Here’s How Much Income Puts You In The Top 10%

How Much Income Puts You in the Top 10%? (0:07)

Rebie: How much income puts you in the top 10% of earners? Let’s talk about it.

Bo: Rebie, I am so excited because this is an interesting thing. Now, we talk all the time on the show about the reality that comparison is the thief of joy. And so we don’t share this because we necessarily want you to compare yourselves to others, but rather we want you to have a realistic expectation around where your peers are. Because I have the belief, I have the theory, it’s a hypothesis of mine that most Americans get this very, very, very, very wrong. And I don’t think your goal should be to be in the top 10%, although it’s a wonderful goal. We’re going to talk about whether that is necessary to build wealth and whether you need that. But I do think it is healthy and appropriate and right to level set realistically where average Americans are and then even where the top tier of American earners are.

Rebie: So let’s test Bo’s theory. If you’re watching live on YouTube, we have a poll in the chat right now that says, “What percentage of households in the US have an annual income of more than $1 million per year?” What do you think? We have a list of answers there. Take a second to answer that and then we’re going to dive in. And we want to say before we dive in: if you are a top earner and you find that out on today’s show, congrats. That’s great. Well, maybe it might be great. It depends on what you do with it. We do want to say that keep in mind a high salary alone doesn’t guarantee wealth. It’s a crazy but true stat that many high earners are living paycheck to paycheck. And if you find out that you are in a lower or a middle income bracket today, don’t be discouraged because similarly, people can absolutely build wealth and financial independence through smart choices and behavior even with a lower or average income.

Bo: And I think what’s really interesting is I think a lot of people, there are sort of these two sides of the coin that exists in sort of the American mindset. One is: oh, well, if you want to be a top 10% earner, you must be a celebrity or an athlete or a musician or one of these types of things. But then there’s this other side of the coin where I think a lot of Americans assume that everyone else out there, all of the other people walking down the street rubbing shoulders, they must be doing better. They must be in a different spot. They must be in a different echelon than I am. And I just refuse to accept that. I do not believe that is the case.

What Americans Get Wrong About High Earners (3:15)

Rebie: Okay. How many people make a million dollars in America? And then we’re also going to talk about what the average American thinks. So, 77% of folks in the chat right now said that they think it’s a half a percent of people who make a million dollars a year. 15% said it’s 2% of Americans that make a million. And 8% said it’s 5% of Americans or more. So the vast majority of our financial mutants believe that if you’re someone who makes over a million dollars a year, the two-comma club, it puts you in a very small percentage.

Bo: But would you believe the average American does not subscribe to this? This is from YouGov data via the World Economic Forum. Would you believe that the average American thinks that 19 to 20%, that’s like one out of five people, make over $500,000 a year? That means when you walk out of your place of work and count five people, the average American thinks that one of those five people make over half a million dollars a year. The average American also thinks that 10% of the population make over a million dollars a year when in reality it is less than half a percent. The average American thinks that you could line up 10 random folks and one of those 10 is going to make over a million dollars, when in reality you would have to line up 200 folks to maybe find one person that made that kind of income. But then there’s this flip thing on the other side: how many Americans make under $25,000? Americans think it’s 35%. In reality, it’s only 18%. So we have this warped barbell view where people think there are a huge number doing extremely well, and a huge number doing extremely poorly. The reality actually exists somewhere in the middle.

Median Income and the Top 10%, 5%, and 1% (5:20)

Rebie: So let’s talk about what does it actually take to be a top earner and what that means for you. If we look at the median income for single earners in the US according to data from the US Census Bureau, the median income just to set the baseline for single earners is $55,584 a year. So let’s compare that to the top 10% of earners: it’s actually just below $163,000 per year to be in the top 10% of all Americans. And again, I think if you asked people to describe the people that are in the top 10% of earning in America, you’re going to hear, oh, they are professional athletes, they’re actors, they’re musicians, they’re celebrities, they’re names you’ve heard.

Bo: When in reality, we work at Abound Wealth and we get to work with tons of individuals and tons of families that are able to achieve this level of income success. And they’re not household names. They’re not athletes. They’re not celebrities. So it doesn’t take as much income as you might have thought to fall into the top 10% of earners.

Rebie: Right. And then just in case you’re curious, the top 5% of earners, it’s $225,000 a year. And top 1% it’s around $570,000 per year. So that top 1 to 5% is making some pretty significant money, but that is not a large percentage of the American population. It’s really interesting. Even if you’re not in the top 10%, if you make $100,000 a year, if in the course of your career you’ve crossed into six-figure land, that automatically puts you in the top 18% of earners.

How Location Changes Your Income Ranking (6:00)

Bo: So we all talk about a big shovel is not a necessity for wealth building, but there are circumstances in which it does make things a little bit easier. But it’s not absolutely necessary. So let’s talk about: okay, if you want to increase your income and move in that direction, what would be required? But before we do that, it makes sense to at least acknowledge and call reality to the fact that there are different variables that affect your income and what you earn. First: geography. Not every part of this country is created equal from a socioeconomic status and a cost of living status. And so incomes, as you can imagine, vary wildly from state to state, from geography to geography.

Rebie: There was really interesting math that we found showing what is the income that you need to reach the top 1% in each state. For instance, the top 10% in Massachusetts, it’s around $263,000. Top 10% in Mississippi, it’s $153,000. Massachusetts is one of the top earning states. West Virginia, Mississippi, and New Mexico: you would need half of what you need in Massachusetts to be in the top 1% in those states. So it varies greatly by your location and the cost of living. A lower income in a low cost of living area may actually create more wealth-building opportunity and margin than a higher income in a higher cost of living area.

Bo: We have seen this firsthand. We’ll have clients that are out in the Bay Area or out on the West Coast. Honestly, just to get by, you need to make something like $200,000 a year. Where in other geographies in Mississippi and some of the other states, if you make $200,000 a year, that’s an unbelievably high income relative to the cost of living. So where you live matters. The cost of living in your area matters, but it’s not the only thing that affects income.

Education, Earning Potential, and Student Debt (9:17)

Bo: Another thing that affects income, or certainly at least has affected income over the past 40 or 50 years, is education. Education can certainly increase your earnings potential, but rate of return or ROI on that investment matters. Because I think we’ve fallen into this false reality that the more educated I get, the more money I’m going to make. The more school I go get, the more money. So it doesn’t matter if I take on student loans, doesn’t matter if I dig myself a hole, I will in fact make more money. And that doesn’t always tend to be true. The field of study, cost of school, student loans, career path, all of that affects whether increasing your education is actually going to be a fruitful endeavor from an earning standpoint. Let’s look at the median earnings by education level: no high school diploma, usually the median income earnings is $40,000 a year. With a high school diploma, that jumps to $50,000 per year. With some college or an associate degree, it goes to $57,000 per year. And now here with a bachelor’s degree, data does show that it jumps up to $82,000 per year. So that is a pretty significant bump. And then with an advanced degree, up to almost $100,000 per year. So there is data behind this. Education can and does matter. But something that jumps out to me is that a lot of people in the current economy go to trade schools, make six figures, and don’t even fall into the data that we just read because they are making great income in a different trade.

Rebie: Also, this is kind of changing generally in culture. I think if you look around, you’re seeing a lot more people take non-traditional paths and also people who are taking on the amount of debt that doesn’t even cover that gap. It jumps from $57,000 per year to $82,000 with a bachelor’s degree. But if you have $50,000, $60,000, $100,000 of debt, does that really move the needle? So things are definitely changing, but education is definitely something to pay attention to. And this is something that even we as parents of young children are having to navigate now. What are we going to tell our children? How are we going to talk about this? Because I think one of the reasons why you see such a big income discrepancy between some college or associate degree and bachelor’s degree is that for millennials around our age, a four-year degree used to be a requirement for employment. I don’t know that that’s going to continue to be the case moving forward.

Income by Age and Peak Earning Years (12:35)

Bo: Another reality, whether it is appropriate or not appropriate, whether you like it or don’t like it: age often affects our income. I know that when we are young, we want to make a gazillion dollars, but oftentimes when we’re young, we haven’t developed the skill sets. We haven’t had the 10,000 hours. We haven’t been able to do the things to reach our peak earning years. And if you look at the data, the data would support that income generally tends to increase as we age.

Rebie: Median earnings by age: $40,000 for a 20 to 24-year-old, $60,000 for age 25 to 34, a nice jump to $70,000 in the 35 to 44 range, and then 45 to 54 is really your peak earning years where median income only goes up to $71,000. At 55 to 64, it goes down to $67,000 per year. So that 35 to 54 year old range really is a key time, often your peak earning years, because you have some experience under your belt. Maybe you’ve climbed the ladder at your place of work. Maybe you have more connections than ever. It makes sense that over time you’re going to statistically earn more.

Increasing Income and Turning It Into Wealth (13:41)

Bo: All right, so you’re out there thinking: okay, guys, I get it, generally speaking, more income is better. Bigger shovel allows me to do more things. How do I climb the income ladder? What are the things that I can do to improve my lot? And we think that there are some things. The first of which is focus on controlling the things that you actually can control. Your income is not necessarily a static figure. It tends to be a lot more dynamic. And in certain situations, you can influence it. You may not be able to give yourself a raise or give yourself a promotion. But one of the things we can all do as earners is increase our skill sets. Maybe it’s adding additional certifications. Maybe it’s adding additional value that we can add either to the organizations that we work for or the organizations that we run. Figure out how can I master my craft and continue to improve. And as technology is changing, how can I make sure that I understand the direction that technology is moving in so that I’m not someone who’s left behind? Am I understanding what it is, how it works, and how I can best utilize that to make me a bigger, faster, stronger, more effective version of myself? If you can do that, whether you’re a 20-year-old or whether you’re a 60-year-old, odds are you’re going to be able to have some positive influence on the direction that your income moves.

Rebie: The second thing you can do to climb the income ladder is to make your current income work harder for you. This is getting back to the basics. If you’ve watched Money Guy, you know that maintaining a reasonable cost of living relative to your income and avoiding high interest debt goes a very, very long way. And I hear you. Cost of living can be frustrating right now. I totally get that. But it is true that any creativity you can do, or if you do have the kind of privilege of living in a lower cost of income area or having that option, all of those things really do matter, especially when you’re starting out and while you’re on your way up your income growth ladder. Because the sobering and motivating truth is that a $100,000 earner who’s spending $95,000 of that every year is ultimately saving a lot less and building a lot less wealth than someone who’s earning $75,000 but spending just $60,000 and actually investing that difference and building wealth for the future. Those are two very different stories.

Bo: And look, I think this third point really drives it home: income isn’t everything. I think for a lot of us, it’s this idea of a scoreboard. Oh, I want to make this level of income so I can say that I’m in the top 20% or the top 10% or maybe the top 1%. But it really doesn’t matter how much money you make. What really matters is how much money you keep. Are you able to turn your income-generating potential into actual wealth, into actual assets? Because what you do with your dollars matters a whole lot more than how many of the dollars that you’re bringing in. If you have a high savings rate, a lower earner with a higher savings rate can often outpace a higher earner with a lower savings rate. Because a higher earner with a lower savings rate tends to have a much larger lifestyle, a much larger footprint, and is going to need to replace a much larger portion of their life via their portfolio. And small savings rates often aren’t able to do that. And if you’re curious how much should I save and where should I put my dollars, we have a tool for you. Go to moneyguy.com/resources and check out by age how much you should save.

Rebie: I love that. We love seeing the data just as much as you. It’s interesting to see where you are in comparison to the median, the average, all those things. But I love what Bo said: income isn’t everything. It’s one piece of the puzzle, and that’s what we talk about here on the Money Guy Show every single week. Now, we’re going to jump into some really fun stuff. We’ve got some questions from you queued up about your personal financial situation. We also have a segment from the wings where we react to some current events and headlines in the financial media. So stick around for that as well. With that, are you ready to dive into some questions?

Q&A: Bought a House — Now I Have to Move in a Year for Work (20:35)

Rebie: We’re going to start off with a question from AB Asking. It says, “If I just bought a house and learned I have to move within one year for my work, does buying a house in the new city still qualify for the 3/5/25 rule as a first home? All my down payment money is now in home equity.”

Bo: See, okay, AB. Brian’s not here, first of all. So the things that I say end up carrying a lot of weight. And so when I tell you that there’s a mode and mechanism and method to break a rule, I don’t have a counter here to be like, “Oh no, you can’t do that.” This is what stinks. When it comes to buying homes, for those of you who aren’t familiar, when it comes to buying a house, we have this rule: 3/5/25. For your first house, we want you to put at least 3% down. We want you to make sure that you can be in that house for at least 5 years because there are a lot of transaction costs to real estate. And we want to make sure that your total housing cost does not exceed 25% of your gross income. So this is the situation AB’s in. I bought this house and I loved it. But lo and behold, a year later, I’ve got to move for work. I’m always an after-action kind of guy. I want to do an assessment of: hey, the decisions I made previously, did I make those decisions well? Was I sound? Now, it’s possible that this job change came out of the blue. You had no idea it was going to happen. That truly happens. If you knew your job was probably going to change, I’m going to say shame on you for making this aggressive decision with a short-term view. But let’s assume that’s not the case. Sometimes life happens. And what I would argue is that if you’ve only been in this house for one year, you’re probably not going to have the means or method to be able to come up with 20% for your next down payment. So if you bought another house, you’re probably going to take all the equity that you have in your current house, you’re going to sell it, and you’re going to put that down. But allow me to challenge your thinking. Because you just lived through this thing where you thought your plans were sure, and lo and behold, a year later you’ve got to move. Perhaps when you move into this new geography, maybe buying is not the most prudent decision. Maybe you ought to say, oof, fool me once, shame on me. There’s a handful of folks who are going to get that reference. Maybe you should give yourself some freedom and flexibility to rent in this new geography because one of the things about moving into a brand new place: what school district do you want to be in if you have kids? What’s your commute to work? What’s your commute to the gym? Where’s the grocery store? A lot of times if you’re moving into a brand new place, you might not know those things. So we encourage people often: if you can rent, meaning like you’re in a situation where that makes sense, perhaps it makes sense to rent where you’re moving, get a lay of the land, find where you want to be, all the while hopefully being able to save and build up money to be able to buy that next house. Because when you buy the next one, sounds like you’re going to have to run afoul of the 20% rule. That’s just the reality. But if you’re going to run afoul of the three part of 3/5/25 or the 20% part of your second home, then you better make sure you don’t run afoul of the five-year part. You better make sure the next home that you buy, you have an extremely high level of certainty that you’re going to be able to be in there long enough to justify home ownership. Because home ownership is a wonderful, amazing, great thing, but it’s not an absolute necessity. And when it’s made at the wrong time under the wrong circumstances, it can really bite you. So measure twice, two, three, four times before you make that decision.

Rebie: This question instantly did make me have so many questions about your job. Like, do you want to move? Do you want to stay in this job at this company? And is this job offering you a relocation package? Because there are some companies whose relo packages are like, “Hey, we will sell your current home and we will make you whole on any money you lost.” That’s incredible. So definitely ask those questions about the job. I know sometimes it does come out of the blue. I have friends who, like, a company they worked for got acquired and then their role had to move to a new state because it was being consolidated. But even then, like if you’re in the middle of an acquisition, do you want to buy there? You just don’t know. But I think what Bo said was great and the questions about the job are really key there.

Bo: I love that. I mean, you can tell I love that our audience gets the stuff. I just know that that’s how I know y’all are my people. AB Asking, if you would like a tumbler, just email winner at moneyguy.com and we would love to cash in on that.

Q&A: Student Loans and Car Debt at 21 — Should I Pay Off or Invest? (27:44)

Rebie: Nathan’s question says, “How do I prioritize paying off student loans and a car loan that are both around 6% when I’m 21 and feel like my wealth multiplier is too big to sacrifice? The total of all student loan and car loans is $40,000.”

Bo: Nathan with a Y. I got some questions for you. Here’s what I want to know. You’re 21. You’re super young. Your wealth multiplier is insane. For a 21-year-old, it’s going to be somewhere slightly less than 88 times, but if we just say 21 to 66, it’s around a 76-times multiplier. So every dollar that you invest can turn into 76 times. The question is: how do I approach things like student loan debt and auto debt? Here’s what I’m going to argue for you. If your student loans are around 6%, while it’s right on the cusp, it’s right on the threshold, I’m going to argue for you that probably does not count as high interest debt. So if I’m a 21-year-old, I’m probably not going to get super aggressive about prepaying those student loans. I might pay that on a reasonable schedule. On your auto loan, if it’s around 6%: assuming it’s inside 20/3/8, meaning you’re going to have it paid off inside of 36 months, I would argue I don’t think you have to be aggressive about paying that off more quickly than that. So I’ve got minimum or reasonable payments on my student loans while I’m 21. I’ve got my car satisfied inside of the 20/3/8 framework. Then everything above and beyond that, let’s go out there and earn that 76-times multiplier by following the Financial Order of Operations. I’ve made it through my high interest debt assessment. I’m getting into step four. I’ve got my emergency fund. Once I’ve got my emergency fund, I want to start socketing it away in that Roth IRA and that health savings account, building up those tax-free dollars so that I can have my money work for me as hard as it possibly can. And if I can do that, there’s a really good chance my future self looks back and says, “Holy cow, that money I saved when I was 21 was some of the most valuable money I ever saved in my whole entire life.”

Rebie: So what step should he pay off his student loan or prioritize it?

Bo: I’m going to say that’s not high interest. That’s a step nine. Here’s what happens: if your student loans are above 6%, it’s a step three in your 20s. But as you get into your 30s, the threshold drops. It’s going to be step three. You got to figure out when do you make that assessment? That’s true. And that’s why the chart we just pulled up shows it changes each decade. What counts as high interest debt changes, and the older you get, the number’s going to go down because we want you to pay off some stuff before you get to retirement. That gets more and more important. Good question, Nathan. You do have a very powerful wealth multiplier. If you want to know your wealth multiplier or download your own copy of the Financial Order of Operations, go to moneyguy.com/resources. It’s all there for free for you in downloadable form and some calculator forms.

Q&A: Should I View Roth IRA and Roth 401k the Same? (32:22)

Rebie: Next up is Kyle’s question. It says, “Hey, Money Guy team. Should I view Roth IRA and Roth 401k the same? I’m not touching it until 59 and a half. My employer offers a 401k. Income is too high for normal contributions. Wondering if backdoor contributions are worth it.”

Bo: So here’s what I’m going to tell you. Can you look at them the same? I’m going to say yes, with a caveat. Because here’s my opinion: the Roth IRA I believe edges out the Roth 401k for just a handful of reasons. Number one: you get to choose where your Roth IRA is held. So if I want it at Fidelity or Vanguard or Charles Schwab or wherever, I get to choose the custodian. With my 401k, I don’t get to do that. My 401k is going to be captive with the custodian that my company has chosen to hold that plan. It might be a Voya, Empower, Fidelity, Vanguard, fill in the blank. Well, because I get to choose a custodian, odds are on my Roth IRA, the cost of operating the Roth are going to be lower. There are no costs to operate a Roth at one of those low-cost custodians. With a 401k, likely as a plan participant, I probably am going to bear some costs for the record keeper or third-party administrator. Now, let’s assume that you have a good 401k and all the investment options match because in your Roth IRA, you get unfettered, unrestricted access to any investment you want. Inside the 401k, you can only buy the funds that they make available inside the plan. But here’s the real reason: with a 401k, most 401ks are pretty locked down in that you can’t go inside and get any of that money until you either retire or separate from service. Those 401k dollars are really there and they’re going to be locked away until you change jobs or until you retire, which is what you want. That’s how they’re supposed to operate. With a Roth IRA, there is this one little provision that when I put money into a Roth IRA, if I had to in an absolute like worst-case emergency, I could break the glass and I could go in and get my basis, meaning the money I put in back penalty-free and tax-free. So if I put $7,500 into a Roth this year and next year the you-know-what hits the fan, I can go in and get that $7,500 back and I don’t have to pay taxes or any penalties on that. Had I put that $7,500 into my 401k, unless they have like a hardship provision or a loan provision, which are awful, I can’t go get that money. So I have just slightly more access there. What would I like to see you do, Kyle? Do the Roth IRA, knock out that $7,500. And then once you’ve done that, as you finish step five, maxing out your Roth, assuming you don’t have access to an HSA, then you go to step six, your employer-sponsored retirement plan, and you can do even more Roth. Because while you can only do $7,500 into a Roth IRA, inside of your 401k, you can go all the way up to $24,500 and you can make Roth contributions. And I had a call with a prospective client two days ago and they didn’t realize this: just because you do Roth contributions does not mean that you don’t still qualify for the employer match. The employer match in most circumstances, unless you elect otherwise, has to go in the pre-tax bucket. This person thought, “Oh, well, because that’s pre-tax, if I want to get the match, I’ve got to do pre-tax. So I’m going to do 3% pre-tax to get the match.” And I said, “Oh, contraire. That’s not what you have to do. You can still do all Roth and your employer match will still go in the pre-tax bucket and that’s totally okay.” So Kyle, for you: $7,500 to a Roth IRA, then $24,500 into your 401k. That is tons of tax-free Roth dollars growing for you.

Rebie: That’s great, Kyle. Thank you for the question. Also Nathan, if you’d both like a tumbler, just email winner at moneyguy.com. We would love to send you one since we answered your question on the show.

Bo: All right, it’s time for our From the Wings segment. But first, I have to give a shout out to our guy Brian Preston himself. October is a big month. It is the last month for preorders of Millionaire Mission on paperback, and it is your last month to get in on the really fun perks that we have planned for everybody who preorders the paperback version of the book. This book is still that same New York Times bestselling book we know and love, but it has been revised and updated with some new stories, fresh case studies that Brian’s really proud of, and fresh numbers for 2026. So if you haven’t read the book yet, or if you love the book and want to keep supporting Brian’s mission to get good financial advice out to everyone who needs it, please go to moneyguy.com/millionairemission and preorder. It really helps us get the message out. Brian’s Book Club and some fun things are being announced soon about what that is going to be. You definitely want to be in on that. And if you’ve read the book and gotten value out of it, leave a comment on Amazon so other people can know. That stuff is more motivating than you realize. It’s the reason why we get to keep doing this and keep putting this stuff out there.

From the Wings: Headlines — News or Noise? (39:16)

Rebie: All right, from the wings, our team from the wings have put together several financial-related news stories. I’m going to read them off and we are going to decide if they are thumbs up news or thumbs down noise. Should you pay attention or not pay attention? Are you ready?

Bo: I’m ready.

Rebie: First headline: “Highest mortgage rates in three years chill the housing market.” Is it news or noise? We both said news. Why do you say it’s news?

Bo: Well, because people who need to buy a house or want to buy a house, this matters. It’s going to greatly impact what they’re going to pay month to month for their mortgage and all of the additional costs. We did a recent show and we showed for the exact same house, what the cost was with like a 4% interest rate which we saw a number of years ago versus 7.5%. And interest rates in and of themselves cause the affordability of housing to be very, very different for the exact same house in the exact same place on the exact same street. And so there are a lot of people who are either trying to get into a home or potentially considering trying to upgrade or sell their home and saying, “Man, I just can’t do it with interest rates as high as they are.” And I do think it’s news. Because I still am a proponent that most things, especially when it comes to housing and real estate, are supply and demand driven. And if the affordability stays high, the cost of housing stays high, and interest rates stay high, it’s going to create a demand issue where supply is going to increase but there’s not going to be enough demand, and something’s going to have to change, something’s going to have to fall. So if I’m a first-time home buyer, I’m keeping a close eye on: okay, what’s happening with interest rates? 7.5% seems pretty awful, but might 6.75% be more compelling? Might 6.5% be more compelling? Is that something I think I’m going to see in the near future? So I just want to stay abreast of that if I’m someone in that market. Now, if I’ve got my house and I’m a couple years in and I’ve got the 2.75% mortgage, I’m just quietly smiling to myself and not telling anybody about it. That’s exactly right. For folks trying to get in, I do think it matters. Interest rate matters, price matters, what you pay matters. For most folks when you buy a home, it is the single most expensive, largest purchase you will ever make. And so you want to make sure you make it well and it’s well thought out.

Rebie: Yeah. All right. Next headline: “Stocks are at record highs for all the right reasons. Investors are still biting their nails.” Is this news or noise?

Bo: Oh, we both said noise. Always be buying. What’s the stock market doing today? I don’t know. What did it do this week? I don’t know. What did it do this month? I don’t know. What do I care about? Am I saving? Am I putting dollars in? Do I have a portfolio that matches my time horizon, risk tolerance, available accounts, goals, risk capacity, all these different things? If I know that I have that and I know that I’m saving well, I don’t really care what the market does in the short term. I want to make sure that over the long term I’m putting my dollars to work because I believe that over the long term it’s going to continue moving up and to the right. Focusing on and getting lost in the noise of short-term daily price movements, I think has way more risk of you arriving at a false conclusion or making an emotional decision. So I think all-time highs, all-time lows, is noise in my opinion. It was Nick Murray who famously said, “Man, if you think the market’s high right now, wait till you see it 10 years from now.” And I loved it. If you could go back in time and tell your 10-years-ago self that the market would be trading at this level today, you’d say, oh no, that sounds insane. And lo and behold, here we are. And that’s kind of the way that this ever-expanding pie of our economic and capital markets works. And so I’m happy to be an investor. I’m going to keep buying. As a matter of fact, I’m going to always be buying. That’s what I do.

Rebie: Always be buying. All right, we’ve got two more. Next headline: “Nearly 70 million kids now have a Trump account, but parents have to claim it first.” Is this news or noise?

Bo: News, man. Trump accounts, it’s free money from the government. Now, whether you agree with it, disagree with it, like him, don’t like him, that is not part of this conversation. What’s part of this conversation is there is this thing that’s available to you if you have a kid that is of the correct age to be eligible for it. And it’s free money, and that free money can be put into an account and it can grow over the long term for your kids and it can start that engine of compounding growth. And the reason I said this was news is because this data was actually suggesting very, very few have actually been claimed. That means like if you have a kid in that age range, you as a parent have to go do the step to claim and open the account in order to get that free money. The account is like automatically opened, but if you’re not going and taking advantage of it, you will not benefit from those dollars and neither will your child. So I think that’s news. I think that’s a really surprising stat. And the key to like financial success is being a passive investor but an active participant in your financial life. I’m actively following the FOO. I’m actively building my wealth. I’m actively putting my money to work, but I’m passively letting those dollars grow. Don’t be someone who just sits by and lets life happen to you because you’re going to miss out on tons of opportunity. If you think an 88-times multiplier is insane for a 20-year-old, did you know that for a zero-year-old, a newborn, the wealth multiplier is 647? That Trump account for a newborn can turn into 647 times what it is today if you let that money work all the way till they retire. Don’t miss out on that opportunity.

Rebie: Yeah. All right. Last but not least, the headline says: “Gangster walruses, exercising bear among the funniest wildlife photos of 2026, from USA Today.”

Bo: Oh, I got to see the photos. That’s just a bunch of walruses. They’re gangster walruses because there’s a lot of them in this photo. They’re just in the ocean and they’re just kind of staring at us. WWA: walruses with attitude, right? Look at that. Oh my goodness. An exercising bear. That’s cute. Hold on. Why is there a paw coming out of his back? Oh, he just twisted. He’s doing his obliques. You know what, I like it. Is that a praying mantis just sitting? It’s like she’s posing. Attitude. It’s like Coming Up on Praying Mantis Vogue. That’s awesome.

Rebie: Obviously news or noise?

Bo: I’ll take that. That’s news. You kidding me? I like some happiness in my day. Look, health is wealth. If a bear can do a few crunches and twist the obliques, so can you. So can you.

Rebie: All right, that has been our From the Wings segment. Thanks for playing along and thanks to our team in the wings for some good financial education and a little fun. We appreciate it. All right, let’s dive back into some questions.

Q&A: Should I Open a Personal Line of Credit as an Emergency Backup? (47:59)

Rebie: This question is from Amber. “Is it a good idea to apply for a personal line of credit as a just in case/emergency option? Not to use it regularly, but just as an extra level of security. I’m 34, female, with a $70k income on step five of the FOO with $120k in retirement.”

Bo: Well, here’s what I know. You’re 34 years old and you tell me you’re on step five, which would be Roth and HSA. So you’re investing, which is where that $120k of invested assets is probably coming from. For those who aren’t familiar, this is the Financial Order of Operations, a nine-step process that tells you what to do with your next dollar. If you want your free copy, you go to moneyguy.com/resources, download your free copy. If you’re on step five, because I’m good at math, I know that means you are past step four. Well, step four is a fully funded emergency fund. So you either have three months of living expenses or six months of living expenses, or somewhere in between, to cover you. My opinion is: the reason the emergency fund is there is to do the very thing that you’re asking for, man. Should I open up this line of credit just so I have access just in case of an emergency? I would argue an appropriately funded emergency fund should satisfy that. Because here’s what I don’t want to have happen: I worry if you have access to it, does it start looking like, you know how like when Bugs Bunny is going through the desert and he starts seeing all these mirages and he starts seeing like the turkey leg? I’m worried that when you have that line of credit there available, you’re like, “Oh man, I want to go on that trip. You know what, I got this line. I’m just going to pull a little bit. I’ll pay it right back.” And next thing, “Hey, I need a new car. I got this line.” And all of a sudden that ease of access to that money, you wake up one day and you’re like, “Holy cow, I’ve got this debt.” I am of the opinion if you’ve done the things you were supposed to do, you should not need to have that emergency option there. Now, don’t mishear me. Home equity lines are fine if you’re using them for the right reasons at the right time. But opening one just to have it, I worry about the behavioral thing that could happen. Because here’s what I know to be true: if I have cash and I’ve got to spend my cash, it feels painful. But when I swipe a card, the card does not diminish. If my emergency fund is $20,000 and I’ve got to pull something out and all of a sudden it’s $15,000, I’m like, oof. If I go do it on a line of credit, it almost feels like funny money, like monopoly money. Behaviorally, I would worry about that being the case. So if you can avoid doing it, I think I would avoid doing it.

Rebie: That was my thought too. The behavioral ease scares me. And it makes me wonder, like, maybe you do have a lower risk tolerance and you’re a more risk-averse person. There’s nothing wrong with that. But also to Bo’s point, the emergency fund of three to six months should make you feel really good and really secure. I wouldn’t want to open up debt in an emergency if I don’t have to. I’d rather use my emergency fund. So well said, Amber. If you would like a Money Guy tumbler, just email winner at moneyguy.com and we’d love to send you one.

Q&A: What’s the Best Alternative for Someone Who Doesn’t Qualify for Term Life? (52:27)

Rebie: Let’s go to Justin 33. Great name. “What is the best alternative for someone who does not medically qualify for term life? 41 years old with a 33-year-old spouse and two young kids, about five times annual income saved. Want options outside employer group life.”

Bo: So here’s the problem. Does not medically qualify means like, hey, for some reason I’ve had a medical condition or something happened in my past and now an insurance company is saying, “Hey, we’re unwilling to underwrite you for life insurance.” It could be because of a big thing or a little thing. These things just happen. Well, one of the reasons why employer options are so great is because oftentimes an employer option, they’re not underwriting you specifically as the individual. They’re underwriting the entire class of employees that you fall under. So even if you can’t get insurance on your own, you might be able, through your company, to get the free $50,000 of life insurance that the company provides. But a lot of employers will let you increase that. Like, hey, I’m happy to pay for it, but I want to get ten times my annual salary. I make $50,000 a year. I want to get a $500,000 death benefit of insurance through my group plan. Realistically, your group plan might be the only way you can do it if you’re uninsurable otherwise. And if you’re 41 and your spouse is younger and you have two young kids, you’ve got about five times your annual income saved, which is great. We say that by the time you get to 40, we want you to have three times your annual income. So you’re certainly ahead of the curve, but you’re not financially independent. Because the question I would ask Justin: if that proverbial bus hit you on a Tuesday afternoon, would five times your annual income plus your wife’s income provide the life that your wife and your kids that you would like for it to provide? Does it replace all of the income that you would have earned in the rest of your working career? Odds are it probably wouldn’t do that. It might not be enough. And so I think that outside of just saving like a banshee and trying to build up assets as quickly as you can, I think that employer-sponsored coverage is probably going to be your best bet to be able to get some sort of coverage in place. Now, just so you know, generally for healthy people that have low insurable risk, it’s often less expensive for you to go direct and not do it inside your employer plan because with the employer plan, they’re taking the average health of all the people in the population. When you go get underwritten specifically, oh, this person’s super healthy, preferred plus, it’s going to be lower cost. For those on the other side: hey, I’m a little bit unhealthy, I’ve got these other issues going on, it might actually be less expensive for you to look at the group plan. So we always tell people when you’re assessing: get quotes both ways. What would it cost to increase through my employer? What would it cost me to go direct? And which one makes more sense? In your case, Justin, your employer plan is probably the best bet.

Rebie: Justin Credible 33, thank you for the question and the awesome username. If you would like a Money Guy tumbler, just email winner at moneyguy.com.

Q&A: Roth vs. Pre-Tax — What’s the Right Tax Bracket to Switch? (55:54)

Rebie: All right. Now we’re going to go to Will Merrow’s question. “Hi, Money Guy team. JL Collins says to switch from Roth to pre-tax at the 22% tax bracket to invest the tax savings. How does this align with FOO step 5? At what exact marginal bracket should we stop Roth?”

Bo: Look, I love JL and it’s okay, it’s a little bit wrong right here. We think about it a little bit differently. If you’re in a lower tax bracket, we love the idea of you doing Roth. And in our world, because most people live not only in a country that taxes their earnings, but a lot of people live in states that tax their earnings. So the math we want you to do, Will, is we want you to take your marginal federal rate, that’s the rate of tax you will pay on the next dollar that you earn, the one that’s on the tax bracket, marginal federal bracket plus your marginal state bracket. If that’s below 25%, so in this