How to Become A Millionaire (By Age)

Introduction – The Mindset and Math Behind Becoming a Millionaire (0:00)

Brian: If you want to be a millionaire, you got to think, you got to act like a millionaire. But what does that really look like?

Bo: Brian, I am so excited because today we’re not just talking about what millionaires do. We’re also talking about the math to show you how to become a millionaire based on where you are in your current age. And at the end, we’re even going to let you in on a little money guy secret.

Brian: So, I’m Brian. He’s Bo, and we’re financial advisors sharing the mindset and the math behind becoming a millionaire. With that, let’s dive right in.

Bo: So, Brian, at its basis level, we believe that anyone can become a millionaire, no matter where you come from, no matter what your backstory is. But there are some things you need to understand. And one of those things specifically are the three ingredients that it takes to actually build wealth.

Brian: Yeah. I mean, guys, we have boiled this down to the lowest common denominator. You got to have discipline, living on less than you make to create that margin of money. You put that to work and the most amount of time is going to load you up with wealth. Because we love the power of compounding growth.

Bo: What’s interesting is based on where you are in your financial journey, you might not have equal parts of each of these. You might not be able to go 33%, 33%, 33%. If you have tons of time and you’re super young, you may not yet have the money or the margin to be able to build. Or maybe if you’re later on in life and you don’t have as much time, boy, do you have to really exercise that discipline. So, what we’re going to show you today is how to become a millionaire, how to be a millionaire based on the age and stage of life that you’re in. And so, right now, Brian, I think we ought to start at the beginning and talk about both the mindset and the math around 20-year-olds that want to become millionaires.

Brian: Yeah. And what I like is we’re going to show you, hey, this is what your peers are going to be doing. Don’t get distracted or fall into the traps that they fall into. Think and act like a millionaire.

Your 20s – Average Behaviors vs. Millionaire Mindset (1:58)

Bo: So, let’s talk, Brian, when it comes to folks in their 20s, let’s talk about some of the average behaviors. What do they do? And the very first thing I think that is common amongst folks in their 20s that are falling into the trap of the average American is they’re just not prepared for the unknown. They’re not prepared for emergencies. They haven’t thought through, man, sometimes things are going to happen that I did not account for.

Brian: Yeah. I mean, think about this. 46% of Americans report having three months of expenses for emergencies. That means that 54%, that’s right, we do public math around here, are unprepared because that’s all you’re doing if you don’t have 3 to 6 months of emergency reserves is you’re just waiting for bad stuff to happen to derail your financial life.

Bo: So, how do you do it? How do you actually build up that? Well, you have to figure out, and the earlier you figure this out, the better, how to live below your means. And yet, most folks in their 20s, the average American is actually living above their means. We know that only 38% of Americans say that they spend less than they make. That means that the vast majority out there are either spending exactly what they make or likely even worse, spending more than they make and going into debt. That’s not what you want your financial life to look like.

Brian: And I get it, especially when you’re in your 20s, you have a present bias. You’re not thinking for the long term. You’re not thinking about deferred gratification. You’re thinking about, hey, what’s the next vacation I can go on? And literally, that shows up in the stats. 52% of Gen Z adults are frequent travelers taking at least three leisure trips in the past year. And I’m not against that. Don’t mishear us. It’s just there’s a time and a place. You got to make sure you pay yourself first and you’ve got to load up on the discipline because your most valuable thing when you’re in your 20s, you’re a billionaire of time. And if you’re sleeping on that time, you’re missing out.

Bo: And you can see how these mindsets, they stack, right? I want to take a lot of vacation, so I’m not going to exercise discipline. So, I’m going to live at my means. I’m not going to build an emergency reserve. And before you know it, you wake up and say, “Holy cow, my life is not where I want it to be.” So that’s what the average American looks like. But now let’s talk about millionaires. What do they do? What are the behaviors that make them stand apart? And the first is they do recognize the value of having an emergency fund, of having their bases covered so that no matter what unknown unknown comes their way, it will not derail their entire financial life.

Brian: Now look, I know if you’re in your 20s, you’re watching this and like that’s not sexy, an emergency fund. But I promise you guys, you don’t want to get caught making desperate decisions like using credit cards or debt because some emergency happens. That’s why we start with the foundational basic stuff. Don’t skip this step because then we get to move in to the sexier sizzle type stuff of like investing.

Bo: Yeah. If you can be of the mindset that at this stage in my 20s, I’m just going to do something. I’m just going to start somewhere. I’m just going to begin putting my money to work for you. You don’t recognize how valuable that single decision can be for you later on in life.

Brian: Well, that’s why. Look, let’s talk about how much you need to save. You just said do something. Literally, the stats show this. You’re so wealthy with time in your 20s that you can leverage the compounding growth. Even if you start out at 20 years of age, even if you’re only saving and investing 10%, you’re going to get a 92% replacement ratio in retirement. That’s pretty incredible, guys. If you think about it, it doesn’t require much. I don’t care if it’s $50 a month. I don’t care if it’s $100 a month. Just do something exactly what Bo said because your time is just so valuable at this stage of life.

Bo: But we don’t want you only living for the future. We don’t want you sacrificing all of today for some tomorrow that may not come. So millionaires that have figured this out or financial mutants that understand what it takes, they recognize that in this stage it’s okay to bedazzle my basic life. If you notice, we said, “Hey, it’s not bad to travel in your 20s. What we don’t want you doing is being that Gen Zer that’s taking three luxury vacations per year in your 20s.” That’s not what it should likely look like. There are ways that you can still create memories, create experiences without breaking the budget.

Brian: Bedazzling your basic life means that you are focusing on creating memories, creating great moments, but it’s not going to be expensive. You’re going to save the bougie stuff for when you actually get to step eight and beyond of your financial order of operations. But I am okay, you know, this might look like state parks. It might resemble, I know when I even went to Europe, you can bedazzle basic even in Europe, but that means you’re going to likely be dragging your own luggage down the cobblestone streets. You’ll be using all the public transportation and you’re probably going to be using your own self-guided tours. There is a way to do this on the cheap and still get those blossoming memories.

Bo: And then the other thing that folks in their 20s that are doing it right, what they figured out is that they understand that failing to plan is planning to fail. So they have a plan in place. They’re not just letting life happen. And if you’re someone who says, “Man, I just wish I had that plan. I wish I knew what I should be doing when it comes to money.” Don’t you worry. We have the ticket. Brian, will you hold the thing up? The Financial Order of Operations is a nine-step process to help you figure out exactly what you should do with your next dollar. So, it takes the guesswork out of it so you can say, okay, I’m doing what I’m supposed to be doing, putting my money where it’s supposed to be going.

Brian: Consider this a love letter to all my 20-somethings who were just like me when I first got out of school. Had a lot of ambition, but I just didn’t know what to do with money. I was like, why does nobody tell you what to do with your next dollar? Here it is, guys. Just go to moneyguy.com/resources. Look at my book, Millionaire Mission. We’ll load you up because I want you to get inspired because once you start putting this money to work, now we get to get to the sexy part of the math. And just like I got inspired by my junior year economics teacher, Mr. Morrow. He shared with me, he told the whole class, it was just kind of a throwaway statement. Wasn’t part of the curriculum. He said, “If you could save and invest $100 a month, you’d be a millionaire.” Guess what, Mr. Morrow? He was wrong, but in a good way. Because look at this. Look at the actual stats here. For a 20 year old, you only have to save $95 a month if you want to be a millionaire or a lump sum of $11,300.

The Math for Your 20s (8:25)

Brian: If you’re 25 years of age, $184 a month or a little under $23,000 lump sum at the beginning. If you’re 29 years old, by the way, use this as a check figure for yourself. If you’re kind of coming to the end of the decade and you’re saying, “Where am I at?” $332 a month if you’re starting at zero, or if you’re using this as a check figure, you only have to have $38,249. You can do this, guys. Just do something just like Bo said.

Bo: Remember, it only takes a little bit to have a huge impact. So, if you’re curious, okay, am I on track? Am I doing what I’m supposed to be doing? We have a great deliverable for you. Go out to moneyguy.com/resources and download the deliverable Are You On Track to Be a Millionaire. We actually walk through whatever age you are. We just showed you what it is for 20, 25, 29. But maybe you’re a 22-year-old. You want to say, okay, I just graduated. I just started. What do I need to be saving? Or, man, if I’m bringing some money from college that I had left over, how much would I need to invest to set myself up to be a millionaire by the time I retire? Moneyguy.com/resources to download that. Your 20s is a wonderful decade for you to set yourself up on a solid financial foundation because as we get into our 30s, things start to change a little bit. Brian, let’s talk about what does the mindset and the math look like for folks who are now entering into this decade of life?

Your 30s – Avoiding the Debt Trap (9:44)

Brian: Yeah. Let’s go ahead and talk about the traps. I want to tell you because look, a lot of your peers are falling into this. So, we want to help you avoid this. The first thing is how the heck are you using debt? If you owe money, I get it. Debt seems like it is the perfect solution to all your problems. If you’re short on monthly cash flow, that’s all right. Put it on a card, put it on a small consumer loan, you’ll be okay. But here’s how this works against you guys is that not only do these things have predatory interest rates, they also work against that component of time. Don’t fall into this trap.

Bo: Yeah. What’s really, really sad is that right now the average millennial, the person that’s in their 30s, has $6,961 of credit card debt. That’s not they’re using that much on their card. That’s an amount that they’re carrying over month over month over month. And if you’re carrying debt, if you have that interest working against you, you are letting one of the most powerful forces in the world, compound interest, be an adversary instead of being an ally. So don’t fall into this trap. And we think that when you are in your 30s, you ought to be thinking about if you have anything in step three. Brian, will you hold up the thing for me? If you have anything in step three of the financial order of operations, if you have any sort of high-interest debt, we want you to focus on knocking that out. And the average American is not doing that.

Brian: Well, a lot of people are probably immediately going, “Well, Bo, what is this? What is high-interest debt?” Because we need some guidance because I’m starting at ground zero. Maybe I didn’t find this in my 20s. I’m now in my 30s. We got you covered. Look, we understand student loans. A lot of you felt like the way you were going to better yourself was to increase your education to expand what your earning potential was. So in your 30s if you have student loans greater than 5%, you got to get serious about paying that off. Car loans, we understand that some of you, your first wealth building opportunity is going to that job. So you need some reliable transportation. We understand that it’s not ideal but you might even have to finance. We want you to pay cash for cars by the way. That’s the first thing I have to put that disclaimer. But if you do, if you’re on that beginning stage of good financial management, you might have to make some uncomfortable decisions. 9% is probably the ground rule for that. But you’ll notice, and a lot of people are shocked by this because if you watch any type of social media, you hear people always leveraging and taking advantage of these 0% introductory offers from credit cards. Guess what? I still treat that as no go land. Remember, credit card use is okay, but carrying any type of balance even if it’s 0%, that is a no way, no go zone.

Car Buying and Housing Mistakes in Your 30s (12:20)

Bo: Another thing that we see folks in their 30s, a behavior that we see the average American falling into, and we see how this happens because we are constantly looking at and evaluating our peers, is buying very expensive cars. There are people who, man, okay, I didn’t do it in my 20s. Now I’m in my 30s. The family’s bigger. The neighbors have this. If so and so is driving that car, then surely I can be driving that car. Well, if you’ve heard us talk about car buying at all, surely you’ve heard us talk about our 20/3/8 rule. When it comes to buying a car, whether you’re buying a new car or a used car, we want you to follow 20/3/8. That’s where you put 20% down, you don’t finance it for any more than 36 months or three years, and we want your total car payment to not exceed 8% of your monthly gross income. That’s what we want you to be doing. But unfortunately, Brian, the average American is not doing that.

Brian: Well, no, Bo, what I love is let’s actually compare and contrast. Listen, 20/3/8 is obviously your bridge to getting you to your job. Walk them through how poorly the average American is doing this.

Bo: Yeah. So, when it comes to 20% down, we want you to put down 20%. Well, the average down payment for a new car right now, only 14%. Fail. We want you to finance for no more than 3 years or 36 months. The average loan term on a new car right now is over 70 months or 5.8 years. And we said that we want your monthly payment to not exceed 8% of your monthly gross income. The average new car payment is $754 or about 10.8% of the median income. The average American is failing on every single one of these metrics.

Brian: Look, there’s a better way to do money. And if you’re one of those people, you’re starting out, you’re like, “Okay, guys, give me the numbers. I need to know what I need to know so I can start taking action.” We want to encourage you to go to moneyguy.com/resources. We actually have a great calculator on the website for how much car can you truly afford. Take advantage of these resources. This is going to load you up to help you out so you don’t fall into these traps.

Bo: Now, this isn’t going to be surprising, but if the average American is making a pretty poor decision when it comes to something as expensive as a car, you might not be surprised that another thing that the average American is doing very poorly is they’re actually buying too much house as well. For most people, this is the most expensive thing that you’ll ever buy. And Brian, I don’t think the average American is doing it the right way.

Brian: Yeah, this is one. Look, I don’t like poking on this one because we’ve just come through a rough period of time because of cost of living and other things because we went through a really big inflationary period. But still, we have to highlight the fact that 23.7%, close to basically a quarter of Americans are spending greater than 30% of their income on housing. That is an uncomfortable thing because guys, if you are house rich, life poor, it doesn’t leave enough margin for you to save for the future to do all the things to live your best life.

Bo: So, we think that there’s a better way when it comes to buying a house. We want you to follow 3/5/25. We want you to put down at least 3% down on the house. We don’t want you to, on your first house, any subsequent homes after that, it has to be 20%. But on your first house, down payment as low as 3%. We want you to plan to be in the home for at least 5 years. We want the total housing costs, your principal, interest, taxes, and insurance to not exceed 25% of your gross income. If you can do that, you can make sure that you’re not letting your housing outrun your paycheck and putting you in a dire spot where you’re not able to actually build wealth for the future. And I think Brian, the average American is not doing this. But when it comes to financial mutants, when it comes to folks that are either millionaires now or on their way to being millionaires, their behaviors look a little bit differently.

Millionaire Behaviors in Your 30s (16:12)

Brian: Yeah, we’ve kind of covered, we just went through a lot of this with keeping your debt in check. That’s probably the first thing you need to be aware of. And that’s why we give you, we try to give you the 20/3/8. That’s why we give you the 25%. We’re giving you the guidelines so you can, those that have been there and done that, you have a path that’s already well worn and you can follow. Just don’t fall in the traps. I know we live in this consumer society where there’s so many advertisers, there’s so many of your peers that are just buy today and worry about paying for it later. That is a trap that you just can’t fall into. So, keep that debt in check.

Bo: They’ve also figured out that having a fully funded emergency fund, not just a partially funded emergency fund, really, really matters. We’ve already said this, this is the thing that keeps your financial life out of the ditch. And you know, every year, Brian, we do an annual survey of our clients and we say, “How much cash do you have? What does your emergency fund look like?” People that have not got a fully funded emergency fund, less than three months, only 6% of our wealth survey respondents said that was the truth for them. The vast majority, 40% and 54% said they had more than three months. 94% of respondents have greater than three months. They recognize that in order to be able to keep my financial journey on the path, I can’t let the unknown unknowns derail me.

Brian: That’s why I think it’s worth repeating. You just said 94% of our millionaire clients understand that they need to have an emergency fund. And so that’s why if you’re looking for behaviors to model for yourself, guys, get in there and get that. Like I said, it’s not, I know it’s not sexy. A lot of people think that having cash reserves is trash because your money is not working for you as much as it should. Guys, this keeps you from making those desperate decisions. That’s why wealthy people protect themselves and you should do the same thing so you don’t get stuck. And that still leaves room because the next millionaire behavior we have for people in the 30s is yes, we do want you to start investing more because it’s still powerful to use that compounding growth.

Bo: Yeah. What’s really interesting is in your 20s, we say, “Hey, we just want you to do something.” Now, in your 30s, we want to make sure that you’re doing enough. We want to make sure that your savings rate is increasing to where it should be. And if you’re curious, okay, where should I be saving? How much should I be saving? Go to moneyguy.com/resources and check out our How Much Should You Save. And what you can see is if you’re a 30-year-old and you’re starting from scratch and you haven’t begun saving yet, having a savings rate of 20 to 25% will get you to that level where you’re going to be able to fully replace your pre-retirement income. But the longer you wait, the harder it becomes. If your goal is to replace 100% of your pre-retirement income and you didn’t start saving until you were 35, well then your savings rate might need to be 30%. Again, this assumes you’re starting from zero. So, make sure you understand where you are and where your savings rate should be. In your 30s, you don’t get the just do something pass that you got in your 20s.

Brian: Yeah. And I want you to automate this. I mean, make this easy. It’s easy with your employer plan, your 401(k), or even you could set this up straight out of your paycheck every month. You have an automatic for the people type investment strategy. And then look, even if you can’t start out at 20 or even 15%, just do something just like the 20s. Then when you get your next paycheck, your next pay increase, if you get a promotion or you get a big bonus or something, I want you to think about a 60/40 split on that where 60% goes towards your future in investing. And then 40% can then be built into how you live your life. If you can start building these type of habits, you will find success because it really does build upon itself and you start seeing the power of your army of dollar bills, you’ll want to do more and you want to experience that success.

The Math for Your 30s (20:01)

Bo: All right, Brian, let’s talk about the math in the 30s. If you’re starting out at 30 from zero and your goal is to be a millionaire by the time that you retire, you need to start saving about $340 per month. Or if you’re someone who’s been saving through your 30s and you’ve accumulated $43,300, you are already on your way to millionaire status. At 35, if you’re starting at zero, you need to save about $600 a month. Or if by 35 you’ve saved up about $78,700, you’re on your way to millionaire status. And if you’re at the end of the decade and you’re in your late 30s, it is still not too late because you can still be a millionaire by the time you retire. Even starting at zero, if you can save a little bit less than $1,000 a month, or if you have been saving, you have been accumulating, and you have at least $122,500 saved up, you are already on track to be a millionaire without saving another dollar by the time you retire.

Brian: Well, look, I know it’s starting to get steep that you’re getting close to $1,000 a month at 39, but you’re also starting to probably hit a stride in your earning potential. Don’t sleep on that time, guys, because your 30s is still a very rich time for getting some compounding growth in there. If you want to know what your wealth multiplier is specifically by your age, make sure you’re going to moneyguy.com/resources. We will load you up.

Your 40s – Wake Up Call for Average Americans (21:20)

Bo: All right, Brian, let’s talk now about the mindset and as well as the math that is necessary to build towards millionaire status in your 40s. And I think this one is really interesting because what happens for the average American is they just kind of let life happen in their 20s and they kind of let life happen in their 30s and then they get to the 40s and they really have no idea where they are. They find themselves at this point and we say, “Hey, well, how much do you have saved for retirement?” They’re like, “Ah, I don’t know. I mean I’m doing my 401(k), 3%. I save 3%.” That is not the answer you want to give. And yet there’s a vast large population of Americans that have no idea what they’ve been doing.

Brian: Yeah, we’re not making this up. TIAA-CREF just did a survey and they found 25% of Americans have no idea how much they’ve saved for retirement. Let me go ahead and just give you the cliffnotes version of this. If you don’t know how much you’ve saved for retirement and you’re in your 40s, you haven’t saved enough because more than likely you’ve had, exactly what Bo said, you’ve deferred the wrong thing. Instead of deferred gratification, you’ve been loading it up, living your best life in your 20s and 30s. Now is the time to take responsibility and get to cranking.

Bo: So, how do you know? How can you know where you are? We have a great tool for you. Go to learn.moneyguy.com. Download our net worth tool and right now list out here’s everything that I own and here’s everything that I owe and you will know where your starting point is because how on earth can you know if you are on the curve, ahead of the curve, behind the curve if you don’t even know what your starting point is. So make sure that you do that. The average American in their 40s is not doing that. But they’re not lazy because there is something that the average American in their 40s is doing. They recognize now, oh, okay, I’ve got a little bit of jingle, have a little bit of success. Now, I’m going to just use risk. I’m going to add on the risk spectrum to see if I can make up for losses.

Brian: Well, look, I get it. You do wake up in your 40s, you realize, hey, I’m actually going to need something to retire. And Americans, we’re looking for the easy button. And they say, “Well, instead of me taking the responsibility and realizing, hey, that deferred gratification that I put off in my 20s, put off in my 30s, how about if I just take on more risk or take on more speculative investments, cut the corner off of this? I’m sure that will work out well.” Guys, that is not the solution either. The 40s is kind of the last stop on the train to where your compounding growth is still super valuable. Don’t let another day go by where you’ve squandered this. Take the responsibility and start saving and investing the way millionaires build it. And I know it’s not sexy to do. And I don’t know why I keep saying sexy in today’s show, but there’s definitely more sizzle with index funds. Instead of trying to beat the market, be the market and you can still find success, but it’s going to require you to have a healthy savings rate.

Bo: It’s very possible to still catch up even if you’re behind in your 40s. But I think a lot of folks in their 40s, they end up getting their priorities out of whack. They don’t defer gratification. They don’t think about the future. And unfortunately, even if they do, what we see a lot of times with the average American in their 40s, they say, “Hey, no, no, no. I’m going to be responsible. I’m going to do what I’m supposed to do. I’m going to start saving for my kids. I’m going to open up the custodial account. I’m going to start funding the 529. Oh, I haven’t looked at my 401(k), but I’m going to make sure that my kids are taken care of.” And a lot of folks, the average American begins taking care of the next generation before they’ve taken care of themselves. And that’s getting it out of order.

Brian: This stat actually got a gasp out of me when we looked at it when we were doing the show meeting because 56% of Americans say they would choose to save for their kids’ college instead of their own retirement. That sounds noble. No, it sounds noble. I don’t know when my heart got hardened, but I was like, “This is a disaster.” If you want to live in your kids’ basement and really strap them with a responsibility, this is the type of decision-making you want. Look, I’m all for the extended family living together. But I want it to be out of choice, not out of obligation. Get out there. Just like the airlines, you think they’re doing that because they want to, where they walk around. I literally was on a flight a few days ago where I watched the flight attendants are walking through the plane looking for young people and their parents and then they make sure they say, “Hey, make sure you put on that oxygen mask for yourself first before you help out the kids.” It’s the same thing with your finances. And maybe it’s because I’m a financial professional that I can say this, but I love my kids to death, but I’m going to make sure that we get our financial foundation built first.

Millionaire Behaviors in Your 40s (25:59)

Bo: I love that. And so when we think about the average American, we contrast that to the millionaire mindset, it looks a little bit different because when folks are in their 40s and they’re on the right path and they are following the financial mutant life, one of the things they’ve likely done is they’re likely beginning to master the financial order of operations. They don’t have to guess, okay, well, what do I do next? Or where should I be? They know exactly where they are. And oftentimes they might even be getting in those later steps. They might be in step seven, in step eight, even in step nine. They understand that they had a plan, they executed the plan, and now they get to move towards the end of the plan.

Brian: Well, what I love, you know, there’s some cool stats that happen in your 40s. Unfortunately, we do content on a lot of the negative stuff because the typical American does things pretty poorly, but it is exciting for those that are actually doing the right things. You know, when most millionaires cross into that two comma club or the seven digits, it’s typically in your 40s. That’s right. So, this is a very exciting time to really lean into the financial order of operations. If you’re just now discovering it, you’re going to find that if you just will build steps one through seven by following our plan, by the time you reach step eight with those abundance goals, you’re going to be living your best life and you’ll own your time that much sooner, too.

Bo: And then one of the things as you begin to master the FOO, you’re going to recognize, okay, well, the FOO was fantastic and it was a great generalized guideline to get me to where I need to be. But now I maybe even need to be more specific about my plan. I need to make personal finance very, very personal to me. And so I understand, okay, where my money should be going, but how much of my money should be going there? And what’s the ultimate finish line that I’m working towards? In your 40s, this ought to become clear. And if you have no idea what finish line you’re working towards, we would encourage you to go check out the Know Your Number course. You can go to learn.moneyguy.com that will actually show you based on the retirement lifestyle that you want to live, based on the portfolio that you’ve accumulated, and based on the assumptions that you put in, okay, how much do I need to save or where am I at? Can I catch up? Am I on track? And the millionaires, the financial mutants who figured this out, understand that their plan is specific for them and they’re executing it accordingly.

Brian: Yeah. I mean, we always say, are you ahead of the curve, behind the curve, right where you’re supposed to be? You’re never going to know this unless you go through the exercise. So, don’t sleep on that. Let’s go figure out exactly where you are on that curve.

Bo: And for those that are not ahead of the curve or maybe right on the curve, they recognize, hey, saving is no longer an option. It’s no longer a nice to do. It’s a, hey, I need to be doing this to reach my long-term financial goals. And so, they are saving and investing 25% or more for the future because they recognize even in the 40s, their money still has juice.

Brian: Yeah. I mean, this is the thing. You’re probably, if you’re just now discovering this, not for millionaires, but just the average people, more savings is going to be doing the heavy lifting. It’s not just 25% because if you’re late to the game, it’s going to require a lot of responsibility, but it’s still exciting if you pull up the wealth multiplier by age. I mean, look, I still think it’s one of those things because I’m beyond 50 now and I see my wealth multiplier is less than three. That’s there’s no sexy in that. But you know what? I was saying I’m going to say sexy in every one of these age groups.

Bo: But you know what? Every dollar you save to this point has the chance to triple before you retire.

Brian: But I do look at somebody who’s in their 40s. A seven times multiple still has got a lot of sizzle in that, pretty sexy. And I know for some of my 20 and 30 year olds that you cheated and you’re going ahead and watching what 40-year-olds are supposed to do. Don’t sleep on the fact that look at the drop off here guys from 20s to 30s to 40s. Compounding interest is something where you have to leverage that component of time. And even for my, if you got a late start and you’re hearing what I’m saying, you’re like, “Oh no, I’m sad about this.” Realize even as a 40-something, you have dollars in your army of dollar bills that will still likely get an 88 times over multiple based upon life expectancies and what’s going on. You just have to get money in there, getting it to work, and letting your money work harder than you can with your back, your brain and your hands.

The Math for Your 40s (30:15)

Bo: So, let’s talk about what savings rate would be required. Let’s talk about the math. If you’re a 40-year-old, you would need to save about $1,000 a month to accumulate another million dollars from 40 to 65. A 45-year-old would need to save about $1,800 a month from 45 to 65. Or a 49-year-old would need to save about $2,800 a month to accumulate a million dollars between 49 and 65. But if you’ve been saving and you’ve been participating in your 401(k) and you’ve built out some assets, by 40, if you’ve saved about $136,000, you’re on track to be a millionaire. If you’ve saved by 45, if you’ve saved $224,000, you’re on track to be a millionaire. By the time you get to 49, if you’ve accumulated $322,000 in your portfolio, you have saved enough to be a millionaire by the time you retire. Your dollars most certainly still have juice. But you better make sure you do it because this next stage is, I think, where it changes a little bit. Brian, you said that this was the, I think you said this is the last stop on the catch-up train, right? Because in your 50s and beyond, the mindset and the math does change a little bit. But unfortunately, when it comes to the average American, not a lot has changed for them.

Your 50s and Beyond – Hard Truths (31:31)

Brian: Yeah. I mean, I think you start making some hard decisions, but I am sad if we go and review what’s going on for the average American. I mean, look, and I’m in this generation. If you talk about struggles with debt, I don’t take pride in the fact that when you look generationally, Gen X, that’s those born from 1965 to 1980. Even without me giving you my age, I can tell you I’m in this category. They carry the highest average debt of any generation with a total average debt per consumer of around $158,000. Not moving the right direction. So, we can do better than this. I also think another mistake that’s going on for the average American is that they’re avoiding retirement planning.

Bo: Yeah. They want to just pretend like it’s not coming. I’ve ignored it this long. I’m going to keep doing it. Unfortunately, if we look at the median household from age 55 to 64, they have about $185,000 saved for retirement. And while look, I don’t want to disparage that, $185,000 is not a small sum of money. But if that’s all you have saved by the time that you retire, if we were just to apply the 4% withdrawal rate to that, that’s only going to generate for you about $7,400 a year in income. So if you think about the retirement lifestyle you want to live and you have $7,400 a year plus whatever you have in social security, there’s a good chance that’s not going to be the lifestyle that you want to live. And so you want to make sure that you’re not avoiding the reality that age is coming, avoiding the reality that retirement is coming. And you want to make sure you’re thinking about it now so that you can make adjustments as necessary.

Brian: You know, another thing I see, Bo, with people, the average American, they wake up and they’re in their 50s, they realize they’re behind, they start speculating with risky investments. Once again, Americans have a history of just looking for that easy button instead of taking accountability, realizing, hey, I probably need to start saving a heck of a lot more. They’re trying to figure out what they can do. And look, I’ve been doing this long enough. I see things repeat themselves. I remember back in, I started doing this in the 90s but even the early 2000s before the dot-com bust, I did a lot of 401(k) presentations and I had a lot of older people who were just trying to buy into the big boom. At that time it was the technology industry and I think we have all the things that are going on right now. I see a lot of people making the exact same mistakes. Nothing wrong by the way, technology is going to be part of your good diversified portfolio. But if you’re in your 50s and you’re behind, loading up on all the AI stocks only to the detriment of just saving more and investing more is not going to work out. I’ve seen this happen in the past and I’ve seen people get devastated. I’m telling you, the appropriate path is going to be a balanced approach of you being more disciplined and saving more and then having a portfolio that not only reflects your goals, but also what you’re trying to build in the background as well.

Millionaire Behaviors in Your 50s (34:37)

Bo: And yeah, millionaires or financial mutants do this a little bit different. Number one, they have a plan for landing the retirement plane. They’re not avoiding it. They’re actually actively planning for what this next phase and stage looks like. They’re also recognizing that health is wealth. They recognize, okay, there’s no point in having all this money and putting in all this hard work, exercising all this discipline and not being around long enough to enjoy it or not being healthy enough to enjoy it. So they recognize it deserves some focus right now at this stage. And as they’re focusing on their health and as they’re thinking about landing the plane for retirement, they’re also thinking about what’s the next endeavor look like? Okay, I know what I’m moving from. What is it that I’m moving to? What is this next stage? What is chapter 2.0 of my life actually look like?

Brian: Yeah. I mean, this is one of those things where I think a lot of people, you know, you’re good at work, but you have to think about when am I going to be good after work, right? When am I retiring to? And so, don’t sleep on that.

The Math for Your 50s (35:41)

Brian: And then, now let’s look at this. This is going to be a hard thing. I think it’s going to be probably more effective as a check figure because if you’re just starting out, if you want to look at the math on this, for those in their 50s, you have to be saving, if you’re starting at zero at age 50, you’ve got to be saving $3,100 a month or greater. At 55, close to $6,000 a month. These numbers are huge. This is a cautionary tale for those who really deferred all this until right now in their 50s. 59 year olds got to be saving greater than $11,000 a month. That’s a hard pill to swallow. But at least if you’re looking at it from a check figure, for 50 year olds, as long as you have $351,000 saved up, you’re on the path to becoming a millionaire by age 65. For the 55-year-old, a little under $523,000. For the 59-year-old, right under $700,000 is going to get you close to a million dollars by the time you retire six years in the future.

The Secret – Aiming for Multi-Millionaire Status (36:37)

Bo: Now, we alluded at the beginning of the show that we’re going to let you in on a little secret. We’ve kind of walked through all this math and all the mindsets of what it takes to be a millionaire by the time you retire. But the truth is for most people in most circumstances, we don’t just want you to be a millionaire. We want you to be a multi-millionaire. And there’s very much a reason for that because we understand that, and we get this in the comments all the time, a million dollars today won’t be a million dollars in the future. We have people say, “Oh, a million dollars is nothing. There’s no point getting there.” No, no, no. And that’s true. The math would substantiate that for a 65-year-old today. Yes, a million dollars is a million dollars. But if you’re a 55-year-old, a million when you turn 65 is only going to be worth about $744,000 today. A 45-year-old, $553,000. A 35-year-old, a million when you retire will only be worth about $412,000. And for a 25-year-old, a million dollars for you when you retire will only be worth about $306,000. Don’t let this be a discouraging thing. Let it be an encouraging thing to tell you that if you want to be financially independent and you want to be a multi-millionaire to live the life that you want to live, you got to get the first million first because you can’t be worth two million unless you’re worth one million. Can’t be worth three million unless you got to two million. And it is possible if you can understand those three ingredients of wealth creation.

Brian: Yeah. As the professional troll slayer here, I would echo what Bo just said is that you can’t have 5 million without first crossing that first 1 million. So get out there and do something. And by the way, we’re going to repeat, plug something because I think it’s that valuable for you to know if you’re ahead of the curve, behind the curve, or right where you’re supposed to be. I would encourage you go to learn.moneyguy.com, check out our Know Your Number because you really got to know where you are so you can know, hey, do I need to save more or maybe, let’s go with the glass half full, maybe I’m so ahead of the curve that I can dial it back and live even more life with my friends and family now. But you never get to do any of these things if you don’t do the exercise of knowing exactly where you are. Guys, we love creating content like this so you know exactly what’s going on in your financial life. So you don’t have to be like the average American. We want to invite you to become a financial mutant. You create enough success, go to moneyguy.com/resources. Let us accelerate that success. You do this long enough, you’re eventually going to realize, hey, I might need somebody to help me with this complex system that I’ve now created. I started off going for simple, but man oh man, has my success created complexity. We’ll leave the porch light on for you. That’s exactly when you’ve graduated to the next level of the abundance cycle. I’m your host Brian with Bo. Money Guy out.