422: The Late Starter’s Guide to Financial Independence (Even in Your 50s!)

29:56And surely we have regrets of doing what we did. But if you really die with zero in the memory dividends, we definitely did that. And we didn't suffer a lack of balance like a lot of folks that are younger and want to earn money to the to the detriment of shared experience. So you just said that your net worth is$4 million, including the house, 3 million if you don't count the house, and you're halfway there. Have you done the 4 % rule math to determine what your FI number is? Or are you shooting for spending like$800 ,000 a year in FI or whatever? No, our spend at the present time is between$175 ,000 and$200 ,000 a year, which gives us a number of around$5 million.

30:53But we're at three. And time may dictate where our number really is. And we may be forced to a spend that is less than that because of the time to the finish line for my work, which is a high burnout field. So we don't really, it's a moving target. Those goalposts are not fixed. We don't fix it on a number per se. It's more managing burnout and getting to a comfortable finish line where, yes, we can manage our lifestyle and we don't need that number. It's just that's the number goal. But a time goal actually takes precedence. Bill, I got a couple of rapid fire questions here. First, what kind of doctor are you?

31:35Emergency medicine. So in that regard, I would say that I learned how to take care of medical emergencies for people, but I had no idea how to take care of my own financial health or financial emergencies. Now I can do that and we want to do that for others. Awesome. Did you have a financial advisor during any part of your money journey and how did they contribute or detract? Now you're going into all the mistakes I made. So out of med school, we were sold a bill of goods. We had financial salesmen, as I know now, come to med school and tell us, I can be your financial advisor by this whole life plan.

32:16These people repulse me. And doctors are their primary prey. They still are. And thankfully, there's Jim Dolly, the white coat investor out there, changing this. And he was one of my mentors and changed my life as well as ChooseFI and other platforms that we all go down the rabbit hole on. But yes, we had the quote unquote financial advisor. We went into a private bank, which became our financial advisors. Again, salesman, huge mistake paying all those fees. And we didn't put in our pockets what they took from us. Their kids went to college on what we paid them. So yes, we did that. And we made many, many, many other mistakes along the way.

33:00Very typical of doctors. You can only imagine. At this point in the Great Recession, what was your primary emotion around money when you were in that period realizing you have a negative net worth? I didn't realize we were negative net worth. That's part of the problem. I had no idea. and we had an abundance mindset, but it was a not pay yourself first abundance mindset. We live, I mean, our boat was named YOLO.

33:32Do you still have the boat today? No, that was part of the downsize. The only good decision we made there was we bought the slip and the equity increase in the slip paid for all of our boat expenses. So I guess you could say we accidentally covered the cost of a luxury item. Real estate investing. Love it. Exactly. Support for the show comes from Public, the investing platform for those who take it seriously. On Public, you can build a multi-asset portfolio of stocks, bonds, options, crypto, and now generated assets, which allow you to turn any idea into an investable index with AI. It all starts with your prompt.

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35:46Get more with Northwest Registered Agent at northwestregisteredagent.com slash moneyfree. My husband and I have multiple investment accounts across several different companies. Throw in vehicles, investment properties, and private equity holdings, and it can be difficult to get a good idea of our actual net worth. And frankly, between the kids, work, and just life in general, I don't have time to be logging into 47 different places. So I just didn't. Scott walked me through setting up my Monarch account and suddenly everything was easy. It's all in one spot, so I can check in quickly. Just like everything else on Monarch, the dashboard is customizable, so I can see at a glance what's most important to me and dive deeper when I need to.

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37:32There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of this show will get a$75 sponsored job credit to get your jobs more visibility at Indeed.com slash BiggerPockets. Just go to Indeed.com slash BiggerPockets right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash BiggerPockets. Terms and conditions apply. Hiring, indeed, is all you need. Okay, and then what's your feeling or sentiment towards money today, now that you've enacted these changes and have multiple millions and are on the way? Well, you asked the question, what was my sentiment around, well, when we woke up, it was scarcity.

38:09It was scarcity, regret, shame, isolation, loneliness. And these are the kinds of things we're trying to combat for the catching up to five population. we all have our heads in the sand. I think this is a common story. Some people say that it's 40 % of the population that wake up after 40. I think it's probably more than that. And I think it's the norm as opposed to the exception to the rule, which is most of the stories we hear in the FIA community. It's the young success, the midlife success, the early retirement. You don't really hear the stories that Becky and I lived, and we're trying to change that.

38:52So why do you think people believe financial independence is unattainable? Well, if you're asking me, I think it's because of our consumer culture and our addiction to debt. You know, we become numb to it, and we're taught to be numb to it. So as opposed to accumulating assets, we accumulate debt and we're paying service to this debt. We're owned by the debt. And as opposed to taking control of our financial lives, realizing that debt can be a lever that increases our path to FI, we don't use it as a lever. We use it as our shackles, our ball and chain, and we don't even realize it. You both had a wake-up call, a curveball in your stories.

39:40Do you think people are waiting for that? Do you think people are like, oh, just like you, I'm going to just toot along, everything's fine, everything's fine. And then they need that slap to change their story? I think a lot of people live that way. I mean, sometimes I look back and I wonder, I mean, what happened to us was a big deal and it was really painful, but I don't know if something else would have done it. I think I almost had to have that pain to wake up and realize that I can't keep going the way I am. I've often wondered how far down that road would I have gone before I decided that something had to change.

40:28So unfortunately, I think a lot of people do need some sort of wake up call because there are those of us in the FI community. There are those people in the FI community that are natural savers. I'm not one of them. I have become one, but I didn't start out that way. And so there's a few people that are going to save money whether they think they need to or not. But I don't think that's most people. I needed the wake up call. I needed the slap of turning 50. I think that's actually a common story. After you exit the funnel of raising kids, for example, and realize that you're empty nesters and you've got to get to 65.

41:13I mean, I had thought that it was, you know, 40 years of a work journey. I kind of had the boomer mentality. My dad worked till he was 80. I mean, this is where I came from. But I realized quickly that I had burned out on my career largely. And how am I going to get there? How am I going to bridge the gap between burnout and financial independence? There's stages to this wake up that are different from the financial stages of early prudence with finances. There's the shock and awe after you have the slap. or maybe somebody takes you aside and says, you know, you can do this gently. You can't lecture at us.

41:58You can't tell people this is what you need to do because we're not going to hear it. And with our podcast, we're trying to put the message out there so that people can digest it at their leisure on their own in a non-shameful way. So the other stages that I see happen to late starters are after the shock, you have the rabbit hole. You go down this, you know, the one that everybody goes down at some point in their lives. You consume everything. You become a consumer of financial information. This can lead to analysis paralysis, which is probably one of the phases of this. And people should reach out for help because a lot of people need a coach.

42:38And I'm not dissing financial advisors. I think a lot of people need one, but you just need to find the right one. You need to find the flat fee, fiduciary, advice-only advisor. You don't want a salesman. And we almost succumbed to that again with a large financial firm. So you get through those first two phases, and then you get to the phase where I'm at. You get into the muck in the middle, as one of our guests called it, where you got to do the work. You got to do the time. You got to increase the savings rate and pay yourself the gap. And it's hard. It's really hard because you watch people, say like yourselves, that have reached financial freedom, time freedom earlier.

43:18You watch people being retired. It's really painful. And you wish you were there, but you can't wish yourself there. You've got to do the work. At some point in your life, you've got to do the work. So I'm in the mid-phase. Then I think, and Becky can speak to this, you get to the, I can see the light at the end of the tunnel. I haven't gotten there yet. I can see that, you know, there is a finish line and it may be earlier than I think. And so you get excited again. And then you go down the rabbit hole of learning about retirement and how to make the transition to retirement. And then you cross the finish line to your ultimate time freedom, your new life, the one where you can have the freedom to make choices that you couldn't make before.

43:59So I think that's five. But I think there's really five phases to late starting. And everybody goes through it at different ways. What do you think, Becky? Do you think this is true? I do. I think that whether you had the big slap or you just more like you where you kind of hit an age and go, hmm, what am I going to do now? I think everybody experiences the shame and the guilt. And, you know, one of the things that I had to come to grips with was I had made a lot of mistakes. and some of those mistakes spilled out on other people. I mean, I look back now and think about what did my children come to adulthood with as far as baggage from our poor financial choices?

44:53And they've all sort of gone in different directions with it. I mean, we have one of our kids had to make his own mistakes. He had to, as he said, burn it to the ground. But he turned it around a whole lot faster than we did. But I had to realize that I needed to forgive myself for the bad mistakes I had made or bad choices I had made. And I also had to go to a few other people and ask their forgiveness too. Like I said, it had spilled out on other people. And because if you stay there, then you're stuck. And you can't, if you're a late starter, you can't be stuck. You've got to start and you've got to start today.

45:37And you're not going to know everything when you start today, but you'll figure it out as you go. And it is figureoutable. You know, that's one of the things I want people to understand is you can figure this out and you can make a plan that works for you and your family and your situation. But you've got to give yourself a little time to process what's going on and then forgive yourself because you can't live in the past. You can't worry about what I did 20 years ago. I've got to think about what am I going to do today? Becky, you had a 13-year journey to financial independence after around age 50.

46:24That involved climbing steadily to this$1.3 million net worth. And Bill, you are two-thirds, three-quarters of the way through your journey to financial independence after starting kind of in 2013, 2016, a ramp there in terms of thinking through how aggressive you wanted to get about moving toward financial independence. Is there such a thing as too late, right? Someone who's maybe closer to 60, hearing those stories, maybe they're thinking, I don't have enough time. What would you say to that person? And what's your thought on when you need to get started in order to achieve this goal? I'll go first, actually.

47:01And Becky and I disagree on this. Not fundamentally, but I woke up at age 50, and if I'd have woken up later, I think it would have been too late. It would have been too late for our spend. We would have had to reduce our lifestyle more than was comfortable. So, yes, I do think you can be too late for a lifestyle that you want to lead, at least initially. But, however, I do think that it's great to start. You can start, start now, and you shouldn't leave your head in the sand because you can make huge changes in your financial future. You can get there. you may not get to where you want to go, but you'll get to a place of financial freedom and peace if you don't start.

47:52So we want to get people to start earlier, obviously. I think you're always 10 to 15 years away from financial freedom. If you start at 50, you're going to get there at 65. Invariably, if you make these changes, you start at 40, you'll retire early. So we're trying to get people to start at 40 instead of 50. Becky, your thoughts are a little different, so I'll let you go. Well, I do say that I don't think it's ever too late, but like you said, fundamentally, we do agree. And the way I put it is, you may not end up where you'd like to be, given the time you have left, but every choice you make today is going to make your future self more comfortable, less stressed, and you can create a better life than what you have now.

48:45You can always do better than where you are now. And one of the things that I, and we may get into some more specifics of this later, but our generation, there's a lot of people in our generation that don't think, they don't include social security in their plan. And for those of us late starters, I don't know what's going to happen in the future. I don't know what Congress is going to do, but I don't think that it's going to disappear. So I feel like that we, those of us that are in our 50s and 60s, we've got a backstop in addition to what we can do for ourselves. So I think we have some levers to pull that people may not really even be considering.

49:33So is it ever too late? Maybe, but I say in general, no. We did an episode 344 with Jeremy Kyle and Emily Guy-Birken talking about social security. And because I have not traditionally counted my social security in my retirement numbers because it's not going to be there. They're going to run out of money. And this episode explains how, yes, it is going to be there. No, they're not going to run out of money and explains how the social system actually works. So Becky, I love these comments that you're making. What advice would you give someone who is in their 50s with a negative or$0 net worth?

50:17My two pieces of information, other than what we talked about already of processing those emotions and getting yourself to a place where you feel like you can start moving forward. I always like to have people look at where they are. When you're talking about a late starter, we have some advantages actually over other younger people. We've got a lot of life experiences. We may have a larger income. A lot of people are in their higher earning years at this point in time. So look at where you are. Figure out your net worth. What are your expenses? What are your assets? It might not be as bad as you think it is.

51:02And then I would say to start learning, get a mentor, dig up books, podcasts, blogs, whatever it is, because you may not know what you need to know today, but it's out there and we can do this. So I would say, have the mindset of, I can make a change. I can make some improvements in my life to accomplish the freedom that I would like to have. And, you know, in the movie, is it Playing With Fire, where they talk about the list of 10 things? That has stuck with me ever since I heard that. But the list of 10 things is they suggested to sit down and make a list of what would your perfect day look like?

52:05What brings you joy? What kinds of, you know, what would you like your life to look like if you could build what you wanted? And sometimes you realize those things don't even cost money. that what you can add to your life isn't going to cost you a ton of money. Some things are, obviously, you know, a vacation is going to cost something, but figure out what works for you, what's valuable to you, what's meaningful to you. And then rather than focusing so much, maybe on a number is what do I need to do to build that life for myself? Oh, I love that. Bill, what do you, what do you think? What should someone who's getting started from scratch in their 50s do first?

52:54They need to assess or assess their risk tolerance. They need to accept the fact that they're going to work longer. For us, we went to a 75-25 portfolio if you want something tangible. We needed some security, but at our age, we knew that we needed to take more risk. 75 % stocks, 25 % bonds, right? Right. Not everybody's going to feel that way. I think you can take on real estate if you want to take on that risk. We're talking on bigger pockets. So if you want to escalate your path to FI, you can use levers like real estate and so-called passive income to create a base of income upon which you can put your portfolio.

53:35Second, you've got to create multiple streams of income. You can start your side hustle. You can do real estate. You can use traditional paper assets. Those are the three or four legs of a stool you need to create. You don't have one lever to pull. You have a lot of options. And yes, the risk may be more initially, and then you'll downshift it for sequence of returns risk and into, you'll do all the traditional steps. The plan is no different. The time course may be a little bit, but the plan for a 30-year-old is the same as the plan for a 50-year-old. It's just that we got to do it faster. I love that.

54:17It's the same plan. It is absolutely the same plan. It is after, what is this, 450 episodes of this show, Scott, I see the same thing over and over again. Spend less than you earn, save, invest intelligently, potentially start a business. There's no easy button. There's no way around it. You have to be conscious of your money. You have to save and invest in a way that is going to grow for your future. I'll just chime in and think. Again, I'm not there. I'm 32 years old. So I have a different viewpoint on a lot of things, I'm sure. But it seems to me that the house hacking concept or housing decision is something that you can also look at with fresh eyes in these situations.

55:11If, for example, your kids have just left the house, maybe that, you know, that bill, that's what you did. You didn't house hack it, but you downsized your house. And that was a major lever, I imagine, in terms of being able to save more. Do you think that's a potential place to start for folks in the situation? Oh, absolutely. Housing is one of the big rocks. You've got to address that. There is no option there. You know, somebody wrote a really good book called Set for Life. I've heard of this. Go on. You can follow that path too. You've got, you know, that's written maybe for a younger audience.

55:45And thank you for that book. I recommend it to my kids. I recommend it to a lot of folks because I think it does lay out a path not too dissimilar from what older folks like us have to do. We may be Jerify, but we can be Fi. Jerify. I haven't heard that one before. Well, you know. I'll leave that one to be used by you guys. We like catching up with my better. One of our guests mentioned, and this is important. It was a great quote. The emphasis on late starter is often late. And that's a negative emphasis. Our guest, Amy Caruso, said the emphasis should be on start, starting, a positive, forward-thinking emphasis.

56:27I'm addicted to saving, and that's where you want to get. You want to get to the point where you're more addicted to saving than you are to spending. And, you know, we were talking about the path is the same whether you're 30 or you're 50. And like Bill said, we just have to do it faster. And, you know, sometimes doing it faster means sacrificing deeper. I mean, that's where we've put ourselves. We can get there. But if we had started when we were 25, the sacrifice is sometimes barely even noticeable. if you want to work until 55, 60, 65. But if you're condensing the timeframe that you have to work with, it's the same steps, but you're going to have to make some big decisions.

57:13And like Bill was talking about the big rocks, you've got to think about those big rocks. Well, one of the things I point everybody to is Pete Adney's or Mr. Money Mustache's shockingly simple math of retirement. Look at that graph and realize that if you can go to a 40 % to 50 % savings rate, this is the amount of time that it will take you to get there. And that ends up being 12 to 15 years. So it's entirely doable. There is no late start to financial freedom, to choices that you want to be able to make with your time. I think a major takeaway for me from this is, I think you're right. I think that for the vast, There can be notable outlier exceptions, but for the vast majority of folks who prioritize the concept of financial freedom and do so in a somewhat reasonable way with a middle class income in this country, it's going to take you 10 to 15 years to achieve financial independence.

58:11Again, there will be some outliers on either one of those, or it's going to take you the entirety of a 30, 40, 50-year working career a little bit at a time. But it's going to be one of those two things. And you're going to pay that price, which comes with sacrifice and the hard work of self-education to get familiar and comfortable with these investment portfolio decisions and to take control of every part of that and to work the probably very long hours it will take to bring home the income, to make the gap between income and expenses large enough, and on top of that, to begin managing your portfolio.

58:46And again, it'll take 10 to 15 years you got to start now. But it's just a reminder for everyone listening that starting now means you can enjoy that, reap the benefits of that for the rest of your life with that, regardless of where you're at. Yeah. If you continue to do what you've always done, you'll continue to see the results you've always seen. If you want to have different results, then you're going to have to make a change. And that is the bottom line. All right. Becky and Bill, you have a podcast called Catching Up to Fi. Where can people find it? They can find it everywhere on all channels.

59:21That's the website address. It'll pop up on all players. And you can also find us on our Facebook group, Catching Up Defy. We've had some amazing community involvement there. Folks are posting their stories, their pictures, asking questions. So it's a great place to just jump in and, again, feel like you're not alone. Yeah, we like to say that we're a mindset first, money second, and life third podcast. We talk about all the aspects of late starting, and we are enjoying the ride. Love it. Well, you guys are a fantastic duo. Thank you for sharing your incredible stories. Thank you for solving or working to begin solving this very tough problem for millions or tens of millions of people out there.

1:00:14And I look forward to watching your community continue to grow and help lots and lots of people. So that's Catching Up to Fi. Go check it out on Facebook and Facebook group and go check out their podcast. They've got a lot of great content, Bill and Becky. Thank you so much, guys. We really appreciate it. And we hope you have a wonderful rest of your week. Well, thanks for the opportunity to get our message out there. And thank you very much for having us on your show. Absolutely. This has been fun. Thanks. Thank you guys for sharing your stories with us. And we'll talk to you soon. All right, Scott, that was Becky and Bill from Catching Up Defy.

1:00:48And I can't even like which story do we talk about first? I love Becky's story. I love how she realized at age 50, we have a$0 net worth and we need to change that dramatically or we're never going to retire. And Bill, falling into the traps of the physician lifestyle where, oh, now I'm making a lot of money. I can spend it with reckless abandon. And you can, but if you want to retire, you're going to need to make some changes. I love all of the tips they had for us and for their listeners too. You have to make changes in your financial life if you're going to reach retirement at any age. Yeah.

1:01:34I thought they were fantastic. This is a real problem, right? I mean, I think there's a lot of people out there who feel like they're way off track for retirement and who are in their 50s and feel like it's getting late, maybe even approaching too late. And I thought that one of the tough things that I really respected from Bill and Becky was, hey, if you want to achieve the concept of financial independence, yeah, you got to start in your early 50s, mid-50s to really have a good crack at it by the time you reach traditional retirement age. And they didn't hold back from stating that. It is possible in a 10, 12, 15-year timeframe for many, if not perhaps most Americans out there in that situation.

1:02:21Everyone's circumstances are different, of course. But you do need to put in those years at the high savings rate and really go after it. But I did think that their stories were also inspiration for folks that it can be done. You don't have to start at 30 or 25 or 18 or 40. You can start in your 50s and achieve success just like they have. Scott, there is no shortage of news articles that say 40 % of retirees or 40 % of Americans will never be able to retire. And all of these doom and gloom articles, clickbait is clickbait. But also, if you don't make the changes, you won't ever retire. And when you are age 50, you don't have the benefit of time, the luxury of time to save.

1:03:06But like Becky said, you have different advantages. You have the advantage of most likely having a higher salary than these 20-year-old kids that are out there doing it now with the advantage of time.

1:03:24Traditionally, you have lower or lowerable expenses because you don't have kids at home anymore or they're just getting ready to leave. You have a lot of different advantages and you just need to figure out what your advantages are and exploit them. But yes, it is absolutely possible to still be able to retire. Probably not early. I mean, you're 50. You're not going to retire at age 25 if you're starting at age 50. That's just math. Unless you invent a time machine, in which case, email me because I want to go too. There's some things I want to change. And then I'll just kind of reiterate what we talked about at the end with Bill and Becky here in that the path to financial independence can take place over decades or over a five to 10 year sprint, if you will.

1:04:16And that is reflected, I think, in the journeys that I've gone through, that you've gone through, Mindy, that Bill and Becky went through. And I just think that hearing this, it's both inspirational in that it can be done. You can start at the age of 50. And I hope that for our younger listeners, it also is inspiring to think about, hey, do that sprint now, right? Do that in your 20s or 30s and reap the benefits of that if you can, if that's an option for you for the remainder of your life and have that power accrue to you so that you can buy that boat YOLO with financial freedom dollars in your portfolio and enjoy it guilt-free from then on.

1:04:58So get those memory dividends. But if you pay the price upfront, I think that there's a lot of benefit to that throughout the remaining, the many decades of your life, hopefully. Yes. The bottom line from that is if you haven't started your journey yet, start today. All right, Scott, should we get out of here? Let's do it. That wraps up this episode of the BiggerPocketsMoney podcast. He is Scott Trench and I am Mindy Jensen saying we got to go, Buffalo. If you enjoyed today's episode, please give us a five-star review on Spotify or Apple. And if you're looking for even more money content, feel free to visit our YouTube channel at youtube.com slash BiggerPocketsMoney.

1:05:39BiggerPocketsMoney was created by Mindy Jensen and Scott Trench, produced by Kalen Bennett, editing by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team for making this show possible.