The Personal Finance Podcast - How Much Should You Have Saved and Invested (By Age!)

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Starting point is 00:01:24 What's up, everybody, and welcome to the personal finance podcast. I'm your host, Andrew, founder of mastermoney.com. And today on the personal finance podcast, we are going to be talking about how much you should have saved and invested by age. If you guys have any questions, make sure you hit us up on Instagram or TikTok at Master MoneyCo. and follow us on Spotify, Apple Podcasts, or whatever podcast player, you love listening to this podcast, and if you want to help out the show, leave a five-star rating and review on Apple Podcasts or Spotify. So today we are doing a cool episode. I love these by age episodes or some of my favorite ones to do because it helps everyone kind of figure out where they want to be when they go along with their financial journey. But before we dive in, what we're going to be doing today is we're going to be talking about how much you should have saved and invested by age.

Starting point is 00:02:15 but we're going to give you options here. This is like a mapping out your own retirement game. So we're going to give you a couple options. Depending on how much you need in retirement, that's how we're going to talk through this. So if you need $60,000 per year, that's the first option we're going to give you. Then you can have a certain amount by age. If you want $100,000 per year in retirement, we're going to give you that option as well. And then we're going to give you $150,000 per year in retirement.

Starting point is 00:02:37 Now, we're not going over $150,000 per year in retirement in this episode. If you live somewhere like San Francisco or New York and you want to have more than $150,000 per year in retirement, or if you're very interested in fat fire, I can show you how to run these calculations. If you're interested in that, shoot me an email or send me a message on Instagram or TikTok saying, hey, I want you to do a video so that you can show me how to run these calculations so I can do these for myself. We can absolutely do that. Another thing that we're going to be doing, because this is very different than what you would do if you're going for financial independence or retiring early. if you want to retire early, then we're going to do a second episode where it's going to be how much you should have save invested by age

Starting point is 00:03:19 depending on when you want to retire. So that is another episode that we'll absolutely be doing as well because you're going to have to be more aggressive and accelerate the path on this. Now this episode here, we're going to be doing it traditional retirement age. If you retired at 60, how much money would you need to be able to retire to make sure that you're on track? And the cool thing about this is,

Starting point is 00:03:37 even if you want to be financially independent, if you want to retire early, then you can use this as a baseline. This is your backup plan. If you have at least this much saved and invested, then what you can do is at least make sure, hey, I at least have this to be able to retire at traditional retirement age.

Starting point is 00:03:51 And then all I have to do is try to figure out ways to accelerate my path so I can get to that next level. So you can use this as a barometer to figure out exactly where you need to land. And another thing to note, do not let this episode get you discouraged. If you're behind, do not worry about that. The way you want to do this is figure out,

Starting point is 00:04:09 hey, where do I need to get to next so that I'm still on track? So say, for example, you need $100,000 by the time you're 35 to be able to retire by 60. Well, what you want to do is if you are just starting out, maybe you're 30 years old, you're just starting out, you haven't invested any money because you're just figuring this stuff out. So you say, hey, I need $100,000 in five years. How do I get to that point? So you jump to the next level to see where do I need to be in the next five years so I can get there. And now I'm on track again.

Starting point is 00:04:36 Now I'm on pace again. So that's why this is so valuable for you is that if you're just starting out, you have not thought through this process where you need to get to in the next five years. What is your goal and then work backwards on that goal? This podcast is teaching you that. Now, if that sounds insurmountable to save up $100,000 in five years, I did it on a very low salary at $30,000 a year and figure out a way to do it. We've talked about that a little bit in the past as well.

Starting point is 00:05:00 So just follow along because once you start to save money and invest money, things start to happen and you're going to start to think of ways to earn more money so that you've can accelerate that path to get to the next level. So do not let this get you discouraged. Now, the way we ran these calculations is we did it with a 10% rate of return over time. Now, if you want to do it with an 8% rate of return, we can show you how to do that as well. If you want to do it with a 7% rate of return, you can do that as well. We ran it with a 10% rate of return over a very long period of time so that you can see exactly how this works. But you can do your own calculations. If you think the rate of return should be lower, I'm all for being conservative on your rate of

Starting point is 00:05:37 return. And honestly, I think that's the best way to calculate your retirement. So you have a safety net in place. So if you want to have it at 7% for example, that's a fantastic way to do it. You're just going to have to save a little bit more when you run those calculations. So you can run that calculation as well. I think it's absolutely worth it to do that. So as mastermoney.com launches here, we are going to have an investment calculator as well in there. So you can actually run all of these calculations on that investment calculator. So I will show you how to do these based on that investment calculator when that launches as well. That should be by the end of this year. So really excited about that. We're going to add that in and we'll have that ready to go. So if this is something you're

Starting point is 00:06:13 interested in, we're going to do it by age from the 20s, 30s, 40s and 50s. So if you're ready for it, let's get into it. All right, so 20-year-olds, there's a bunch of different things that you want to be doing in your 20s to make sure that you can hit this level. A lot of them we've talked about in the past, but some of these you just want to focus on and make sure that you're laser focused on very specific things. The biggest one overall is income because you're starting off at an entry level job or maybe you're just starting off not making as much as you want to. I was there. I know how that feels. It feels like a mountain that you have to climb.

Starting point is 00:06:43 So what you want to do is focus on growing your income in your 20s. If you can do this as early as possible, it's going to absolutely change the rest of your financial life as you start to grow your income. So making sure that you figure out ways to grow your income is one of the most powerful things that you can do. It's going to solve so many problems throughout. your life. So obviously the first place to do it is to negotiate your salary. We have a free e-book that you guys can check out on how to negotiate your salary. We have a very specific system on how to do this. Side hustles are another big one. So making sure that you find additional ways to earn income. Some of the side hustles I did was Amazon FBA. I had a Christmas tree stand. We did a

Starting point is 00:07:21 bunch of other niche websites. I had a bunch of things that we were doing so that we can earn extra income, especially in our early 20s. But focusing on the income side of the equation is the most powerful thing. that you can do. Most people say cut back. Well, you can only cut back so much if you're making 50 grand a year. So making sure you have enough additional cash so you can invest some of these dollars, put them towards wealth building activities so that you can start to become a wealth builder because wealth builders do as anything that they possibly can to start building wealth, especially in your 20s because these dollars are so valuable. I cannot stress this enough. When you're in your early 20s, you have so much time to compound your money that these dollars

Starting point is 00:08:00 are the most valuable dollars that you will ever make in your life. And as you start to invest these dollars, it is so powerful what $1 can do over your entire investing career. So making sure even if you can just invest a little bit, starting now is going to make it so much easier for you later on in life. So making sure you're investing as much as you possibly can. If you can start at 20% of your income, that would be absolutely amazing. If you can't get there yet, start at 10

Starting point is 00:08:25 and start increasing it by 1% every single month or every two months or every quarter so that you can hit that 20% range because that's really where we want you to be at least at a minimum is 20% of your net income is invested or going towards your emergency fund or other savings goals. And the last thing you want to do is if you have high interest debt, any debt over 6%, you want to get rid of that high interest debt, make sure that it is gone so that you don't have something eating away at your wealth building ability because that is what high interest debt does. It takes away from your wealth building ability. You can't invest as much money if you have high interest debt. You can't put enough money towards your emergency fund if it has high interest debt.

Starting point is 00:09:02 High interest debt is going backwards and investing your dollars is how you accelerate your path to wealth. So separating the two, getting rid of that high interest debt is something that is going to be absolutely powerful. So this is credit card debt above 6%. Any student loans that are above 6%, any personal loans above 6%, car notes that are above 6%. All of these are considered high interest debt that you want to get rid of as fast as you possibly can. All right. So now let's jump into how much you want by age. So if you want to spend $60,000 per year in retirement, here's how much you need to have. If you're 22, you want to have $4,138. Now, how many 22-year-olds have $4,138? My guess is if you just graduated from college and you never even thought about

Starting point is 00:09:47 money until just now, then most of you don't have that. If you do have that, don't worry, because you can start to catch up for the next couple of years so that you can make sure that you're on track. At 25 years old, if you want to spend 60, thousand dollars per year you need 19,206 dollars and at 29 years old if you want to spend 60,000 per year you want to have 47,000 dollars saved up. Like I said, don't let this get discouraged. If you're just figuring out and you're 29 years old now, you can still get to the next level. Just look five, six, seven years ahead and figure out a plan to get to that next spot. A hundred thousand dollars a year. Let's jump into a hundred. So if you're 22, you need 68, 97 saved up and invested so that you can

Starting point is 00:10:26 retire by the age of 60. If you're 25, you need $32,000. And if you're 29, you need $78,876. Now, I will say this here. If you have $78,876 saved up when you're 29, you're doing a great job. And at the same time, most 29-year-olds don't have that much saved up. I've looked at the data many, many times. Most do not. So if you want to be a wealth builder, you want to be an outlier, then doing this early on in your early 20 so that you can do that when you're 29, you're going to be way ahead of everybody else. 150,000. Now, obviously the numbers go up, the more you want in retirement. So for $150,000, $10,000 is at the age of 22. How many 22 year olds have $10,000 unless they've been working all through college or they got a lot of gifts from parents or grandparents and they saved those up and invested? A lot of them don't have $10,000. But what you can do is look at some of the next

Starting point is 00:11:16 levels and see where you can get to that point. At 25, you want to have $47,724. And at 29, you want to have $117,597. Now, one thing to note here is when you're in your 20s, your income is usually at your lowest. And when your income is usually at your lowest, what happens is once you start to level up in your career, you get good at your job and you start to have some experience under your belt, your income starts to rise. So sometimes you can play catch up as you get later on in life, especially if these numbers seem crazy high. Maybe you're 29 years old. You want $150,000 a year to have the life that you want your dream life in retirement, but you're like, I'm not even close to $117,000 yet.

Starting point is 00:11:58 Well, don't fret because as your income rises, you can start to take that extra income and put it towards investments. But you've got to think through this now, because thinking through it early, as you can see, it gets harder and harder as time goes on. But what happens is as you make more money, you keep your expenses the same,

Starting point is 00:12:14 or they can creep up a little bit, but you keep those expenses as close to minimal as possible, and then you can raise that income level invest those dollars. Now, I'm all for spending on the things that you value and cutting out everything else that you don't. So that's one way to cut back your spending if you're interested in doing that, but making sure that you just make enough money so that you can do what you want in life and have that dream life available to you is going to be the most powerful thing that you can do with your money. And that is why we love talking about it so much on this podcast.

Starting point is 00:12:41 Now, let's jump into the 30s. So your 30s are a very interesting time. I'm in my early 30s right now. And this is the time where a lot of different things can happen, where life gets a little messy, life gets really hectic, especially if you have kids or you're married or you just have a lot of things going on, and you're accelerating your path in your career typically. So this is probably the busiest time of your life is in your 30s if you are starting a family and doing some of these other things. So one thing to note here is in your 30s, cost can rise, which is one important thing to make sure that you start in your 20s.

Starting point is 00:13:15 If you didn't start in your 20s, don't worry. It's never too late to start, but costs can rise. And especially if you have young children, daycare or child care costs, it can be one of the largest items in your budget. In fact, it's the largest item in my budget by far is child care costs. It's a very expensive thing to take on, especially if you have both parents working full time. So your child care costs can be something that can be the biggest line item in your budget. We'll have an episode coming out on that to figure out ways to potentially save up for that

Starting point is 00:13:43 so that you can just plan for that. Planning for child care costs because it is a thing that. that you need to have is something that you can definitely do. One thing to watch out for, though, in your 30s is watch out for lifestyle creep. A lot of people start to see their lifestyle creep up a lot in their 30s. The reason for this is a number of things, but maybe you have more responsibilities

Starting point is 00:14:02 so your lifestyle is going to creep. I know, for example, my grocery bill after we had kids, doubled from when it was just my wife and I. So your lifestyle will creep up in various ways. Maybe you get a nicer car or a fancier house or all these different things so that you can fit your entire family. lifestyles will go up in your 30s expect that but know why it's happening and know what you value so it doesn't creep up too much lifestyle creep can destroy your wealth if you don't know why it's

Starting point is 00:14:27 happening and if you're not aware of it so making sure you're aware of your lifestyle creep it's okay to have lifestyle creep don't let anybody tell you it's not okay because increasing the amount of money that you spend especially if it makes you happy and it brings you value is absolutely what money is there to do don't let anybody tell you lifestyle creep is the worst thing that you can never do, but creeping it up too much where you're not hitting your investment and savings goals, that's where it's a problem. So as long as you're hitting your goals and making sure that you're on track, which we're going to talk about what your goals here are in a second, but as long as you make sure that you hit those goals, it doesn't matter if your lifestyle creeps up. Let it creep up.

Starting point is 00:15:00 Creep up all day long if you're hitting your investment goals because you're on track to retire when you want to retire. So let it creep all day. But making sure that you are hitting those goals is the most powerful, powerful thing. Also, in your 30s, if you have dependents, you want to have term life insurance. You don't want the fancier life insurance. You don't want the crazy life insurance that talk about on TikTok that they say is an investment. Life insurance is not an investment. Life insurance is insurance. If somebody is telling you life insurance is an investment, you need to write them up because they get a big fat check every single time you sign up for their life insurance policy. Make sure that you are not falling into that trap. Another thing is getting a will. So if you do not have a will in

Starting point is 00:15:38 place already, I think people over the age of 18 should have a will even if you have any sort of asset whatsoever. Really cheap to set up. We use trust and will online and it's really cheap to set up. I'll link it up down below as well. But it's one of the biggest thing for your wealth protection plan, especially if you have people who depend on you or people you want to hand your money down. It helps ensure that your assets are going to the correct person. Then another thing, if you're not investing 20% plus of your income, you need to be doing that in your 30s. If you can't do that, then you need to try to earn more money so that you can because really this is the time to buckle down. Make sure that you're investing those dollars towards your

Starting point is 00:16:12 emergency fund and torture investments. All right, so let's get into how much you need in your 30. So if you want to be spending $60,000 per year by the time you're 30, you want to have $56,197. So you can see what's happening here. So at 29, you needed $47,326. At 30, you're going to need $56,197. At 35, you're going to need $115,771. And at 39, you want to have $188,706. Now, one thing to note here, you might be thinking to yourself, well, should this be all in one account, or can I spread it across a bunch of different accounts?

Starting point is 00:16:52 It doesn't matter how many accounts you have. It's going to compound the same. One misconception a lot of people have, which I need to be mentioning more on this podcast. So a lot of people think you have to have all your money put together in one account. Compound interest is math. And the way the math works is it works the same if it's spread out throughout 10 accounts or if it's just in one account. You don't have to have it all in one account. So if your spouse has an account, like a Roth IRA and you have a Roth IRA and your spouse has a 401k and you have a 4.1K, it doesn't matter. If it's spread across all those accounts, you can have it spread across all those accounts and have $56,000 and have $15,000 or the $188, whatever you want to do there. So $100,000 a year. How much do you need? When you're 30, you want to have $93,661 saved up. When you're 35, you want to have $1,000. $192,951 saved up. And when you're 39, you want to have $314,510 saved up. Now, single people,

Starting point is 00:17:45 if you're still single in your 30s, you're having a grand old time in your 30s, one thing to note here is thinking through, well, if I do want to have a partner later on in life, do I need to plan for that now or should we be planning on together? That's something you're going to kind of have to think through now because what if your partner is not financially responsible? one of the best things that you can do for your money is actually marry somebody who's financially responsible. But if you fall in love with somebody who's not financially responsible, what would you do in that situation? How much money would you need? How much would your income increase? Thinking through that a little bit in your 30s is going to be something that you definitely want to do

Starting point is 00:18:15 as well. Then $150,000. If you're 30, $139,641 is how much you would need to have saved and invested by the time you're 30. At $35, $287,000 is how much you need. And at $339,000, $6,000 is how much you need. $468,000 is how much you need to have saved and invested. So for people who are just starting out, $468,000 may sound like a crazy amount at the age of 39. It's really not, especially if you start very early on. If you start at 30, you can still get there, I promise you. But you've got to start saving and investing and really accelerating your path there. But if you're dedicated, you can definitely do this to make sure that you have enough in your

Starting point is 00:18:54 investment portfolio so that you can retire at the age that you want to retire. So that is how much you'll need there. getting your savings rate up is definitely the biggest factor to making sure that you can actually accelerate your path to wealth. Your savings rate is so incredibly important. So if you're below that 20%, you got to raise it at least 20%. And really, when you're in your 30s, you almost want to have your savings rate, whatever decade you're in, you want to try to bump up that savings rate to that percentage. So if you're in your 30s, 30%. If you're in your 40s, 40%. If you're in your 50s, 50%. See if you can do that because that would be the fastest way to accelerate your

Starting point is 00:19:26 path to wealth. And that means you're increasing your income over those decades and you're continuing to save more and your income is rising so you actually get to spend more as well. When your income rises, you get to spend more on the stuff you love and you get to save more at the same time. Your savings rate goes up. So that's kind of the cool thing to think through that. But if you can't get there yet, do the 1% rule. Start at 10, increase it by 1% monthly so that you can get to that point and do it gradually over time so it's not as painful. Because the last thing we want you to do is rip the bandaid off, make it super painful where it's like, this is absolutely miserable. What am I doing this for? And then you just quit. So we want to make it.

Starting point is 00:20:00 make sure that you do it gradually over time, increase that savings rate gradually over time, so that you don't just quit because most humans, as we know, don't have the willpower to keep going. So you want to make it a systematic thing so that you can increase it and get to that point. Now let's jump in to the 40s. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy, clothes don't fit anymore, and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking about more this spring,

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Starting point is 00:23:14 your family, and your dreams. Get financial advice that puts you at the center. Find your advice. at IDPrivatewealth.com. All right. So in your 40s, a lot of things are starting to change. A lot of things are starting to adjust. But for most people, their careers are really starting to peak now as well.

Starting point is 00:23:31 So in your 40s, there's a bunch of things that you want to be doing. One thing is your emergency fund should start to grow a little bit. The reason why you want your emergency fund to grow, unless you have to use it, is because once you get closer to retirement age and you're ready to retire, you want to make sure that you have enough cash on hand. I like to have extra cash as you approach retirement. because if there's really bad down years in the market, you can actually utilize that cash

Starting point is 00:23:55 instead of having to utilize your portfolio and your portfolio is going to grow really fast. But if you have a couple years worth of cash on hand, then you're really going to be able to really protect your wealth no matter what happens. So cash is always the biggest wealth protection vehicle, even though it loses value every single year, having some extra cash on hand does not hurt.

Starting point is 00:24:13 So continuing to fund that emergency fund, some people stop at the six months. I like to continue to fund it. And if it's not hurting your money, your investment goals, then I would continue to fund it. If it is hurting your investment goals, invest those dollars instead. I want that money to grow. I'd rather that money grow. Move cash out of your account and get it over there. But if you're hitting your investment goals and you want to have a little extra cash, I would continue to fund that emergency fund to allow

Starting point is 00:24:35 it to start to grow because it's much less painful to do it now instead of waiting to your 50s and then you have to put huge lump sum to make sure that you have a big enough cash position when you enter retirement. So another thing to do is start thinking about what you want to do with your housing situation in retirement. So now you've got 20 years until retirement. So you're trying to think through, hey, what do I want to do with my housing situation? How do I want to approach my mortgage, for example? Do I want to have it completely paid off by retirement?

Starting point is 00:24:59 I think that's the best option because the less liabilities that you have to pay out, the safer your retirement is. So kind of protecting your retirement so that you don't ever have to work another day in your life is what you want to be doing. And then you want to look at your asset allocation. Make sure you're still comfortable with what it is. I love to be aggressive through the 40s, but not everybody is that way. look at your risk tolerance. What is my risk tolerance? What stocks and bonds should I be buying

Starting point is 00:25:22 so that my risk tolerance is matched with my portfolio? And one thing to note, a lot of people don't talk about this in the finance space, but making sure that you actually take care of your health in your 40s is even more imperative than ever because it reduces your medical costs later on in life. So if you're not healthy, making sure you get into shape because health is wealth. And it's going to absolutely make a major difference later on in life if you're healthier than if you are now. Your cost will reduce significantly. In addition, you'll just be happier in life if you're healthy. So making sure you take that very, very serious is important. And then if you have any high interest debt that needs to be gone by now, no matter what,

Starting point is 00:26:00 make sure that high interest debt is gone. It should be gone in your 20s, but making sure you eliminate it in your 40s is absolutely imperative. So how much do you need in your 40s? Let's look at it. So $60,000 per year. If you're 40, you need $211,000 invested. If you're 45, you need $3,000. $166,000 invested. And if you're 49, you need $55,000 invested. So that's for spending $60,000 per year. At $100,000 per year, you're going to need $352,000 invested. That's for age 40. At 45, you're going to need $610,000 invested. And at 49, you're going to need close to a million, $925,000 invested. You should be approaching close to a million if you started in your 20s or 30s, you'll be approaching a million by your late 40s, for sure, depending on how much you're investing every single month. So making sure that you're

Starting point is 00:26:52 doing that is imperative. Now, $150,000, at $40, $526,000. At 45, 910,000, and at 49, 1.3 million is how much you should have invested? One question you may be asking is, how do these numbers actually come about? So one big thing that we talk about here a lot is the 4% rule. And if you've never heard of the 4% rule, it's how much you can draw down from your portfolio every single year. So within the 4% rule, that means every million dollars that you have, you can draw down 4% of that portfolio every single year. So every million dollars, you have $40,000 per year. That's where these numbers come into play. And that's why it's so important to understand this early, because the 4% rule is how you can have the safe withdrawal rate in retirement

Starting point is 00:27:37 and still preserve your wealth throughout retirement. So that is where those numbers come from if you're curious. So like by the time you're age 39, for example, if you have $1.3 million, then you can draw down close to $60,000, but it's not the $150,000 mark that you want. So making sure that you are getting to that X level and your $1.3 million will really accelerate in the next 10 years because you have that amount and it's going to really start to compound. Once you hit a million, it really, really, really starts to accelerate fast. So that's the cool thing about a million as well. So without further ado, let's jump in to the 50s. All right, so the 50s, the nifty 50s.

Starting point is 00:28:15 I don't know where I got that from, but this is where we are going to be thinking through retirement a little more. If you're just starting in your 50s, you've got to start getting aggressive here and making sure you're investing as much as you possibly can. So the first thing you would think about in your 50s is how do you want to withdraw from your portfolio? How much do you actually want to withdraw?

Starting point is 00:28:31 The 4% rule is the best rule that we talk about here, especially in your 50s. You have plenty of time to preserve that wealth with the 4% rule. The second thing you want to be doing is building out that large cash position. If you haven't started yet, having that extra cash on hand is going to be very helpful. Now, if you haven't hit your investment goals, that cash should be going into investments. But if you have hit your investment goals and you're still on track and you have the extra cash on hand, building out that cash position so that you can

Starting point is 00:28:55 have some additional safety net is going to be something that is key now. It doesn't have to be 10 years of cash, for example. I just like to have a year, two years, somewhere in that range. Some people like even more to have a larger cash position. And if you do this over time, if you're in your 20 is listening to this and you just build that cash position over time, it's going to be very easy to do over time. You can put it in a high yield savings account. Or if you're doing this for your retirement cash position, it's outside of your emergency fund and you're just continuing to fund that emergency fund. You can invest those dollars outside of your six months emergency fund if you're comfortable with it because you already have your six months there. You can have an

Starting point is 00:29:30 additional thing where you invest those dollars and then in 20 years when you hit your 50s and you're approaching retirement age and you're seven years away. And if you have enough cash there available to you, then you can draw down that cash, kind of preserve it and keep it in that high yield savings account because you're going to need that money within the next five years. So that's one other option that you can utilize as you're thinking through this. Then you want to take advantage of catch-up contributions. So catch-up contributions are additional amounts of money that you can invest once you hit the age of 50 in your retirement accounts. So for example, in the Roth IRA for next year, you can max out a Roth IRA at $6,500. And your catch-up contribution is,

Starting point is 00:30:08 is an additional $1,000. So making sure you take advantage of that if you're over the age of 50 is definitely something you want to be doing. One thing I like to do also in the 50s is talk to people about starting a dream fund. And what a dream fund is is like, what are your dreams in retirement? What are the things that you want to do? Do you want to travel the world? We'll start a fund where maybe by the time you hit retirement, you have $50,000 in a dream

Starting point is 00:30:28 fund where you can travel wherever you want for a long period of time. Having that available to you so you have that life experience. So you can live the life that you want, have that dream life available to you is really, really powerful because then you're living out what you want to do. So starting a dream fund is a really cool thing to do. Your estate planning should be an order in your 50s. Making sure that estate plan is an order is imperative. You should have a will and if you want to have a trust, if you have a million dollar net worth, then having a trust in place is also something you definitely want to do. And then looking to pay off mortgages or any other bills that you're paying out is something

Starting point is 00:31:01 you want to do as you approach retirement age as well. I like to have no mortgage. If you want to have a mortgage, it's fine. You just got to plan for it. So make sure. you have that in place. And then lastly, if you want to pay off all that low interest debt, if you're interested in doing that and you have the extra cash on hand to do that, so you don't have any additional liabilities once you hit retirement. I love the idea of just having zero liabilities, just living your retirement, not having to pay anybody any debt. That is a really cool way to retire. And I think it is a comfortable way to retire and reduces your stress and anxiety. So let's look at the 50s here. So $60,000 per year. If you're 50, $615,000 is how much

Starting point is 00:31:37 you want invested. If you're 55, $1 million is how much you want to have invested. And if you're 59, $1.5 million is where you want to be. And you want to be at $1.5 million. Why? Because of the 4% rule, that means you can draw down $60,000 a year if you have $1.5 million by the time you're 59. At $100,000 per year in retirement, if you're 50, you want to have $1 million invested. If you're 55, you want to have $1.6 million invested. And if you're 59, you want to have $2.5 million invested because at $2.5 million, what is the 4% rule drawdown? It is $100,000.

Starting point is 00:32:17 So that is where that number comes from. At $150,000, at $50, you want to have $1.5 million. At 55, you want to have $2.5 million. And at 59, you want to have $3.7 million. So that's how much you want to have. up with for $150,000 a year. Now, if you want to do this calculation really quickly, maybe you want to live on $200,000 a year. How much do you need for that 4% rule? You just take 200,000 and multiply it by 25. And that is going to give you how much you need at the end of retirement. So by the

Starting point is 00:32:52 age you turn 60, this is how much money you need. This is your goalpost. This is what you can try to achieve and make sure you're on track with your investment. So you can run it through an investment calculator say, hey, I want to have $5 million by the time I retire. How much do I need to be investing so I'm on track to hit that $5 million. So that is a way you want to make sure that you're planning it out and make sure you know this number because knowing this number dictates everything you do with your money. It dictates everything you are doing so that you can achieve this goal and make sure you're paying your future self so that you can retire and have a comfortable life in retirement. Now people are saying so if you are thinking to yourself, hey, I want to retire

Starting point is 00:33:25 earlier. I don't want to retire at 60. What is all this money at 60 going to do for me? Well, we're going to do the financial independence version of this where you can accelerate your path and you can choose how long it takes you to retire. We'll do that one in the future here. So make sure you subscribe to this podcast so that you can check out that episode. Really pumped to do that one as well because financial independence is everything here. That's what we love to talk about on the personal finance podcast is financial independence. That's the biggest thing that we talk about here. So incredibly excited to talk about that episode as well. Listen, I hope you guys learned a ton in this episode. If you guys have any questions, make sure you hit us up on Instagram or

Starting point is 00:33:59 TikTok. And make sure you follow us on Spotify or Apple Podcast. And don't forget, Please thank you so much for everybody who's been doing it, leaving those five-star rating and reviews. It helps us just show so many other people how to build wealth. And if you're getting value out of this episode, share it with a family member, share it with a friend. Because teaching people how to build wealth is one of the best things that you can do to reduce their stress, reduce their anxiety, and really help them navigate so that they can have their wealthy life as well. So really excited to share some of the upcoming episodes with you guys. We have some really cool stuff in store. So just stay tuned for that as well.

Starting point is 00:34:30 Thank you guys so much for listening this episode. I truly appreciate each and every single one of you, and we will see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play-Ojo, the online casino with all the latest slot and live casino games. What you win is yours to keep with no wagering requirements, instant payouts, and no minimum withdraws.

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The Personal Finance Podcast - How Much Should You Have Saved and Invested (By Age!)

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