96: Building Generational Wealth in Your 40s & 50s

0:00When it comes to what your family eats and drinks, you know your choices matter. You're the expert because you know what fits your life. And getting it right starts with good information. That's why America's beverage companies are sharing more information about our ingredients at GoodToKnowFacts.org. No spin, no judgments, just the facts straight from the experts for more than 140 beverage ingredients. Visit GoodToKnowFacts.org. This episode is brought to you by Marshalls, where you never have to compromise between quality and price. The buyers of Marshalls hustle hard, working to bring you great deals on brand name and designer pieces.

0:42Because Marshalls believes everyone deserves access to the good stuff. Visit a Marshalls store near you or shop online at marshalls.com. Hey, everyone, and welcome back to the Rich Habits Podcast, a top five business podcast on Spotify. My name is Austin Hankwitz, and I'm joined by my co-host Robert Croak. Robert is a seasoned entrepreneur in his 50s with lifetime revenues of over$300 million, and I'm an entrepreneur in my late 20s with a background in finance and economics. Since quitting my full-time job in corporate finance a few years ago, I've built a seven-figure media business and actively advise some of the most well-known fintech companies around the world.

1:20As the show name might suggest, every episode we talk about rich habits as they relate to business, finance, and mindset. However, we try and bring you two unique perspectives, one from an industry veteran, which is Robert, and the other myself, someone who's still in the process of building wealth and figuring it all out. So, Robert, what are we going to be talking about in today's episode? Well, first and foremost, I think I want to address that we need to change the opening line to you're just figuring it all out. I'd say you pretty much have it figured out. You're crushing it. You're a great co-host, and you've really taught me a lot over these last couple of years.

1:54So we're definitely going to make that our New Year's resolution is changing our opening statement because I think you've come so, so far just since I've known you and it's time to upgrade that line. But in today's episode of the Rich Habits Podcast, we're going to be sharing with everyone our three best tips to build generational wealth in your 40s and 50s. So many people feel, especially in their 40s and 50s, that wealth has passed them by, and we're here to tell you it has not, and lay out all the blueprint for you to succeed with money as your hair starts to gray like mine, and it's go time to figure all those things out, and we're here to lay it out for you.

2:34Specifically, we're going to address three of the most important things you need to do in order to get back on track financially and set you and your family up for financial freedom in retirement. Most of you listening still have 20 or more years of investing ahead of you, which means there's so much you can still do and accomplish before retirement. So let's figure out how to catch up and build wealth in our 40s and 50s, Robert. And when it comes to building generational wealth in your 40s and 50s, if you feel like you're behind in your retirement savings, you either have an income problem or you have a spending problem.

3:07So let's first address the income problem. So number one is increasing your household income and we're going to walk you through it start to finish. So many of you might feel like you're scraping by financially and you're either spending too much or you're making too little. And luckily for us, we can fix both of these problems. The first step to take when evaluating your monthly household income is to audit that honest budget you always hear us talking about. How much all in is being deposited to your bank account and how much of that are you spending every single month? So once that's done, our goal is to find 15 to 25 % of that household income in your monthly budget and begin setting that aside for investing.

3:56Now, I'm sure that some of you listening right now saying I don't have 15 to 25 % of my income to save, which means it's time to increase your take-home pay, and we're gonna walk you through it. I think just that right there is the solution, right? Finding that margin in your budget, because that is how we build wealth. We find margin and we invest said margin. To your point, you either have that income problem or you have a spending problem. Assuming you've audited this monthly honest budget that we've all created, and you've realized that you might have an income problem, it's time to fix that.

4:30Well, good news for us, it's 2025, which means there are countless ways to increase your monthly income. Now of course some of the most obvious ways include side hustles which we've actually published countless episodes about. One of which is called Side Hustles for Busy People. It's a really great episode. Go listen to it. It's awesome. But when it comes to career enhancement and progress in your own professional fields consider doing the following. Getting a specific certification in your field that could help you maybe negotiate a raise. This could be a free certification. I know that MIT and Stanford and Harvard have all of these free classes online for people as it relates to computer science, as it relates to HR, as it relates to everything in between.

5:12Go see what could happen if you got those certifications, took those classes, and then went back to your employer and said, hey, I think I might now qualify for this raise or this new position or this new title in the company. Also, job hopping to another field that would allow you to make another 15 to 20 % more is another solution to this. I mean, at the end of the day, everyone, unfortunately, I was in this situation myself, Robert, is I felt like I had so much loyalty to the company I was working for that even if someone was waving a 15 or 25 % pay raise in my face, I'd be like, no, I like what I'm doing here.

5:46You know, I'm secure. I don't want to take on any risk like that. And I don't blame you if you're a risk averse person. But I think at the end of the day, if there's a way that you can say, okay, I work for ABC company making$82 ,000 a year. But if I went to go work for XYZ company in the same city, maybe even the same building complex, I can now go make$94 ,000 a year. I mean, that's a pay bump. That's meaningful, right? That's that 10, 12, 15 % we're talking about. And then number three here is laying out a clear path to rising in your career, which sometimes means going back to school. Now, Robert, I never liked school.

6:20I wasn't really good at school, but going back to school to maybe get that executive MBA, going get that master's degree of whatever you need to do at an affordable price, lay out a strategy that says, okay, I'm 43 years old. I'm 47 years old. I'm going to be working for the next 20 years. Right now, I'm a senior manager, but I want to get up and become a director. I want to be a VP. I want to be a senior VP by the time I'm in my 50s. What do I have to do to get there? Do I need the MBA? If not, then that's great. How can I lateral around and climb the corporate ladder? Do I need certifications?

6:53If I do need those, I need to go find schools that offer them. Maybe Robert, and I know my company did this, they will pay for you to go back to school, assuming you work at the company for like three or four more years after that. So there's a bunch of different ways that people can grow in their long careers, the professional careers here still in their forties and fifties that allow them to increase the household income by 15, 20, 30 % over the next couple of years, which will have a meaningful impact on your ability to build wealth for retirement. Yeah, and I'm all about loyalty as a business owner.

7:25I want people to be loyal to me, but you also have to make sure that that loyalty does not get in the way of your financial freedom. So many people are loyal to a company at fault to where they're loyal to them for 10, 15, 20 years where their upside potential economically isn't there in their bonus package or maybe equity or stock sharing or whatever may be there. So you have to always be aware of that. Like you said, always be moving up, whether it's with your company or moving on to another company, because loyalty only gets you so far, especially with some bosses. There are some business owners out there that just do not care about company culture, and that is a problem.

8:10So make sure you understand the upside potential, but also if you believe you deserve more money before you go take another job for that 10 or 15 % raise, it's always good if you like your current position to give your current boss a wake-up call. Go into the office, either written in an email or a letter, sit down, ask for 10 minutes, give them the letter and say, hey, I've had a great run here. I need to make more money. I'm giving you a chance. I have another offer right now If you can beat that offer or match that offer, I would love to stay if not No harm no foul because I once lost a key person Over three dollars an hour and this was back 12 years ago And I did the math for him after it was too late and he already took the job And I said your commute here is like eight minutes a day.

9:04Your new commute is 30 minutes each way I said, so between the gas, the wear and tear, all of the other things, the tolls, you're not really getting a raise. And I wish you'd have given me another chance. And so just make sure you think all of that through when you're going through this phase of your career, because you have to make sure that you're progressing in your financial journey and not letting someone else do it for you that owns the company and not sharing it with you. So I want to make sure everyone understands that. Something I thought that was really beneficial, and Robert, you kind of touched on it here, where if you have that positive relationship with your manager, like for example, when I worked at this old company, I had a wonderful relationship with my manager.

9:43I give him all the kudos, all the praise. He's a wonderful human being and a wonderful manager. And at one point I said, hey, can we carve out like an hour of your time so that we can sit down and like go through, hey, I'm this 22, 23 year old right now as an analyst, but I wanna become a senior analyst. I wanna become a manager. I wanna become a director. What things do I need to accomplish over the next 18 to 24 months that will allow me to deserve that title. And we laid out what those things look like. I accomplished all of those things and I was on track to become that next title, but I quit my job to go do this instead.

10:18But what I'm trying to get at here is if you are well in your career and you're feeling good about where you are and you know that you can move up a little bit and that's gonna really give you the pay bump we're talking about, sit down with your manager or your direct superior and say, hey, what can I accomplish over the next 18, 24, 36 months that will allow me to move up in my role to become the VP, become the SVP, whatever it might be. And unfortunately, sometimes those roles only come up when existing employees leave the company. If you are deserving of a new title like a VP or a senior vice president or director or whatever it is, and you deserve that title, go find that title at a different company, right?

10:56Because Robert, to your point, I mean, sometimes these people stay around loyalty to a fault for a long time, And they are the directors and the VPs and the senior vice presidents, and they'll be there for 20 years. And so you're next in line now for 20 years. Go stand up for yourself and go make that new career move that's going to put real meat and potatoes on your dinner table every single night. And I'm going to go one more time with this because this is incredible. And this is why I love these episodes of just nothing is scripted. We're just riffing and going through our thoughts of how these things can be better for everyone.

11:27Elizabeth did this to me last week. She brought up one of our key employees that works in the social media in the marketing department She said hey, I feel like he's been looked over. I feel like he deserves more He's really crushing it for us. I know you don't work with him directly So you don't see it on a daily or weekly basis and I was like wow I said, okay, we need to do this and we gave him a raise and a bonus on the spot and I literally Texted him in that moment telling him and giving his praise without any prompting from him And it's just so true that we don't realize sometimes our manager or our boss or our regional manager, we may not even be getting looked over because it's intentional.

12:09They just might be so busy that we get lost in the shuffle. And so I think this is a great conversation for everyone because sometimes you can find that money you need right in front of you and you just have to ask for it. So let's round this point out with kind of another part of this is there are just countless ways in your 40s and 50s to make that extra 500 to$1 ,000 a month. And so don't just sit on the sidelines at 44 years old and say, okay, this is what I'll be doing. This is what I'll be making for the next 20 years. Do the market research, figure out what's next for you and build a clear plan to execute because we live in one of the greatest periods of human history to be able to build these side hustles and build these niche jobs to be able to make extra money to put towards your financial freedom.

12:59Couldn't have said it better myself. All right, so let's get into talking point number two, putting your money to work. You followed step one. You're finally ready to put this new money to work, but it's not just the new money. It's your existing money that isn't working properly for you. So let's dig into that and what that means. There really are two things to consider when it comes to making your money work as hard for you as you work to earn it. Earning interest and paying interest. We all know what it means to pay interest. We're talking about debt. And if you're in your 40s and 50s and struggling to get rid of high interest credit card debt, pause everything else you're working on and investing toward or saving for it and get out of this high interest debt.

13:45Hear me clearly. You will never build wealth by paying 35 % interest on credit cards or 60 % interest on a title loan debt. And like we always say, you can't out-invest high interest debt. And this is a great, great illustration of that. And we recommend trying the debt avalanche method when it comes to paying off the debt. So be sure to check that out via Google, do your research, and implement that strategy. When it comes now to earning the interest, do not overcomplicate it. Robert, so many people make the mistake of trying to find that perfect investment strategy so they can get the extra half a percent or the extra one or two percent in their portfolio, when in actuality, if they just got the ETFs and index funds we talk about, they'll be just fine over the long term.

14:32There are three places you want to continually be earning your interest. In a high-yield savings account, in a retirement account, and in your bridge account. The high-yield savings account is pretty straightforward. That's essentially your emergency fund. But make sure your savings is earning something. There's T-bills, there's high-yield savings, high-yield cash account, all these different things that you can do. But just make sure that your emergency fund is earning you money. It's not just sitting in cash and withering away. Your retirement account is also pretty straightforward. You've probably heard of something called a 401k.

15:01Just make sure that you're not making the mistake of letting the funds remain invested in these underperforming target date funds or mutual funds or whatever. I just helped my friend Hunter. It was so funny, Robert. We were watching the Tennessee Vanderbilt football game at a bar on Saturday. He goes, hey, man, can you just look at my 401k? And I was like, yeah, I'd be happy to. And he shows it to me. It's like$30 ,000. It was up 2 % this year. 2 % in 2024. And I was like, hey, man, I don't mean to be the bearer of bad news, but you got to fix this. So I educated him. He's like, what's wrong? I'm investing my 401k.

15:33So I educated him as to what's going on, the differences and everything. So he's on the right track now, but he's not the only one. And I guarantee you some people listening right now are going to look at their 401ks year to date in their 40s and 50s where they still have 20 more years ahead of them. And it's going to say 2, 5, 6, 7%. When in actuality, it should say 22, 25, 27%. Because you want to be benchmarking and tracking the S &P 500. You want to own the ETFs and index funds that we talk about. VOO, VGT, VTI, and QQQ. Real simple. 1, 2, 3, 4. Now finally, the bridge account. This is your normal taxable brokerage account that's inside of public.com.

16:12It's going to be a way for you to access your investment portfolio before the age of 59 and a half without paying penalties and fees. We suggest having the same ETFs and the same index funds in that account as well because that's what American capitalism is. So a quick pro tip also on that note is that I see so many people all the time that just have way too much money sitting in their checking or savings account. And you don't need to have 60 or 90 ,000 in your checking or savings account. We talk about this all the time. You need two, three, four months worth of your monthly expenses put away, which could be 25 or$30 ,000 for your family.

16:51And everything else needs to be active. We always tell you to make sure your money is working hard for you as you work to get it. And this is a great illustration to make sure that you don't have your money sitting idly by in your account while you're leaving so much money on the table by not investing it. So you have to do these things. You have to get out of debt. You have to start investing and you have to start living on less than what you make because no one is going to do it for you. And I promise you at the end, no one is going to save you. You have all these friends and family and cousins and uncles, but guess what?

17:26If you want to find out how close you are, go try to borrow money or tell them you're moving, and you'll find out how close you are with those people because they will be gone in a second. And that's why you have to listen and follow along to everything we discuss in the Rich Habits podcast and the Rich Habits Network to make sure you take care of yourself and set yourself up for financial freedom. I love it, Robert. Let's get into talking point number three, and that is estate planning. Now it's time to look forward to the future for both you and your family. We're going to go rapid fire on some of our favorite estate planning strategies and structures that'll ensure your family is set up for life because it's all about at this phase in life, it's about structure and protecting the money you've saved and invested over the years and putting yourself in a good place to make sure that Uncle Sam doesn't come get it all.

18:21And we're gonna go through that right now. So my first point here, Robert, is the 529 plan. We've talked about the 529 plan a few times. And essentially why it's so important is you're in your 40s and 50s, you likely have children. And those children are probably thinking about going to college or higher education. And so by going to a Vanguard, for example, opening up a 529 plan, I think the minimum's now only$2 ,000. It was$3 ,000 when I opened mine a couple years ago now. But by opening up this 529 plan, contributing money to it, that$3 ,000, and consistently contributing$150 a month between, let's say, age zero, right, when they're born, up until age 18, that total contribution's not gonna be more than$15 ,000, $17 ,000, but it's gonna grow over the next 18 years to be$95 ,000.

19:07So two things are now gonna happen. Either one, if your kid decides to go to college, they don't have to take on all the student loan debt, which is going to save them financially in the future. That's cool. Two, if they don't decide to go to college, maybe they want to start a business or go to trade school or whatever else, you can use some of this money to pay for those certifications and the tuition for that. But more importantly, when they turn 18 years old, you can take up to$35 ,000 of this$95 ,000, move it into the kid's Roth IRA, deposit it right then in there, invest it in the S &P 500, and by the time your child is from 18 to 65, that$35 ,000 that was just deposited on their birthday will be worth over$1.3 million tax-free.

19:49That is how you take three grand and$150 a month for, let's call it two decades, and turn it into generational wealth for your children. Tax-free million dollars in retirement. The 529 plan is undefeated. I'm already doing this for kids I don't even have yet. It is such a great idea. Make yourself the beneficiary like I have and just rock and roll on this plan. I love it. And the 529 plan I've learned a lot about in the last two years from you. And it just really highlights. There's so many tools out there. And that's what's so cool about what we get to do every day is laying out these plans, not just from experience, but also educating through our financial musings and learnings over the years.

20:30So it's really cool to learn all these ins and outs like we did with Ankar Nagpal, just really figuring out all the best tools to help people retire comfortably and with the right structure. Couldn't agree more. Now, the next point I want to make to talking about sort of legacy here, right? You want your children to be set up when you eventually are older and you pass away, making sure that they retire millionaires when you're long gone with the 529 plan. Legacy also includes term life insurance. God forbid anything happened to you or your spouse or whoever is making the money for your household here.

21:04But if you are the breadwinner, and let's say you're making$100 ,000,$120 ,000 a year and in your 40s or your 50s here, and something happened to you, you now need a pile of cash to be invested in the S &P 500 to then have four, five, 6 % pulled off of it every single year that your family can live off of, right? So you want to take 10 to 15 times your annual income. So in this example, let's call it one to one and a half million dollars out as a term life insurance policy. You'll pay probably 40 bucks a month for it, get a 15, 20 year term. And if something happens to you, your survivors will now get this one and a half million dollars that they can put in the S &P 500 and make 10 % a year off of, call it 120,$150 ,000.

21:48And now they're not scrambling figuring out funeral costs. They're not scrambling because they don't have to say, do we have to sell the house because we can't afford the mortgage because our mom's dead, right? Like there are all these things that happen upon death that I think people don't really think about. And having a term life insurance policy worth one to$2 million is gonna allow your heirs, your children, the survivors, the ability to just grieve your passing versus having to now be stressed out about money. Yeah, that is so true. I've been down that road already with my mom's passing and some other things like that.

22:21And that's for a whole other episode, but I love that. And I think it's a great strategy for everyone to consider. And then I would say the next one that is really, really important for someone like me and everyone listening that owns businesses is having your business and your real estate ownership structures in order. So many people that I deal with on a weekly basis, they'll have their home and their properties in their personal name and they don't have their business in an LLC structured properly. And I think this is one of the biggest mistakes people make when building their financial freedom over years and years is they never take the time to get their business structure in order.

23:02And what I mean by that is having that LLC for every business and make sure that it's operated properly so it's legally operated in a way that lawyers and other people can't penetrate the corporate veil on those LLCs. Then the next step is understanding having that holding company that has total ownership of all these LLCs. And then after that, the next really important step in structure is having that revocable trust that owns all of the holding company in which then holds all of the assets in the LLCs. In my world, that's called layering and you want to have that layering. so then you are protected from an inside attack or an outside attack.

23:45But also later on, if something were to happen to you, then you can structurally have everything protected and out of probate. So then that way your children or your heirs, whoever it is left to, don't have to go through the rigorous nonsense of a year or two years of probate and all the money it will cost out of your assets to be able to pass it along properly to them. And I think that is such an important thing that so many people lack on. And I deal with it a lot of helping people structure their entire portfolio and all of their assets to make sure they're protected later on. So that leads us into talking point number four, which is the revocable trust versus the will.

24:28And what does that mean? And the basic essence of this is the revocable trust is how you structure and protect your assets while you're living. and the will is the designation once you pass. And there are a lot of pros and cons to the revocable trust over the will. And the most important one I've already covered, and that is the fact that by having the revocable trust for all of your assets, you will not have your heirs suffer by going through probate court and figuring out who gets what and what is left after all of the court fees and everything that it takes to go through probate court. So that would be the number one most important thing for me.

25:08But then also with the trust, it keeps all of your business private. And this is a very important thing for wealthier people because you don't want the public in your business. Because remember, if you go through probate, that is public knowledge. It'll be in the papers. Everyone will know exactly what's going on. So those are two very important parts of the revocable trust versus the will. Right there with you, Robert. just want to reiterate, a revocable trust allows you control over your assets during your lifetime with provisions for after your death, whereas a will controls assets only after you die.

25:43And trusts can manage your affairs if you're incapacitated, whereas wills do not. So revocable trust, way to go. I mean, that is just right there with you. And then speaking of incapacitated, power of attorney. If you don't have a power of attorney, probably a good idea to check that one out. I'm my dad's power of attorney. I can sign on his behalf with different things. He's 79 years old at this point. So for the hospital, something happens, he can't respond, right? I'm right there with him and can do all those things on his behalf, but definitely have a power of attorney, have that person in your life that you trust.