How to Become A Millionaire (By Age)

19:48Brian Preston:But the longer you wait, the harder it becomes. If your goal is to replace 100 % of your pre-retired 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. Yeah, and I want you to automate this. I mean, make this, it's easy with your employer plan, your 401k, or even you could set this up straight out of your paycheck every month. You have an automatic for the people type investment strategy.

20:25And then look, even if you can't start out at 20 or even 15%, just do something just like the 20s. But 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.

21:02Brian Preston: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 saved up about$78 ,700, you're on your way to millionaire status. And if you are finding this, 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.

21:46Brian Preston:And 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. 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 slash resources.

22:18We will load you up.

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23:01Brian Preston:With up to 60 % off hotels and up to 50 % off flights, you can book everything you need for your next adventure. Don't just dream about that next trip. Book it with Priceline. Download the Priceline app or visit Priceline.com and book your next trip today. Go to your happy price. Priceline. All right, Brian, let's talk now about the mindset and then as well as the math that is necessary to build to a 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.

23:35Brian Preston:And then they get to the 40s and they really have no idea where they are. They find 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 401k. Three percent. I saved three percent. 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. Yeah, we're not making this up. TIA Cref just did a survey and they found 25 percent of Americans have no idea how much they've saved for retirement. Let me go ahead and just give you the Cliff Notes version of this.

24:11If you don't know how much you're saved for retirement and you're in your 40s, you haven't saved enough. Because more than likely, you've had more, exactly what Bo said, you've deferred the wrong thing. Instead, 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.

24:31Brian Preston: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.

25:03Brian Preston: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 lost time. 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, I probably, 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, cut the corner off of this.

25:35I'm sure that will work out well. Guys, that is not the solution either. This is the 40s is the 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 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.

26:12Brian Preston: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're saying, 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 401k, but I'm going to make sure that my kids are taken care of.

26:43Brian Preston:And a lot of folks, the average American, begin taking care of the next generation before they've taken care of themselves, and that's getting it out of order. This stat actually got a gasp out of me when we were doing the show meeting because it's 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 kid's basement and really strap them with a responsibility, this is the type of decision-making you want.

27:20Look, 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.

27:51but I love my kids to death, but I'm going to make sure that we get our financial foundation built first.

27:58Brian Preston: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 operation. And then all I 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.

28:29Brian Preston:They understand that they had a plan, they executed the plan, and now they get to come move towards the end of the plan. Well, what I love about the, you know, there's some cool stats that happen in your 40s. You know, a lot of, unfortunately, we do content, 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.

29:02If 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 that your time that much sooner too

29:17Brian Preston:and then one of the things as you begin to master the food you're going to recognize okay well the food 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.

29:49Brian Preston: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. 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 the fact.

30:22Learn.moneyguy.com. Let's go figure out exactly where you are on that curve.

30:26Brian Preston: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. Yeah, I mean, this is the thing. If you're just now discovering this, this is not for millionaires, but just the average people, more 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.

31:03But 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. There's no sexy in that. saying I'm going to say sexy in every one of these age groups. But you know what?

31:22Brian Preston:Every dollar you save to this point has the chance to triple before you retire. But I do look at somebody who's in their 40s. Seven times multiple has still 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 if you've got a late start and you're hearing what I'm saying, you're like, oh, no, I'm sad about this.

31:55Realize, 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.

32:14Brian Preston: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 401k and you've built up some assets, by 40, if you've saved about$136 ,000, you're on your 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.

32:54Brian Preston: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 changed 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 the 50s 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. Yeah, I mean, I think you got to start making some hard decisions, but I am sad if we go and review what's going on for the average American.

33:37I mean, look, I'm in this generation. If you talk about struggles with debt, I don't take pride in the fact that when you look at generationally, when we try to just scapegoat us or put us into our own categories. 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 though.

34:16Brian Preston: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 income right now 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.

35:01Brian Preston: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. You know, another thing I see, Beau, with people who, 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. It said taking accountability, realizing, hey, I probably need to start saving a heck of a lot more.

35:33They're trying to figure out what they can do. And look, I've been doing this long enough. I see things repeat themselves. And I remember back in the – you could do – I started doing this in the 90s, but even the early 2000s before the dot-com, I saw a lot of – I did a lot of 401K presentations, and I had a lot of older people who were just trying to buy into the big boom at that time was the technology industry. And I think it's kind of, 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.

36:07But 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.

36:36Brian Preston:And yeah, millionaires or financial mutants do this a little bit different. Number one, they have a plan for landing the retirement plan. 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, 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?

37:17Brian Preston: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? 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 what am I going to be good after work? That's right. You know, what am I retiring to? So don't sleep on that. And then now let's look at it. 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.

37:52If you're starting at zero at age 50, you got to be saving$3 ,100 a month or greater. 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.

38:36Brian Preston:Now, we alluded at the beginning of the show that we're going to let you in 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 multimillionaire. And there's very much a reason for that because we understand that, and we get this in the comments all the time, that a million dollars today won't be a million dollars in the future. We have people say, oh, a million dollars, nothing. There's no point in getting there.

39:07Brian Preston: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 dollars 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 dollars when you retire only be worth about$412 ,000. And for a 25-year-old, a million dollars for you when you retire is only going to 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 multimillionaire to live the life that you want to live, you got to get the first million first.

39:52Brian Preston:Because you can't be worth$2 million unless you're worth$1 million. You can't be worth$3 million unless you got to$2 million. And it is possible if you can understand those three ingredients of wealth creation. 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 to go to learn.moneyguy.com.

40:28Check out our Know Your Number because you've really got to know where you are so you can know, hey, do I need to save more? 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'd never get to do any of these things if you don't do the exercise of it 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 slash resources.

41:04Let 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.

41:32Brian Preston:The Money Guy Show is hosted by Brian Presson and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through The Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice.

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42:34Brian Preston:See full terms at MintMobile.com.