George Kamel - How To Save $1,000,000 (By Age)

Episode Date: January 22, 2025

📈 Are you on track with the Baby Steps? Get a Free Personalized Plan - https://ter.li/t8v6zq Did you know the value of a dollar changes based on your age? In this episode, find out the real reason why, plus how this handy trick helps you retire with literally millions.   Next Steps:   🎥 Watch my video Best Way to Pay Off Debt Fast (That Actually Works).  Connect With Our Sponsors:  🔒 Get 20% off when you join DeleteMe.  💸 Learn more about opening a high-yield savings account with Laurel Road.  📱 Get $5 off Tello's Unlimited Plan and enjoy great nationwide coverage for only $20 at Tello.  Explore More From Ramsey Network:  🎙️ The Ramsey Show  🍸 Smart Money Happy Hour  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  💡 The Rachel Cruze Show  🪑 Front Row Seat with Ken Coleman 📈 EntreLeadership    Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

Did you know that the value of a dollar changes based on how old you are? It's true. If you're in your early 20s, $1 is worth $50. If you're in your 30s, that same dollar is worth $18. But when you hit your early 40s, it's only worth $6. And by your 50s, that $1 is worth a mere $2. I know, I know. Sounds completely crazy.

But it's true. It's not a conspiracy theory. And that's because of the power of compound growth. It's where your money makes more money. And then that new money makes even more money. So you're earning returns on the whole balance. not just what you started with. And that's why $1 invested at age 22 with a 10% rate of return and no additional contributions could grow up to $50 by age 62. But you probably want to retire

with more than $50. So how much do you need to invest in order to retire well? Great question. I'm glad you didn't ask. Now, this is going to change based on your age, but let's use this as an example. Let's say you want to retire with $1 million at age 62 regardless of your age. So here we go. This is your money. This is compound growth. This is your brain on drugs. Just kidding. This is your retirement account. So we want this to get to a million, which we're going to say is this line right here.

Okay? So your money, age 22, you're going to invest $158 a month over 40 years. Now, that's not a lot of money. So we're just going to start putting a few of these little guys in there. Look at you contributing. Look at you go. Oh, my goodness. You're on a roll.

You're on a roll. Look at that. We're 20 years in, baby. We're 30 years in. Could he go all the way? There we go. That's your contributions. Now, what happens over 40 years as compound growth works as magic?

Here's what happens. Oh, my goodness. Look at this. We're millionaires, baby. Look at this. At 22, this is all you put in. That's $76,000 of your own money. The extra $925,000 that got you to a million, that's pure growth, baby.

So that's 22 years old. But let's see what happens when you start at 32. Well, here we go. Here's your retirement account starting from zero at 32. years old, this is the million dollar mark right here. You're going to need to invest more than double the amount of that 22 year old, about $442 a month. So here we go. 442 a month, over 30 years, because we're going from 32 to 62. Whoa, there we go. That amounts to almost 160 grand of your contributions. And now let's see what compound growth does for us. Oh, right on, man.

We got over a million by accident. So still good news for the 32 year old. $840,000 of that million was still thanks to compound growth, and only this much was your contribution. Now, you might be saying, George, must be nice to be a mere 32 years old, but I'm over here and I'm 42 years old starting from zero. What do I need to invest to get to that million by 62? I'm so glad you ask. Let's see. So here we are, 42 years old, nothing saved in retirement. Here's our empty retirement account.

We've got to get to that million, and it's going to take 20 years to get there. And we have to invest 1,300 a month this time to hit that same million mark by 62, which is going to take more of your money. 1,300 a month is nothing to sniff at, nothing to shake a fist at. So here we go. All right, there's our contributions. And now we get to the million mark. Thanks, compound growth.

Look at you go. All right. There we go. Now, 1,300, that's a big number. But the good news is you're still getting a lot of help from compound growth, about 683,000 worth, which is very, very impressive. Now, last example, let's say you're late bloomer. You're not getting started investing until you're 52.

What would that look like? I'll tell you what that would look like. 52 years old, you got nothing in retirement. Here's the empty retirement account, and you want a million dollars in just 10 years. That's 62 years old. Well, you need to contribute a whole lot more to the tune of $4,900 a month for those 10 years. And that adds up to $585,000.

So we're going to go a little over halfway to a million with our own money. And that'll do it. And the rest is going to be our compound growth. About $415,000 worth for us to hit that million mark in 10 years. Call it good. So there you go. Looking at these examples, you will see that starting early makes a big difference. You want time on your side and you also need to be investing consistently.

All of these examples, we were investing every single month the same amount without failure. Now, if you saw these last two examples and you feel like you're short on time, don't stress. We're going to dive into what you can do about that in just a minute. But first, remember, retirement is not an age. It's a financial number. You don't get to retire just because you turn 62. You get to retire when your investment accounts and other assets generate enough income to cover your expenses with room to spare, letting you trade in that 9 to 5 grind for 95 minute midday naps. So start investing as soon as you're ready, because the earlier you start, the more consistent you are, the better off you're going to be. So how much wealth can you build

based on where you're at today? Let's figure it out. An easy way to figure that out is with a good investment calculator. And this one is my favorite if you want to check it out for yourself. All you got to do is plug in your numbers and you'll get a better idea of what steps to take next. And if you're new to investing, a little heads up. Your money is going to fluctuate with the market, like a little roller coaster. But do not worry about what the market is doing. Why?

Well, if you're only looking at a small portion of time, the market can feel scary and unreliable, like a toddler with a Sharpie. But if you look at the last 75 years of the S&P 500, which is the benchmark for the U.S. market, it consistently goes up over time to the tune of 10 to 12% on average. So some years it'll be down, some years way up, some years it's a little flat, but over time you're going to see 10 to 12 percent growth. So just invest every month and don't worry about whether the market is up or down. No matter what, just keep investing. It's kind of like planting a tree. You don't need to dig it up every week just to check the roots. Just let it grow and do its thing. And you know what else grows

your money with time? A high-yield savings account like the one offered by Laurel Road, one of the sponsors of today's episode. Here's how it works. Laurel Road helps your money make more money by offering top tier rates in their savings accounts. And if you're wondering where to park savings of all kinds, whether it's your emergency fund, a sinking fund, or even a down payment on a house, look no further than a high-yield savings account, like the one offered by our friends at Laurel Road. There's no minimum balance. There's no sneaky fees. And your deposits are FDIC insured, which is a fancy way of saying your money is safe and sound. So you can rest easy while your money makes you more money. So go get started. Check them out by going to laurel road.com slash George,

or just use the link in the description below. And while we're talking about resting easy, one of the ways that I rest easy is by using Delete Me, another sponsor of today's episode. Here's what they do. They actively search the internet and wipe you off of these dirty, no-good data broker websites. You know, the ones that have all of your information for some reason, like your email, your address, your phone number, your favorite snack from college, which may or may not have been the pizza lunchable, still hits. And they do all of the hard work for you and they send you a detailed report to let you know how many hours they've saved you and currently I'm up at 66 hours. Come at me, bro. If you can beat me, let me know in the comments.

So if you want to sleep better and know that your info is nowhere to be found, get started by going to join deleteme.com slash George or by clicking the link in the description below. Okay, so what if you're older and you're behind the ball on investing? Well, there's no shame in starting late. Life happens. Maybe you spent your 20s chasing dreams, your 30s chasing kids, and your 40s wondering why the kids won't leave. But what does that mean for you? Well, it might mean you need to invest more and or work longer. Now, don't fall for the lie that because you didn't start early, it's not worth saving now. That's just an excuse to justify a lifestyle that isn't serving you. So drop the shame and guilt and realize that, yes, time may be short, but you still have power

to buckle down and do everything you can to get things moving in the right direction. And here's some good news. The IRS gives you something called catch-up contributions when you turn 50. Not catch-up, catch-up. And this may be the only time I'll be thanking the Internal Revenue Service. Just kidding. I always thank the Internal Revenue. Thank you so much. for your service, internal revenue service. It looks like someone's scared, guys. But I know a lot of people think, well, George, where am I supposed to find 20 or 30 grand a year to invest? Well, that would definitely be a problem if you're not making serious lifestyle changes.

So if your habits are still out of whack, then you're right. It's going to be hard to find that much to invest throughout the year. But a lot of people are still carrying debt into their 50s, which is eating up potential margin to invest. And in a second, I'm going to show you how to fix that problem. But first, I want to emphasize that you can still retire with dignity as long as you're hyper-focused and willing to make some changes. For example, you may have hoped to retire at 63, but you're not ready, and you need to stick it out to 70

because, fun fact, your investments will double about every seven years. Rule of 72, if you know, you know. So if this is so simple and easy, why don't more people do it? I just showed you how would you get a million dollars? Well, if people had the margin, I think most would invest. But they don't have margin because they're living paycheck to paycheck. They've got credit cards, car loans, student loans,

bad spending habits that are siphoning away thousands of dollars every month. And look, I know a lot of you are already commenting down below, well, George, must be nice. Where am I just to find $1,000? Listen, if you can't find $1,000 to invest, and yet you're shelling out over $1,000 in debt payments, you've got your priorities way out of whack. And I'm telling you, go add up all of your car payments, your credit card bills, your student loans, your HELOC, whatever it is. I guarantee you it's more than $1,000 a month. That's money that could be going to your financial future instead of sending it to a bank. So stop sending your paycheck to capital

to Wander and start sending it to future you. Because if you do a little bit of sacrifice now, it's going to get you investing sooner rather than later, which you saw is very important. And if you still have debt hanging around, get that junk out of your life as soon as possible so that you can start building for that beautiful future. And keep watching this next video to find out the fastest way to get that debt gone for good or click the link in the description to go check it out. And if you enjoyed this video, be sure to hit that like and subscribe button and share this with a friend who needs to see it.

Thanks for watching. We'll see you next time.