt. How can we help people know how do they live their best life? How do you go from make wealth? How do you get to maintain? How is this all going to be split out?

Bo: Yeah, I think what’s so interesting is we all get so excited early on that naturally we want to jump right into make wealth. We want to jump into the idea that I want to go grow, grow, build, save, save, invest, invest, invest. And a lot of people don’t recognize that at this stage of your financial journey, you are one relatively small decision away from a cataclysmic disaster. And so we actually think when it comes to this early career, when it comes to the just starting out phase, rather than having the majority of your focus on the make wealth part of the equation, you probably are going to be focusing more on maintain wealth. And even when you think about the way that we’ve designed the Financial Order of Operations, the early stages that we talk about, the very things that we highlight in the Financial Order of Operations are centered around maintaining wealth.

Brian: Well, yeah. We don’t want you making desperate decisions right out of the starting blocks. Yes, without a doubt, your time is so valuable because you are that billionaire of time. But if you’re in step one and you don’t even have your highest deductible coverage, so if you had an emergency or bad thing happen, you’re in a pickle of a situation. Number three, if you’re out there running up a bunch of high-interest debt, how are you ever going to turn compounding interest to start working for you in that make phase? That’s why we have to focus on the maintain: avoiding the high interest debt and then of course step four. Cash is so important. It doesn’t get just one step. It gets steps one and four. So if you lose your job or have a big emergency come your way, you’re not making those desperate decisions.

Bo: But then even beyond just the early steps to the FOO, there are other defensive steps that you ought to be taking when you’re at this stage of life. Not only are you following the Financial Order of Operations, but are you getting appropriate insurance in place? Because remember, insurance is a tool that allows you to transfer risk from yourself to the insurance company. It’s a great way to transfer the risks that have a high severity but a low probability. The things that if they happen, they can derail you. Those are the things that you get to insure against. And yet a lot of people don’t focus on this in this phase.

Brian: So once again to avoid the making desperate decisions. I think a lot of people know, hey, if you’re renting a condo or something, you’re going to have renter’s insurance. I think a lot of people know, hey, you’re going to have to have car insurance. We’re going to need to have health insurance. All that stuff is covered in getting your highest deductible covered. But Bo, a lot of people, and you worked in the insurance industry for a split second, is they overlook that the most important thing that they can do while they’re young is that they have earning potential. They have an income. Well, you know how you protect yourself from making desperate decisions? Disability insurance is often overlooked. And you think about if you have family members because 25 to 35 is when you’re probably growing a family, you find a significant other. How many people are sleeping on this whole disability insurance?

Bo: Yeah, it’s wild when you look at the numbers. 49% again this is according to Guardian. 49% of Americans don’t have any disability insurance. And this is really kind of frightening when you think about in your working life, you are four times more likely to become disabled than you are to die prematurely. Yet most people, they focus on life insurance, they think about life insurance, but the odds of actually having a disability that’s going to cause you to not be able to go to work are significantly higher. So part of maintaining your wealth in this phase is just making sure you put a moat around and protecting that very thing that allows you to build wealth, which is the income you’re able to create at your job.

Brian: And then a few other things that we just want to make sure people know these are big decisions you ought to make even early on as part of maintain wealth phase is beneficiary designations. Put some time into thinking about who you’re going to write in on those retirement accounts, the life insurance and all those type of things. If you do have children, please have a will because you want to make a bad situation worse is let the government, let the state decide who is going to raise your children. Go ahead and have those discussions while you’re on this planet and get that simple will done.

Bo: And so these are all kind of like blocking and tackling, but there’s also behavioral sides to the maintain wealth phase in the early career. Are you looking at your job as more than just a job, an actual career? Are you doing the things necessary to become really good at that job so that you can advance in that career? And are you actually putting into practice living on less than you make? Are you doing what you should be doing when it comes to exercising discipline and exhibiting deferred gratification? If you’re not focusing on those things, you’re not putting enough emphasis on maintaining wealth early on in your career.

Make Wealth in Early Career (12:18)

Brian: Well, like I said, all this is going to keep you from making desperate decisions and keep your life out of the financial ditch. But let’s get to what people I think really when the stereotypical thing you think you ought to be doing between 25 and 35 is making wealth. And without a doubt, when you’re 25 to 35 years of age, you are a billionaire of time. And so that’s what. But like I said, you’re probably broke as a joke. So you feel this separation from, man, yes, I know I need to be saving and building assets, but I also feel like I just don’t have a lot of money. The good news is a little goes a long way. So it doesn’t have to be where I have to do 100% towards make wealth. Maybe you’re only able to save and invest a little bit in the beginning. But the good news is because and we cover this so much, the wealth multiplier is your army of dollar bills are going to do that heavy lift for you. You choose your hard. Do you want to take a little bit of today now so that you get that great big deal from tomorrow? Do you want to defer and see how much lower your wealth multipliers in the future? And it’s just going to require you to save more and more. So that’s why we love to share this. Go to moneyguy.com/resource/wealth-multiplier-by-age. You can look at what every dollar in your army of dollars can be. But for a 20-year-old, it’s 88. For a 30-year-old, it’s 23. For a 40-year-old, it’s seven. You can see very quickly, especially all the light blue here from 20 to really 35 years of age. Great exponential growth by just taking a little bit today for that great big beautiful tomorrow.

Bo: And the beautiful part is it only takes a very little bit. And there are some things that are naturally set up in this phase that will allow you to begin doing that. One of those is just not missing super easy opportunities like getting your employer match. Brian, will you hold the thing up? It’s the reason why it’s step two of the Financial Order of Operations. It’s so valuable that when you’re not getting the employer match, when you’re not taking advantage of that, you are literally walking away from free money. So, not only are you doing that, we also want you to continue to build your career trajectory. Am I doing the things necessary to move in the direction I want to move so that this job, this vocation, this thing that I’ve signed up for actually turns into a career? Something I actually wake up in the morning fulfilled and happy to be doing on a daily basis.

Brian: We had a Making a Millionaire episode recently where we had an engineer on the show who was talking about that he just had somebody at his work tell just do the 401k and do the match. And he woke up at the end of his he worked this job for close to 10 years. And by the time he got close to 30 years of age, realized this was getting close to six figures and it was just set it and forget it. And that’s what I’m telling you is that if you can focus on these behaviors early on, it’s an easy strategy. And that’s why it is step number two. But we do want to make sure that you know if you’re watching this and you’re saying, “Guys, how do I do it? How do I do it?” It’s okay if it’s 1%. I mean 2%, 3% increase that investment rate every time you get a pay raise instead of it all going to lifestyle and consumption. There’s nothing that says you can’t just give 1% more. We even have great resources on the website. You go to moneyguy.com/resources. We’ll show you what that 1% can actually yield for you over the long term. Don’t sleep on this.

Multiply Wealth in Early Career (15:36)

Bo: So a lot of people think that okay early phase I really need to focus on make and okay oh yeah maintain but multiply that’s something that’s later on. That’s something that I don’t need to focus on and we think that that is far from the truth. Now multiply in this phase will not get as much emphasis as maintain or as much emphasis as make but it is so valuable. It’s why we even if you go work through the FOO course and you look at any of the literature there we talk about generosity as sort of a step zero. It’s sort of like a groundwork very beginning thing that you can do because multiplying your wealth is something that you don’t actually need monetary wealth to be able to do. There are other ways that you can impact the world and the people around you even if you’re not at the stage where you can start just writing checks and doling out money.

Brian: Well, look, when we because we’ve already held it up a few times, we talk about the Financial Order of Operations, but you know what doesn’t necessarily show up on the first nine steps is that we actually say generosity is rewarding and that’s why it’s a step zero behavior. If anybody who’s read Millionaire Mission, you know that I talk about in the ground rules how important it is to be generous with your resources because money in a lot of ways is just an amplifier of who you are. That’s right. So if you can understand if you’re good and generous when you have a little as you get blessed and things come your way and you have more and more resources, you will be great with a lot. But you do need to kind of do something that separates the tool versus who you are in the element of money. And we think being generous is a big part of this.

Bo: So maybe you’re someone early on in your career. You think, well, things are tight. Money’s tight. That’s okay. There are ways that you can multiply. Maybe it’s just giving $50 to your favorite charity. Maybe it’s volunteering in your community or highlighting and being an advocate for causes you care about. Or maybe it’s just cleaning out your closet and donating to Goodwill. Or maybe you even just set aside a line item in your budget that says, “You know what? Once a month, I’m going to pay for the car behind me when I go through the drive-through line. I’m going to pay for someone else’s coffee.” Even doing those types of things are ways that you can multiply your wealth without having to have a huge dollar figure associated to it. And again, Brian already said, who you are when you have a little is just going to be a reflection of who you’re going to be when you have a lot. So if you can build in these habits early on, your future self will likely thank you for that.

Brian: And that’s why as we close out 25 to 35, it’s important to look at these phases. Like I said, it is a glide path. The lion’s share is to make sure your financial foundation is set and you’re not making those desperate decisions. That’s why you see so much is going into the maintain wealth is because those early steps of the Financial Order of Operations. But notice we didn’t walk away from yes, you are a billionaire of time. And if we can find some way to get you to just take a little bit, just a tiny bit. That’s why you don’t have to be jealous of those who are ahead of you who have 30, 40, who are your bosses and you say, “Man, if I had just what they had, I would be so…” They are so jealous of how much time you have. So you can take a little bit of that make wealth behavior and turn it into huge results in the future. And then of course, don’t sleep on the multiply. We know you don’t have a lot of money, but that doesn’t mean you can’t volunteer. It doesn’t mean you can’t give something so that you’re actually focusing on the fact that money doesn’t control and define you on every component of your life.

Mid-Career (35-50): Peak Earning Years (19:01)

Bo: So, you’ll notice the path changes through time. And as we come out of this early career, when we move into the mid-career, we are now beginning to focus more and more of our attention on making wealth. And it makes a lot of sense because this is the phase when we’re likely entering our peak earning years. I mean, early on in our financial journey, if we’re just saving $20 a month, $50 a month, it might seem like those dollars aren’t stacking and aren’t doing anything. But by the time we get to age 35, the time we get to our late 30s, early 40s, we begin to see, okay, the work that I was doing was powerful. And now I’m actually in a position where I can save realistic, substantial sums for my great big beautiful tomorrow. So perhaps I should begin to focus my attention on the make.

Brian: Well, and don’t take our word for it. We actually compiled and looked up at what the peak earning years are and you can see yeah without a doubt we are somewhere between 35 to 54 years of age is when you are going to make the majority of your money and this is why it is so important when we’re talking about the make wealth phase is that you’ve got to make sure that you are focusing on how you’re going to earn this money. What’s your shovel? What’s your income? Because a lot of times how much money you’re making will be the driver of how much we can save for the future. So don’t sleep on that. I do count on the fact that when you’re younger you are trying to make sure you’re not just working a job that you’re actually building a career.

Bo: But remember how much you make is only one part of the equation. We want you to have a high income. We want you to have a big shovel. But what really matters more is what you do with that. How are you converting that into actual assets on your balance sheet? And that’s why at this stage in the make phase, one of the things we really want you focusing on is investing 25% of your gross income or more. Remember early on in the early career, 25% is aspirational. It’s a goal that you’re shooting for. But at this stage, it becomes less of a goal and more of a necessity. Are you actually saving the way that you should be saving so that you can build the future that you want to be building?

Brian: And look in the beginning a lot of this as we cover in the Financial Order of Operations. It is going to be focused on avoiding the desperate decisions. It’s also going to be getting the free money from the employer. There will come a time though when you get around step seven of the Financial Order of Operations that you’ll want to make sure you have a plan for every dollar in your army of dollar bills. And we often talk about step seven is it’s no longer just tax focused anymore. It’s now how are we actually going to use this money as we bring this plane in for landing and approach retirement. So, that’s going to require you to figure out, hey, do I have enough money in after tax money, pre-tax buckets, tax-free Roth buckets. They all do things well, but you’ve got to have a plan that addresses how these actually go into the execution of your full financial plan.

Maintain Wealth in Mid-Career (21:46)

Bo: But now, I want you to keep in mind in your early career, you didn’t have a lot and maintaining was still important. We said now the mid-career making it is super important, but obviously maintain is still a major part of your focus. You’ve actually built up some wealth now. And what you want to make sure is it’s not just about how much you make, it’s not about how much you stack up, it’s how much you get to keep over the long term. So as you begin to think about where your focus should be in the maintain phase of your mid-career, this probably is where you are starting to think about asset allocation. Not just which tax buckets am I putting in, but how much risk am I actually taking in my portfolio? Does my portfolio match my unique risk tolerance and my unique risk capacity? It may be at some point in this stage that you graduate from the generalized target retirement one-size-fits-all plan to a more customized asset allocation that really makes sense for your unique personal circumstance.

Brian: And I’m going to look at my financial mutants because I think this is also the phase. Look, when you’re in the early part of this, say you’re 30 years old and you have your first $100,000, you lose 30% because you went all S&P, you did VOO for life, you lose 30%, that’s $30,000. That’s going to hurt. But you lose 30% on a million dollars, that’s $300,000. You will quickly see the more successful you become that there is a cost and you’re like oh my gosh maybe I maybe this whole thing about asset allocation I get it is because maintaining wealth there’s a reason that we go beyond the make we actually have to see how much of this we get to keep in the long term too.

Bo: Another thing we want you doing when you’re focusing on the maintain phase in your mid-career is control, not and don’t mishear we’re not saying avoid but control lifestyle creep. Inherently there’s nothing wrong with your lifestyle improving as your financial circumstances improve. But what you want to make sure is it’s not rising too rapidly and that your lifestyle is not increasing more than the other areas and facets of your financial life. So there are little tools and strategy and techniques that you can put into place to do this. If you are someone out there who gets a big bonus or maybe you get an annual pay raise or maybe you get a promotion, rather than allowing all of that additional income to go to your lifestyle, figure out a way how do I compartmentalize it? How can I have 60% of it go to my lifestyle, but 40% of that pay raise, 40% of that bonus, 40% of that promotion money is actually going to go to my savings, is going to go to building for my future self. If you can do that, one of the things you’re going to do is you’re going to be able to keep your lifestyle in check.

Brian: Well, also when we’re talking about maintain, your life is going to change so much. You think about this is a broad group of people in these peak earning years, but in the beginning, like in 35, you might be in the messy middle. Got little babies or little kids in the house. But by the time you come out of this phase, these kids are probably getting ready to launch. They’re going off to college, even leaving the house. You need to make sure your estate documents, your beneficiary designations, all those things, your wills reflect because it’s going to change so fast, so quick. Don’t just set it and forget it once. I want you to do that with your investments in a lot of ways. I want you to automate the process, but your estate planning, your insurance, those things. I would encourage you annually look at your situation and see what needs to update.

Bo: And then don’t be lazy with your emergency fund. We see this happen all the time. Someone will put their emergency fund in place when they were 30 years old and single and making $50,000 a year and then they get into their 40s or 50s and they’ve got three or four kids and they live in a bigger house and they have more expense and they make $150,000 a year. Make sure that annually you’re reviewing, do I actually have my three to six months of living expenses in liquid cash based on my current circumstances, not based on myself 10 years ago.

Multiply Wealth in Mid-Career (25:30)

Bo: So again, what you want to do is you want to make sure you’re doing those decisions right now at this stage that will keep your financial life out of the ditch.

Brian: When we covered this for the younger group, the ones right out of college, starting out and getting traction phase, when I talk about multiply, it was kind of limited. We just assumed a lot of people you’re struggling. Yes, you have a lot of time, but you don’t have a lot of resources. So, we wanted you to be generous and volunteer. Definitely wanted you saving first for your future versus your kids. But now that you’re in this peak earning years, you’ve had a chance for your money to start building upon itself. When you get to the multiply phase, this might be when you actually can start giving some money and saving for the kids’ college, for the future, and paying it forward. It’s a really exciting time when we think about the multiply phase of wealth building.

Bo: Yeah. You don’t just focus on yourself. If you focus on your other loved ones, the other people that may be depending on you or that you may have some impact or influence on or maybe this is the stage where you say, you know what, I want to not change my strategy, but I want to add to, I want to bolt on to my financial wealth building strategy. So maybe I’m going to look at real estate or maybe I look at other alternative type investments or maybe I want to invest in a small business. When it comes to multiplying your wealth in this phase, those might be some of the things that begin to take your attention now that you’ve already built a solid financial foundation and you can do that without risking derailing your whole financial plan.

Brian: And then of course because you are in a higher income tax situation, you’re starting to see resources that are hopefully growing towards the seven figure status. You will have the opportunity to do more gifting, more donating because we do find being charitable is rewarding. So we just want to make sure because it’s an amplifier and we don’t want you to focus your entire life on what you have versus what it can become for you if you can just be selfless and understand what the tool of money is and it is not for the future.

Bo: One thing we want you to make sure you keep in mind is that no 35-year-old to 50-year-old looks the exact same. No one’s circumstances are the exact same. And in this stage there’s a really good chance that you are going to be in the messy middle for a big chunk of this phase. And we know that in the messy middle unknown things happen. And so what you see here on the glide path is that yeah make wealth increases and maintain wealth kind of decreases as we enter those peak earning years. But it may not look exactly like that for you. Because remember a lot of people think when it comes to my financial journey I just want it to go lock step. I want to go from step one of the FOO to step two of the FOO to step three of the FOO to step four of the FOO. So on and so forth. Yet in reality, in our financial lives, often times we have to step back. We have something happens, we change homes, we have another kid, we grow the family, we have the medical bill, we have the car wreck, whatever that thing is, and we have to get off track from the straight linear trajectory. And I want you to hear us say that’s okay. What we want you to recognize is, hey, these are the areas at this phase that you should be focusing on, but your life circumstances are also going to dictate the things that you have to focus on. And what we want you to do is figure out when those have to happen. How do I get back to the area I’m supposed to be in as quickly as possible and give yourself some grace because the journey is exactly that. It’s a journey and it’s going to have unknown unknowns and that’s okay.

Bo: Yeah. But I just kind of just put a bow on this. I get so excited because you more than likely you’re in the messy middle when you enter this phase. You hit your peak earning years and you’re going to come out the other side and you’re like, “Wow, there’s just a lot that has changed in this phase of life.” And that sets up perfectly to when we get to the late career.

Late Career (50-65): The Fork in the Road (29:16)

Brian: This is people who are from 50 to 65, you know, depending upon what your life goals, your career goals, but this is when you’re probably going to start thinking about, man, I can now see this used to be a goal that I had for many decades in the future and I really couldn’t even I didn’t even know how to save because it just seemed like the goal was so nebulous. Now, you’re probably seeing you need to land the airplane and you can actually see your retirement in the future. We probably need to start tightening down the screws of the plan to make sure this thing reflects how your life is actually going to be in retirement.

Bo: And oftentimes this phase, Brian, we talk about it being sort of a fork in the road. There’s generally two different people or two different circumstances that you’re in. One is, hey, I’ve done all the things that I’m supposed to be doing and I’m right where I’m supposed to be. Maybe I’m even ahead of the curve and I’m beginning to think about the next endeavor. I’m beginning to think about that. That’s scenario number one. But there is a second scenario. Maybe you say, “Holy cow, I haven’t done everything I’m supposed to be doing.” And I recognize that it’s now third quarter. It’s now crunch time. It’s now time for me to begin making the decisions to put me in the place that I want to be at. And both of those are okay. But you need to assess for yourself which one of those describes you. And depending on which one describes you, it will impact and affect how you focus on the different phases of wealth building in this journey.

Maintain Wealth in Late Career (30:38)

Brian: Well, I mean, this is so much in the beginning is we’re worried about the risk of you got to make the wealth before you pay down. But this is I think when you get to this phase, it is okay to de-risk your life. And this is why paying down debts. I mean, it’s easy when I really I always say when you’re over 45, if somebody I don’t even if you have a really low interest rate, it’s okay to pay off some of those debts because we’re now in that phase of life where you want to have as little encumbrances on you so you can truly see, am I financially independent or am I still under the thumb of the banks? And that’s something why I like paying off the debt.

Bo: Yeah. And paying off debt as you would imagine is a maintain wealth focus because here at the late career remember peak earning years the main focus was going to be on make wealth. Here at the late career the main focus is going to be maintain wealth. One of those is going to be paying off the debt. Another thing that you may begin doing is transitioning your portfolio. You may be moving from the point to where it’s all about grow to now it’s about capital preservation. How do I make sure that I am prepared to land this plane, enter into retirement and get to that place to where I’m going to soon begin living off of these dollars, not just accumulating them and growing them.

Brian: And that leads to the beefing up cash. Look, you know, in the beginning you’re worried about just getting laid off. So that’s why you need three to six months because you’re building that bridge so that you can cover all those desperate decisions. But as you get closer to retirement, now you’re worried, oh my gosh, I’m living off of this money. What if the market gets its teeth kicked in and I need to have something that can cover 12 months. It can cover 18 months so I’m not having to sell things at the most inopportune time possible. So that’s why your relationship with cash might have you instead of going 3 to 6 months we might be boosting up as we get closer to retirement 18, 36 months. It depends on who you are and your relationship with risk. But don’t sleep on the fact that you are going to beef up your cash.

Bo: And then in this stage you’re making some huge life decisions like am I at the place where I’m going to actually leave the workforce, where I am going to start shifting what my financial trajectory looks like. And so at this phase when it comes to maintaining wealth we want you to measure twice cut once. Have you stress tested your plan? Do you know what you’re going to do with social security? Have you factored in your pensions? Where are you going to live? What’s your next home going to look like? How are you going to support the kids? All of these questions you want to make sure you answer before you make the decision to actually leave the workforce. And this is something that a lot of people only get one crack at. You might only have one retirement. So, when it comes to measuring twice and making sure you have a plan in place, this might be a great time to consider taking the relationship to the next level. This might be a time when you want someone who’s navigated hundreds of retirements and can speak to, hey, here’s what I’ve seen work successfully. Here’s what I’ve seen not work successfully. And here are the things that you need to make sure you’re aware of so you can go into this next phase of life with eyes wide open and an extreme level of confidence.

Multiply Wealth in Late Career (33:36)

Brian: So Bo just covered the maintain. I want to talk a little bit about multiply. I think it’s perfect. I’m in this phase myself. As you know, life is cruel in some ways is that the older you get, the more sentimental you will become about all the memory building, those blossoming memories. Meanwhile, your kids are getting more and more independent. That’s why I tell you when you get to this multiply phase, especially in the late career, make sure you’re taking some time and putting some effort into the memory building with those family members because it is that much more precious.

Bo: One thing I’ve loved again seeing you kind of do at this phase is another thing you can do when you’re in this stage is you can begin mentoring younger folks. I can’t tell you how many times, Brian, I’ve seen you sit down to have lunch or sit down to have coffee with one of your neighbor’s kids who said, “Hey, I’m thinking about getting into financial planning.” or hey, I’m thinking about going into accounting. Because you’ve lived that, because you’ve gone through that journey, you have a ton of wisdom that you can share with us. For those of you out there in the late career, you’re in the exact same place. So, are there younger people in your life or maybe in your organization that you can begin pouring wisdom into? That’s a great way to multiply the wealth that you’ve accumulated over the years.

Brian: Yeah. And I also think it’s one of those things where you are going to be transitioning to something else in the future. Make sure you know what you actually enjoy doing. I mean, it does make me sad when people are only defined by the work they do and they don’t know, do they have hobbies? Do they have other groups of people outside of their co-workers? Figure out and spend some effort because you are about to enter a new transition in your life. So, you probably require some additional effort.

Bo: And then this is probably that phase where likely you have the greatest ability, the greatest means to actually be able to give monetarily. Are you giving to causes that you care about? Are you providing opportunities for other people? Maybe you’re multiplying other folks’ efforts and the way that you’re able to interact and engage with them. This is a great thing that you can do, a great way you can begin to multiply your wealth as you enter in that life.

Make Wealth in Late Career (35:29)

Brian: I don’t want to over assume because I think there are going to be a number of people watch this content, Bo, and they’re still going to be very focused on the make wealth. And that’s why because you said this was kind of a fork in the road. There are going to be a portion of people who are going to say, you know what, this make wealth requires I’m going to have to save even more, double my efforts. Yes, because I maybe procrastinated or I just didn’t figure out how money works until a later age. I’m going to start building up. But at a minimum, every one of you, whether you’re behind or ahead of the curve, you need to kind of know what your number is. So that if you are ahead of the curve, you’re not running up the scoreboard and taking on too much risk. But if you’re behind, you’ll know that that much sooner so we can figure out in a triage type of way how we fix this as fast as possible.

Bo: And a beautiful thing about this late stage of the career is you still have time on your side. It’s not the same as the 20-year-olds, but you can still make some meaningful efforts and have some meaningful progress building towards those goals. So, if you can define what your number is, it will allow you to begin to define what steps I need to take to get there. And then you can also begin thinking about other things like, okay, what am I going to do with social security? How am I going to factor that into my plan? Am I going to have to work in retirement? Do I want to pick up a side gig? Do I want to pick up a hobby that’s going to make money for me? All of these things are ways that you might be able to focus on the make wealth phase even as you’re in the late stages of your career.

Brian: Yeah, I get excited when we actually look at the phases for somebody in this late stage career is that you are seeing some big shifts, a lot of the big increases in the multiply, which I think that’s so great from the memory building, from the generosity side of things. You’re starting to see maintain wealth getting more of a focus because you’re like, man, I have built up something pretty spectacular. How do I make sure that this is going to serve me well for decades, but then the make wealth, it I don’t want to say it wanes, but it’s definitely kind of transitioning from a hyper focus to where now this is something you’re like, I guess I have to live with what I’ve got and I need to maximize this moment as much as possible.

Retirement (65+): Your Great Big Beautiful Tomorrow (37:32)

Bo: And then that leads us as we transition into the next phase. This is what we’re calling retirement. But really, it’s more. It is your great big beautiful tomorrow. This is the thing that you have ultimately been working for. This is the thing that you’ve ultimately been saving and accumulating for. And this is now the stage of life where you get to live life on your terms and do things the way that you want to do them, when you want to do them, and how you want to do them.

Brian: Yeah. I mean, this is the let’s go through these. The make retirement. You’re living off of your portfolio if you’ve done this right. So that’s a big part of this and what I like is this is literally the phase of life to where your money can make more than you can actually with your brain, your back, and even your hands. So it’s pretty exciting in that aspect.

Bo: And a lot of financial mutants when they get here, even though they’ve put together this plan, they’ve looked at withdrawal rates because a lot of our mutants are so conservative, you may actually see that your portfolio is still growing at this phase. Even though you thought I was going to be at the stage where I’m going to start living off these assets, you’re living in such a way and the market’s performing and the portfolio is performing in such a way that it continues growing. So even now your portfolio is making money even when you don’t necessarily intend for it to be.

Brian: Well, and think about maintain. We’re sitting here talking about portfolio, portfolio, portfolio. Well, one of the main levers you can control is how much risk you’re taking on. Don’t run up the scoreboard if you because you just don’t want to have another 2008 or a bad economy come your way and derail all the hard work. So your portfolio is definitely going to change. I think your behaviors, the way you track, the way you look at money, your relationship with money will change a lot as you’re entering retirement. And then of course we all hear words like IRMAA. You’re like what? Taxability, social security. I know that’s all on the table right now, but your tax planning is going to become more and more important because you need to take an active role as you are in this retirement phase.

Bo: And then as you’re in the retirement phase, when it comes to multiply, you get to do what you want, when you want, how you want. This is probably the peak multiply phase because now you have both the time and the resources to live life the way you want to, and to do with your money the things that you want to do. And one of those things that you may begin to do at this phase is really create experiences. And maybe those are experiences for yourself, maybe they’re experiences for your spouse, maybe they’re experiences for other loved ones. In this stage of life, it’s where you get to write what that story looks like. And if you’ve done it right, it’s a super super fun and exciting time.

Brian: Yeah. Because you get to, if you do this right, you’re creating your legacy plan. You get to think about how you want this money to be used, what you want to be known for.

Final Thoughts: The Glide Path Through Life (40:15)

Brian: And then that’s also a great segue into looking at the glide path once again for the phases over time. The big part of this is that I think as financial mutants, we’re so rewarded for thinking about in a singular focus. If I can do this well, I will be rewarded. And yet here we are dropping bombs on everybody, letting them know, no, this is one of those things. Yes, you will have a hyper focus in specific areas depending upon where you are in life, but more than likely, you’re actually going to have focus on all three of these phases. And that’s why we wanted to help change your mindset, plant some seeds today so that you can actually go into this with your eyes open, and live your best life and not leave anything on the table. Now, if you do this right, we know it. You’re going to create abundance in your life and abundance. Even though we try to strive for simplicity is going to create complexity. So I want to encourage you two things. If you’re just now starting out and you’re like, “What in the world are these guys talking about?” Go to moneyguy.com/resources. Download all the free stuff. Let us accelerate your journey. But if you’re somebody who’s like, and you’re just sitting there nodding your head and going, “These guys get it.” I feel like if I look at my younger version, I was splitting myself into these different focuses. I wonder what else these guys know that I don’t know because I haven’t experienced this retirement or I don’t know what risk is coming my way. We’re going to leave the porch light on for you and we know there is a better way to do money and we’re going to help protect you from those blind spots with the abundance cycle. Hopefully you’ll consider working with us. Go to moneyguy.com/become-a-client and look at our work with us section because we know that you can do this and we want to help carry you through this journey and be your partner. I’m your host, Brian Preston. Mr. Bo Hansen, Money Guy Team out.