The Amount of Money a 40-Year-Old Needs to Invest to Be Wealthy!
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- Опубліковано 1 сер 2023
- How do you become wealthy if you are in your 40s? Avoid big wealth killers like midlife crises, divorce, and “dumb doctor deals".
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Turning 40 in October and I'm paying for my poor decisions in my 20s and early 30s.
But I'm fighting to correct myself while teaching my son not to make the same mistakes I did.
Time is still on your side!! Hit it hard.
Whatever you’re able to save is a hell of a lot better then doing nothing or kicking the can down the road!
It is not too late, not at all. I didn’t waste my earlier years entirely but didn’t take it seriously until I hit 40-41. Amazing what a few years of going hard can do, keep at it :)
What would say your biggest regret is? (Currently in my early 30s)
@@loliwelch9151picking the wrong mate and the cost of divorce and child support. Choose wisely.
My biggest regret was paying too much tax and not diverting enough to my pension (401k I believe in the U.S). I’ve always been good with money and bought a house early etc but I definitely allowed ‘lifestyle creep’ a bit when the kids came along. Back on track now 💪
At 38 discovered the Money Guy and realized the 12% I’d been saving for the last decade wasn’t enough through their teaching. Now up to 27% and just a little behind on the 2-3x income saved. Hope to finally hit that track to retire well by the end of this decade.
You’re gonna do awesome! Stay disciplined.
Thanks for the inspiration, I feel like I’m behind at 33 but trying my hardest to hit those milestones
Great job, stay on course, you got this!
Great video! I just turned 40 so it's very relevant to me. We're only about halfway to that lump sum number, but we're automatically putting away almost $6k/mo if you count employer match and 529 contributions in addition to the automatic 401ks, Roth IRAs, HSA, and taxable brokerage contributions. I'd love to retire at age 55, but failing that I'm shooting for 59.5!
Good job. Keep cranking. We are a bit behind you.
We have been investing 15% and cash flowing my wife's nursing degree. This year she graduated and doubles our income. we are going to invest 100% of her income. With employer matches we'll be investing 62% of our income. $14k a month. Doing an extreme push to get to $1.5-2 million in the next 10 years before our term life insurance policies expire. After that we won't need any additional life insurance.
just hit 40 a few weeks ago. I lost my 20s and 30s. no real savings, or personal retirement. and a small personal investment account (about $20k). Only real retirement is my 401k. I still have 25 years to do basically 45 years of retirement planning.
I was in the same boat, as I drank away my 20's before getting sober in 30's and going back to school.
Basically started 40's at $0 & 2 years later at 150k with a 70% savings rate as I look to make up for lost time. Savings rate will slow as I start my "messy middle" in my 40's but now i have a good base with good habits at least. I hope you're able to get your good habits established and make up that time through aggressive savings rate (while still living a little)
I love the way you put information in a very simplistic manner. I am in my 40’s and totally relate to what you have said in this episode.
This is great advice. While most studies of millionaires do show that the most common way to become a millionaire is through small business ownership, 401k invested in index funds is also an excellent way for most people to invest.
They made especially great points by talking about the mid-life crisis and divorce; those are definitely true about being more common reasons why 40 year olds see drastic drops in wealth.
I am 38 and agree that measuring where you are at is key. Doing FIRE plan and been saving large portions of income. Now have my plan on track to finish by age 40. I plan to continue doing contributions to my ROTH, 401k up to match, HSA, Wife’s traditional IRA, UTMA and brokerage. You are amazing team. I learned so much watching your show. Thank you!
I turned 40 this year!
Turning it shortly. Game on lol
🎉
Love you guys. Quality content. No bs. 40 myself and built over 1 mill in real estate and 401k is at 500k. I m not a fan of retiring as I will get bored but got plenty years ahead. So in good shape. Blessed ❤. If I can do it from 0, so can anyone else. Let's go 💪
"Retired" doesn't mean you stop doing things. It means you've reached the financial freedom to CHOOSE what you do, rather than being obligated to work for income.
@@Angela-ne9cy Agreed. Retired in my books = dead. 😊
Thank you! I really needed this video. I'm 38 and i feel so behind.
I turn 50 this year and according to this video I am behind, but I do not feel behind. $2.2M is a big wad of dough. Where you live and your lifestyle will have a tremendous impact on that. Knowing your own number is way more important than what any study says. It is a guideline and something to plan against, but it is not gospel.
Thanks for thinking of those of us in our 40’s!
46 here, and I'm way ahead! Thanks to my 20s 30s😊😊
Great video. I follow these guys from Malaysia. I find super interesting how your dollars do way more in Asia, than they do in the US. I see many retiree couples here living quite well on $2k or less per month.
Right on track. I was definitely weird in my 20s and 30s but at 39 I'm there already! We'll see if the sacrifice is worth it
Ill be 42 in a few months and have been putting away close to 21% of my income plus emp match to my 401ks, i also put away $50/wk into my emergency savings so overall in the past 4 years ive been hyperaccumulating, ive got.close to $50k tucked away. Hopefully it will grow exponentially by the time I hit 55 and start preparing for retirement at 65
I'm a doctor and a fan, but I have to admit - being called dumb repeatedly makes me feel that I'm not welcome. Is there any other group or profession that people get a free pass for calling them dumb?
Im 47 and have $400 saved !!! Im F$cked!!!
I wouldn't say so. Save and invest as much as you can. Get enough rest and exercise. Let's say you work until 67. At the very least you'll have had two decades to save and invest. The money would have to cover less years of retirement, and if you delay social security (assuming it's still relevant) you'll get a bigger cut.
Other things you can do is spend a few of the early years of retirement living in a lower cost of living area.
Its tough to imagine, but you can get something done if you are committed. AFter clearing up all debt, at 40 you should be seeding up a 401k or Roth IRA. There are ways to get a Solo 401k if you are a contractor. If you are a high earner you can do a backdoor roth and a max 401k. You just don't get the deduction for the Roth. You have 10 years until age 50 where all the fun starts. You get to contribute more to both the 401k and the roth. Make sure you are in a position to commit to max contributions for your 50's to get the most benefit. On top of this create your own "IRA" and do long term dividend stock investing. Just pick a couple of low risk qualified dividend stocks and acquire an affordable amount of shares each paycheck and you might make enough dividends to pay your property taxes each year when you retire. If you are able to do this while maintaining a mortgage, make sure to chuck all the money toward your investments when you are paid off so you can have a chance at max gains.
Love the last part. Being a boring rich person is kind of attractive.
holy cow 8:50 and on, great point money guy
Hope there's going to be a "50" versiion of this
I’m learning the schtick here is becoming wealthy, but I’d love a video for 30s/40s folks (starting with nothing) on how much to invest to just be okay enough to not live under a bridge at time of retirement. That $4,844 is well above my monthly take home, and I have some family members who think I’m rich (cause I make $60k a year).
That all depends on what your number is and what you need to not live under a bridge. That number is very different for someone from California vs Mississippi
Save and invest 25% if possible. If you have $500K invested plus social security benefits you shouldn't be living under a bridge. Keep in mind that you may be able to keep working full time or part time, even if its a different line of work. Also, moving somewhere cheaper for a few years can make a big difference.
It seems to me that a lot of people who end up in a wealthy situation prior to retirement age feel like they need a story to tell of how they are wealthy that isn't just "I saved a lot" or "I got an inheritance" so they look for some hustle or some business or an interesting investment that isn't just standard balanced portfolio money management, and it more often than not doesn't make more than a traditional portfolio would. Maybe it's still worth it to them because it's interesting or whatever but like Bo said, nothing wrong with being boring.
When you say an individual should be at 1.1 million by age 49 does that assume a marriage? Or if figuring a married couple do you want that to be 2.2 to be considered a safe level of wealth?
Married I think. They’re assuming the 1.1m at 49 will be 2.2m by 60 and retirement age
I agree, they generally talk as a household for pretty much everything. So single or married would be the same, not double
Wow...1 million is no longer considered rich. I'm toast.
I turn 46 later this year but looking at my net worth from the start of 45 it looks like I’m pretty close to that lump sum target.
Same here. It’s a nice place to be
Can I stop saving if I have the lump sum?
The amount you need saved at 49 - does that come from just your savings or do you add in your spouse’s savings? I’m 47 and she is 36. It is confusing. Do I have to be saving this much or do “we” need to be saving that much? Are you talking net worth including your house? Or do you only count cash in savings and investments?
I’m screwed, started to late with life happening.
Who needs 2.2M for retirement! That's spending 88K per year w/o including SS. Most people who have anything significant saved for retirement make more money then they spend in retirement, especially after 75.
The study they refrenced is to feel wealthy. So yes you don't need 2.2 million now or the equivalent in retirement to be more then fine. Only if you want to feel wealthy.
90% of people will never have near 2.2m. And even the 2.2 invested conservatively will generate 80k on interest income to live off of and not touch he principal. Then there’s ss on top of that
You don't know the level of care you'd need at that age. Some of the options are very expensive.
Does that lump sum count home equity?
Does it return 8% annually with .1% returns decreasing annually to age 65?
Is 2.2 M is hold household saving or 2.2 M for me and 2.2M for my husband?
2.2m household.
I've been investing at 15% since my late 20's have about $230k invested by 40.
This year my wife graduated and is more than doubling our income.
We are saving 100% of her income once we are debt free. If you add in employer matches it will be 63% of our income.
The goal is to get to $1.5-2 million invested by the time I hit 50. $5-10 million by 60.
I figure $5 million will be worth the equivalent of $1 million in before covid dollars.
Sorry, but don't factor your wife's money into your retirement goals. You never know what's going to happen
Short version: Everything
Easy lob with “puts the bow on it” and total miss. 😂
Invest $4,000 a month? You can only put $500 a month into an IRA, and $1,700ish into 401k, where do you put the other $3,000? Brokerage?
For starters you are left with 1800 and not 3000. And yes you can use brokerage. I would say add to HSA first. Rest leftover in brokerage. Having 4000$ to invest after all living expenses in itself majority don't have. Just know your number what you would need @retirement and live accordingly. Hope this helps 😊.
@@AT-hs9nf I made a typo, they said $5,000 a month and I typed $4,000 a month. So after 401k/IRA you're still left with $2,770 a month you need to "invest" to reach the target. Even after HSA you're still looking at $2,000 extra after MAX 401k/IRA/HSA to invest. Is it typical where the vast majority would put that into a taxable brokerage account, or what other avenues do people use to invest that extra money to "catch up" to meet their goals?
@@puthyx no worries bud. If u have kids you can use 529 to save in that for them. If your company has after-tax in 401k, u can use that before brokerage too. And if neither, hop on the brokerage train. I personally don't like to add too much in 401k bec u r still locked until atleast 55. So having in brokerage works better if you need access to it before 55. Let's say @ 50.
@@AT-hs9nf Thank you for the wisdom.
Brokerage is the easy option. Be careful though, they come for the capital gains tax out of nowhere sometimes if it’s a fund, even if you haven’t sold. High yield savings account would be another easy, safe place to park money for 4.5-5% returns while you figure out your strategy. The rate is variable though, so likely to go down over time.
But I don’t wanna work till 65!
Does the 1.1 and 2.2 million refer to net worth or savings alone (liquidity)?
Net worth
I think savings, so not including your house. It's the reason the contribution to investment is so high when starting from $0. The goal is to hit 2.2 million in liquid assets in 25 years after adjusting for inflation.
Of course, there is nothing to stop you from using it as net worth. However, just be careful when doing so. If you calculate your FI number based on your net worth then you need to make sure your FI number accounts for paying for housing. We calculate our FI number with the assumption that we own a house and it's paid off.
“3% inflation”
*the good ol’ days*
"The good 'ol days"... You mean like right now?
June and July 2023 were both a 3% YoY inflation rate
Yeah it’s nowhere near that. And inflation is cumulative. We’re paying 25%+ more for everything than before Covid and all the retards printing money
Basically now lol
I’m 50 years old. Net worth $350. I will only need $500k. Plus my social security and get out of the USA 🇺🇸. ❤❤❤
Why do you want to get out of the USA?🤔
@@derekcox6531because of build crack better
@@derekcox6531cost of living
Probably because it's too expensive to retire here
Can you collect social security if you leave the U.S.? Doubt it.
$5000 a month starting at 0. At 8%, compunded monthly, for 25 years is 4.7 million not the 2.2 they said....
Same purchasing power as 2.2 million dollars today, in 25 years. The rate also goes down .1% yearly, in their calculations.
Factoring a 3% inflation rate, then yes, $2.2M today = $4.7M in 25 years.
Good thing you double-checked their math
On track to hit net worth millionaire in our mid-late 30s! 31 now, start your kids as early as possible! My parents are financial mutants and our 3 kids will be extra super financial mutants!
My son 12 years old net worth $120k. I’m so proud. From now and on I will let him alone
Was he 4 when he started saving for retirement?
Your son? What about you? Worry about your retirement so he doesn’t have to care for you
@@xmochix604 so far my net worth in Roth IRA $ 875k. In taxable broker $350k. Plus my social security I will not plan to live in USA 🇺🇸 I going to much cheaper country. Thank you 🙏. I got investment too in fundrise I stared this journey 18 years ago
@@grigorirasputin425 I opened a custodian Roth IRA for my child when he was 3 years old
LOL y'all catering to already rich people. most americans do good to save 5,000 a year much less a month. LMAO! this kind of stuff can make people just throw their hands in the air and give up. the good news is that even if you're just starting saving in your 40's you likely will manage to save up enough to combine with social security to survive okay. you won't be rich, but you'll do okay.
Those numbers were based on achieving a 7m nest egg at 65 (equivalent to about 2m in today's dollars). Not everyone needs 7m dollars in retirement.
Theoretically if you cut $4k to $400 ($4800 annually with 10% returns) then you will still end up with ~700k by 65, which is wayyyy better than living on social security alone
I used to be one of those people who saved $5K a year. Increase your income and live below your means. Get a side hassle and save 100% of that income. I went from negative net worth to $1M in 10 years. I didn't have a 6 figure income when I started either.
Yes they are catering to rich and the young
They dont cater to rich people, they try to create rich people. Or at the very least give everybody the opportunity to get there themselves.
164th!!😊
FIRST!!!!!!
is that still a thing in 2023? Seriously?
@@jeremygmail obviously, if you read it…
@@jeremygmailhe is special
@@thecurtisfamily3810 just consider him the 1st idiot
You guys seem like very nice people. But very much salesmen. Can you do videos with actionable steps that DO NOT require us to go to your website and enter our email address so you can solicit us? It seems like 10 times a video you tell us if we want to learn how to do something we have to go to your website. There are many good content creators who do not try to funnel viewers to their websites to further enrich themselves. Your videos provide aspirations, but the catch is you want to charge us for the directions.
They provide a ton of direction for free. Theyre charging for a simulation tool you can create yourself on excel or google sheets.
What you need to know:
Income, living expenses, real expected rate of return(4-5%), and your safe withdrawl rate(3-4%)
Project accumulation with: (income - expenses)+wealth*(1+rate of return) per year
Your target is: expenses / swr
I agree that it sucks to have to pay for the information. But they also have to pay their own bills. They are certified planners and advisors and are running a business. They give out plenty of information for free.
Unfortunately it takes money to make money, if you’re looking for the next step it’s probably going to come with a cost. Though I find the content they provide for free very informative and useful.
Most of the resources you are referring to which require your email address they post on the screen when they reference them during the show. It's annoying needing to give them your email address, but you could always use a burner address if you are that opposed to it.
I haven't done their course, but I understand it's a fairly complex topic with lots of individual-specific considerations, so they want to do it in a way that is complete and matches what they believe and what they teach. So I don't really have a problem with them keeping it behind a paywall. There are other resources out there that do something similar for free. Just google things like "know your retirement number" and "retirement calculator" for example. Just note that results and assumptions built-in may vary widely, what it asks or shows may not be complete or go into the same detail as their course, and those resources may not be produced by experienced finance professionals like them. So read a few different articles about knowing your number and run a few different calculators. You're bound to learn a lot from that exercise!