The Personal Finance Podcast - How to Become a Millionaire (By Age)!

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Starting point is 00:01:19 And today on the personal finance podcast, we're going to be talking about how to become a millionaire by age. If you have any questions, hit me up on Instagram or TikTok at Master Money Co. And follow us on Spotify, Apple Podcast, or whatever podcast player you love listening to this podcast. If you want to have out the show, leave a five-star rating and review on Apple Podcasts or Spotify. and check us out on YouTube at Master Money on YouTube as well. So today, we're going to be talking about how to become a millionaire by age. And what I want to do is I'm going to equip you guys with the numbers.

Starting point is 00:01:59 I'm going to back this up with the numbers so you can figure out, hey, how much do I need to save every single month to become a millionaire? And in addition, how much should I already have saved if I want to just coast to become a millionaire? And I'll explain both of those things coming up in a little bit. And it's extremely important to do this because now you can put together your plan to figure out, hey, how do I want to get to this level? Now, one thing and one caveat we want to talk about before we get into this is a million dollars isn't what it used to be. And if you have a million dollars, just remember this because if you've ever based your retirement on the 4% rule, and if you ever thought through this before, the 4% rule states that you could draw down 4% of your portfolio every single year and still be able to preserve your wealth.

Starting point is 00:02:42 So when it comes to that, every million dollars that you save up for retirement means that you can draw down $40,000 a year. And this is amazing because you can reverse engineer your retirement. You can go and say, hey, okay, I want to spend $120,000 a year in retirement. So I need $3 million saved up to be able to do that. Or I want to spend $80,000 in retirement so you need $2 million saved up. So you've got to look at your expenses, see what you think you're going to be comfortable in. But remember that a million dollars isn't what it used to be 40 years ago.

Starting point is 00:03:15 A million dollars is less because inflation rises every single year. Now, on average, inflation has only been 2.5%. In 2021, it was much higher. But just looking at those factors and thinking through this, so you can set up your plan is extremely important. Now, we've talked about this before because we're going to go through what you should be doing within your age range to start to take the steps towards becoming a millionaire.

Starting point is 00:03:38 But we talked about last week, the seven factors of a typical millionaire. And I'll run through them quickly, but you need to understand those and listen through that episode so that you know what the factors are so that you can start to work towards these habits. And the first one is they live well below their means. The second one is they allocate their time, energy, and money efficiently. The third one is they believe that financial independence is the most important thing. It's more important than displaying high social status. The fourth one is their parents did not provide them economic outpatient care. The fifth one is their adult children are economically self-sufficient.

Starting point is 00:04:13 The sixth one, they are proficient in targeting market opportunities. And number seven, they chose the right occupation. And we pulled those off the millionaire next door, one of my favorite books. I talk about all the time. It's linked up in the show notes as well if you want to check that out. But that's where that came from. And it's one of the best books out there. And if you want to hear the explanations as to what those are, maybe some of those are mysteries

Starting point is 00:04:34 to you, that's where I would check out last week's episode because we ran through the whole thing in great detail so that you can know exactly what we're talking about here. So what we're going to do is we're going to go through each age range, from the 20s to the 30s to the 40s to the 50s, and see what you need to be doing to start building up wealth so you can become a millionaire and make sure you're on track to become a millionaire. Because I believe anybody in this world can become a millionaire. And so making sure you're on that track is all you have to do,

Starting point is 00:05:01 and you could automate this. You don't have to think about it all day long. It's not something to go hustle and grind all day long. This is something that you can automate, and that's what we're trying to teach you guys here. So if you're into that, and if you want to become a millionaire, let's get into it. All right, so we're jumping into the 20s. Now, when you're in your 20s, you got to understand one thing.

Starting point is 00:05:20 You are in the golden years of investing. Because every dollar that you allocate towards investments are going to grow massively compared to the rest of the decades. So, for example, someone who's in their 20s and their early 20s, every dollar that they start investing into the market is going to be worth over $80. So every dollar you put down, every single thing you buy at the dollar store, for example. If you buy something for a dollar, that is going to be worth $80 by the time you hit retirement age if you invest those dollars. So everything is a tradeoff here, especially in your 20s because you're making less money,

Starting point is 00:05:58 but those dollars can work harder for you over time. That's the beautiful thing about how this works and how wealth building works. when you're making less money, specifically when you're younger, those dollars are still going to produce more than the dollars when you're making a lot more money and you can allocate a ton more money in your 30s or 40s or 50s. It's going to be a massive difference for you. So I'm going to give you some wealth tips so that you can think about how should I think through this process because you're setting the foundation in your 20s.

Starting point is 00:06:24 You're setting up your foundation for the rest of your life. And if you're in your 20s and you're listening to this and you can set this up the right way, you'll be set for the rest of your life. Your family is going to be set for the rest of your life. the rest of their life, but you just have to be doing the right things early on. So the first one is to focus on foundational knowledge. We talk about how important knowledge is all the time. Read books, listen to podcasts, listen to audiobooks, and build that knowledge base so that you

Starting point is 00:06:49 know what's going on with your finances, so that you know what's going on with your investments. And building that knowledge base, you don't have to do this your entire life, even though I suggest that you do. I'm still always learning. So to make sure that you have that knowledge base so that you understand what you understand what you're doing is extremely important. And your 20s is the perfect time to do that. Now, if you're in your really early 20s and you're still in college and reading a book

Starting point is 00:07:13 sounds like the worst thing in the world to you, listen to podcasts that entertain you or listen to audiobooks. It does not only have to be books. Watch YouTube videos. There's so much valuable information out there, but get that baseline and make sure it's from reliable sources because there's a lot of bad information out there as well. The next thing, try to focus on automating your money. And the reason why you do this, the reason why you want to automate all of your money is so that you can focus most of your time on increasing your income because the faster you increase your income the further you're going to grow the gap and the further the gap grows that means you can invest more dollars the gap between

Starting point is 00:07:47 your income and your expenses so when you're automating your money send at least 20% to your brokerage of your income at least 10% to your emergency fund if you can save that 30% which i know sounds like a lot to a lot of people but if you could save that 30% you're going to be setting yourself up for tremendous wealth for the rest of your life. Now the bare minimum we talk about on this podcast is at least saving 20%, but even if you can't do that, if you're trying to get by, just save as much as you possibly can in your 20s because every dollar you save is the life-changing money. So making sure you're automating it to your brokerage and automating it to your emergency funds. So you're paying yourself first. You're paying yourself first. Then the rest of the money

Starting point is 00:08:24 follows goes towards your bills. And then make sure you're automating your bills as well. So you're not laid on anything. You could build up that credit score and ensure that everything is paid. on time. The next one, understand that you're going to be going against the grain when you do this. When you're building wealth in your 20s and you're not making a lot of money, maybe you are making a lot of money. But even if you're not making a lot of money, you're going to see a lot of people on Instagram or TikTok or your peers or your friends. Then they're all bawling out, going on crazy vacations, getting the fancy apartment, driving fancy cars, ghosts riding the whip down the freeway. All of those things are great if it fits into your budget. But a lot of people who don't make

Starting point is 00:08:57 good money in their 20s because you're starting out at an entry level job, for example, that's not in their budget. And so maybe some of those things are in your budget, but not all of those things. So there's nothing wrong with that stuff. But the majority of 20-year-olds just don't make enough money to make that work. So don't keep up with the Joneses. Don't go up with lifestyle creep. Understand that the decisions you're making right now, we're going to be life-changing for you.

Starting point is 00:09:18 And everybody else is going to be asking, how'd you get so lucky? There's no such thing as luck. It's consistent efforts over time. The next one. Avoid consumer debt at all cost. Building wealth is hard enough starting at zero. And if you're starting off in the negative by running up credit cards, going into debt, it's going to be extremely difficult. And a lot of people start their life off negative as it is with student loans and things like that.

Starting point is 00:09:42 But if you're starting off, do not put yourself in a worse position than where you are. Avoid debt at all costs because debt is a pants on fire emergency. And if you dig yourself a hole, it's much harder to get out of that hole than just starting at zero. The next one, start frugal and coast later. What do I mean by that? Starting frugal and coasting later means that early on, try to live like you still did in college. Try to live like you still did early on. Because if you do this, this is what I did, if you do this and you start to set your investments up,

Starting point is 00:10:13 you can start to coast later on where you don't have to save as much money because you're still going to hit your target goal, especially if you're considering working for a long period of time, or you can get really aggressive and try to achieve fire in 10 to 15 years, and then you don't have to work another day in your life. And then you can pursue what brings you happiness and what brings you. you join, you can get out of that cubicle or get out of that office. And now you're doing what you want to do. And you're building businesses or you're just sitting around, whatever you want to do. But thinking through that and making sure that you start off frugal, you start off spending less than you

Starting point is 00:10:44 may and allocating those extra dollars to investments as much as humanly possible because the higher your savings rate early on, the more money you're going to be allocating towards investments and allowing you to get to that first 100, 200, 300,000, and all of a sudden compound interest is blowing up. because it's like a snowball. It's starting to roll downhill. That snowball is growing massive until it spits off enough cash where you don't have to work anymore. So just understand that power that you have in your 20s. You have the power of time. And having the power of time is one of the most valuable things.

Starting point is 00:11:14 And so as you're starting to automate all this stuff, you're starting to live below your means. Now you can focus the majority of your time on increasing your income. Because once you start to increase that income and start to build skills that will grow your wealth, you're going to see massive benefits over time. So putting the rest of your money on autopilot is what you want to do so that you can get more dollars into investments and not have to start thinking about your finances all day long. Now let's get some investment tips. Number one, and the biggest one is invest right now. I don't care how much money it is. I don't care if it's

Starting point is 00:11:46 $10, $20, $50, $1,000, $1,000. I don't care what it is. You need to start investing now because every single dollar is well above $80. So starting in your 20s, I don't care what it is. do fractional shares, do whatever you can to get as much money into those brokerage accounts as humanly possible. Forego things that do not bring you value and put those things that do not bring you value. The money you were spitting on things that don't bring you value, shove it into those brokerage accounts. It's going to be absolutely life-changing for you.

Starting point is 00:12:15 Compound interest will change your life. And you really need to get your first 100K as fast as possible because that is the hardest part. The majority of it is your savings rate. And then once you get to that first 100K, then it starts to begin to slowly roll. all of a sudden you're going to see compound interest start to work much faster for you. See, what happens with compound interest is at the beginning, it feels like you're getting nowhere, and then all of a sudden it all comes at once. I explained a portfolio last week where if you had a million dollars invested in the S&P 500,

Starting point is 00:12:44 just in the last two years, that million dollar portfolio would now be $1.6 million. So $600,000 were made in two years just by having a million dollars. The same portfolio, if you only had 50 grand, would have only grown $40,000. So you can see the massive difference here because now this year, going into 2022, the time I'm recording this, that $1.6 million portfolio is now going to be compounded. So you're going to see how this works over time, but you've got to build up that baseline and the faster you can do it, the better. And here's another example.

Starting point is 00:13:18 In 2021, based on the returns, a $150,000 portfolio invested in the S&P 500 would grow to $194,000. This is an increase of $41,000. The same portfolio, which only had $50,000 invested, would increase $14,000. So the first $100,000 is worth the work. So here's the basive question. Here's the question we're all asking ourselves. How much do I need to have invested in my 20s? So if you're 20, say you're 20 years old, the lump sum you would have to have, meaning this is how much money you would have to have where you would never have to touch it again. you would get to be a millionaire by the age of 65. So the lump sum, what that means is, the lump sum is how much money would I have to have invested

Starting point is 00:14:03 right now and never have to invest another dollar to be a millionaire by the age of 65? If you're 20 years old, all you have to have invested is $13,600. And by the time you're 65, you'd be a millionaire. You don't have to put another dollar in there. So parents, this is a great idea for your kids to set them up. Start getting to the point we're saying, hey, how can I see? set my kids up, by the time they're 20, I have $13,600 set up in there. It's a great idea. It's a great idea to have that set up for your kids. Do the math, go backwards, say how much

Starting point is 00:14:36 every single month should I save up to get to $13,600 by the time they turn 20? Because you're giving them a million dollars if you do that. And then monthly, if you're 20 years old, you have to invest $11 a month to get to a million dollars. Now, this is with a 10% rate of return that we're doing this math on. Now, for a 25-year-old, the lump sum you would have to have is $22. thousand dollars and you never have to put another dollar in there to become a millionaire by the time you turn 65 and monthly you'd have to have 182 dollars a month to become a millionaire by the time you turn 65 so if you're in your first job you can invest that 182 dollars a month or you could double it or triple or quadruple it depending on how much money you make and you can see the power of how that will

Starting point is 00:15:16 build up over time because 182 dollars a month is something that you can figure out how to do it's less than 50 dollars a week to be able to become a millionaire when you're 25 think about the difference there. When you're 20, you only need $111 a month. When you're 25, you need $182 a month. This is why it's so incredibly important to start as early as possible. Now, let's get into the 30s. I remember when I needed to hire someone fast, but finding the right person quickly felt impossible. And if you've ever been there, you know how stressful this can be. That's where Indeed comes in. When it comes to hiring, Indeed is all you need. Instead of struggling to get your job post noticed, Indeed's sponsor jobs, help you stand out and

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Starting point is 00:18:48 You need to be doing all those things in the 20s. But in addition, we're going to talk about some other things that happen when you're in your 30s. Because the 30s are wild. They can get messy. Maybe you're getting married or you have kids. Or a lot of other things are happening. Your career is accelerating. So a lot of things are happening where you're super busy in your 30s. And what happens is if you have dependents or people in your life that are from your kids

Starting point is 00:19:10 to your spouse, whatever it is, your bills and your cost of living is going to be rising as that happens. So the first thing you want to do is watch out for lifestyle creep because we've talked about lifestyle creep in its own episode. I'll link it up in the show notes. But people who start to build up extra income because you're going to start to to make more money in your 30s typically. And you'll start to notice that you have extra income.

Starting point is 00:19:29 As your income starts to rise, you want to avoid that lifestyle creep. Now, it's going to go up naturally, depending on what's going on in your life. But you want to make sure that every time you get a raise, for example, you're saving half of that back into investment because that's how you grow your portfolio significantly over time, is making sure as your income rises, your investments rise as well. The amount of money that you're allocating towards those investments rises every time you do this. but also you want to make sure you're not keeping up with the Joneses.

Starting point is 00:19:56 You're not looking at your neighbor and saying, hey, they got a new car, I'm going to get a new car. They got a new house. I'm going to get a new house. You don't want to be doing that. And you know what else you don't want to be doing? Taking on massive car payments. Because right now, the average car payment in the U.S. is absolutely astronomical. Last time I looked at it was around $800 a household.

Starting point is 00:20:14 So what you want to do is making sure that you just keep your expenses manageable to low so that you can allocate those extra dollars to investments, especially if you want to achieve financial independence or you're trying to pursue that in your 30s or 40s, then you want to make sure you're keeping those expenses as low as possible. The next one is to work to make sure you're making what you're worth. This is the decade to set yourself up. This is the decade to make sure your career is on the right path and you want to make as much as possible in your career. So your 30s going into your 40s is we're going to make the majority of your money statistically. Now a lot of people can make a lot of money in your 20s too. There's a lot of outliers out there. But what I'm talking

Starting point is 00:20:48 about here is making as much money as possible so that you can allocate those, for investments so you can have freedom with your time and your energy and everything else. The next one, you should have your emergency fund set up. No more playing games. You're in your 30s. You need to get this set up. Life is going to happen. It's not if it's going to happen.

Starting point is 00:21:07 It's when it's going to happen. When are you going to need your emergency fund? So you have to have that set up. You can have your cash buffers in your 20s and maybe get by, but you still need an emergency fund your 20s as well. But there's no more playing games here. You have to protect yourself and protect your money. And at this point in time, you should.

Starting point is 00:21:23 should be saving 25% of your income at least you need to get your act together need to be saving 25% of your income now i know that's hard for a lot of people if you're not making as much as you want to in your 30 25% of your income is difficult so what i would do is look at increasing your income don't beat yourself up if you're not doing it don't beat yourself up if you're not saving 25% of your income but look at yourself realistically and say hey am i doing everything i can to at least get to this 25% level because my family depends on it my retirement depends on it. I need to get to this point. This is extremely important. And you need to have your money invested. If you're not investing your money, if you haven't invested any dollars yet, you have to

Starting point is 00:22:02 start now. And you'll see exactly why in a minute. If you have dependents, this is one thing to consider is to look at term life insurance. Now, term life insurance is the only life insurance I'm interested in. If you want to talk about other life insurance, we can have that conversation at another point. And I will go through that on an episode in the future. But term life insurance is cheaper. And it's good if you have dependence. If you have a spouse or you have kids or you have parents who depend on you or you have a business partner that depends on you, all this stuff means that you need term life insurance and it's not expensive. If you can get term life insurance in your 30s for 30, 40, 20 bucks a month, depending on how much coverage you want, it's very cheap. And we have sponsors of this podcast

Starting point is 00:22:42 who will definitely take care of you and I absolutely recommend them. They're linked up in the show notes as well. So check them out. And then thinking about taxes and think about your tax situation. Now, in your 20s, you may be using something like TurboTax or something like that to get by or you're using an accountant. But in your 30s, you want to make sure you understand your tax situation and make sure you're maximizing those tax dollars because those extra dollars are going to go towards your investments as time goes on. So I have an accountant. I love my accountant. He has saved me thousands and thousands of dollars every single year. And that's what I would recommend to you if you're getting serious about your finances and you're starting to make more money, then look into an accountant.

Starting point is 00:23:17 Now, how much can accountants cost? it can be any wide range depending on the area that you live in but if they're charging you like 10 grand or something like that that's astronomical so look into it price it out talk to them and say how much would it cost just to do my traditional tax return and i've seen it from a couple hundred dollars to if you have a business or two then one to two thousand dollars somewhere in that range but if they're saving you more than that then it's well worth the cost now how much do you need to save in your 30s to become a millionaire So if you're the age of 30, you would need to save $295 a month to become a millionaire by the age of 65. So almost $300 at the age of 30 to become a millionaire by the age of 65.

Starting point is 00:23:59 What about lump sum? We need to have $36,000 invested to become a millionaire by 65 where you don't have to put another dollar in there. So it's still not a crazy number if you're investing through your 20s to get to the point that you can be a millionaire by 65. Now, what if you're 35? You need to save $490 a month if you're at the age of 35. Or you need to have $58,000 invested. So as you can see, you can still start late and easily become a millionaire by saving, investing, and getting to the point where you need to get there.

Starting point is 00:24:30 And increasing your income is going to be able to allow you to allocate more dollars towards this over time. So let's say you get a bunch of raises and you're starting to make really good money. Well, maybe you want to start investing a couple thousand dollars a month by doing that. But if you can't get there yet, don't beat yourself up, work towards the goal. Set the goal up, do things every single day to work towards the goal, increase your skills so you can increase your income so that you can get to this point. Because anybody can do this, but you have to put in the work and you have to put in the time to plan it out and then take action every single day. Now let's get into the 40s.

Starting point is 00:25:04 So when you're in your 40s, a lot of things start to change. Maybe your expenses rise even more if you have kids and they're going to college or something like that. or there's a lot of extracurricular activities. But at the same time, a lot of people, their income begins to rise and they start to earn even more, especially in their early to mid-40s. So this is something that you want to think through. And if you haven't started investing and you're listening to this podcast

Starting point is 00:25:25 and you're in your 40s, it's time to kick it into gear. It's time to get this thing rolling. If you're starting to invest in your 40s, we have an episode talking about how to catch up if you started investing late. I'll link it up in the show notes as well. But understand it's never over. A lot of people in their 40s that I talk to say, it's too late. I can't invest my money now. I'm in my 40s. I waited too long. That's absolutely

Starting point is 00:25:45 not true. We'll talk about how much you need to save here in a second, but it's not true. Don't give up. Keep pushing. It's time to get to the next level. It's time to ramp it up. You know, people in their 40s start to get to their job levels and they're starting to think in their head, man, why am I doing this? Is this worth it? And they just start to coast. Well, if you're starting to build up wealth and if you're starting to really save up money, then you can start to think through some potential retirement options in your 40s as well. but let's get through some of these tips. So the first one is you want to continue to work on increasing your income because this is where you want to get your highest earning potential.

Starting point is 00:26:16 In addition, if you haven't started doing this, we've talked about this a couple times in this podcast, but health as well. So you need to ramp up your health because you want to be enjoying those dollars that you're working so hard for in this retirement that you've built up this fortune. You want to make sure that you are going to be able to enjoy it for a long time. So if you haven't started getting healthy and exercising and eating right, you need to be doing that now because it's going to increase your productivity. It's going to allow you to make more money because

Starting point is 00:26:39 you're going to be more alert, you're going to understand things that are going on, your brain's going to function better, all of these things are going to happen by ramping up your health. So making sure you get your workouts in, making sure that you're eating right, are extremely important in your 40s so that you can enjoy this wealth that you built up. The next thing is, if you started to build up assets and you have a good amount of assets, don't start taking massive risks and get careless. Don't go out and buy a bunch of NFTs with a bunch of monkey faces on them with your entire nest egg just because you know it's the new hottest thing.

Starting point is 00:27:08 Continue with your plan. Obviously, you can make a bunch of money with NFTs. That's not what I'm talking about. But continuing your plan that you set out early on is what you need to do. Don't have an investing midlife crisis here. Now, if your income is higher, focus more on the IRAs than the Roth IRAs. The reason why is you want to get that tax deduction when your income is high instead of contributing that money to the Roth IRA. So just consider that as well so that you can get the greatest growth benefits for your money.

Starting point is 00:27:34 And if you're behind on retirement, halt all. savings towards everything else. Don't fund your kids college or anything like that. Don't fund the wedding fund that you have. Put your dollars towards retirement because there's no loan for retirement. There's no retirement loan out there. I know you don't want to have your kids have student loans, but it's something that's going to have to happen because you need to take care of yourself first. When you're on an airplane, what do they tell you to do? They tell you to put your oxygen mask on first, then you can help others. And the same thing goes with your money. You have to take care of yourself first when it comes to this type of thing specifically with retirement, and then you can

Starting point is 00:28:10 help out your kids. I'm just talking about college and things like that. I'm not saying they're everyday essentials, but you need to take care of your retirement first before you start funding other things like that. Now, how much do you need to save to become a millionaire by the time your age of 65? Well, if you're 40, you need to save $812 a month. What about the lump sum? We need $95,000 saved up by the time you're 40 where you don't have to put another dollar in there. to become a millionaire by 65. What about 45? If you're 45, you have to save up $1,400 a month

Starting point is 00:28:41 to become a millionaire by the age of 65. Or have $150,000 saved up. So you can compare this for a second. Compare 45 to 25, for example. So at 25, you would need to invest $182 a month. At 45, you're going to have to invest $1,400 a month to become a millionaire. This is the power of time and why you need to start as early as possible. So if you're in your 20s listening to this part,

Starting point is 00:29:04 see the difference. You need to start as early as possible. Otherwise, you're going to have to work so much harder. So this is extremely important to understand. Now, like I said, if you're in your 40s, it's not too late. But you got to get started now. You got to get the ball rolling. It's time to get investing.

Starting point is 00:29:20 Now, let's talk about the 50s. Now, the last one we're going to talk about is the 50s. And this is something that if you haven't started yet, you can still do it. And I'm going to give you the numbers here. It's still doable. But you've got to really work your butt off to make sure that you stay on track and there's some extra things that you could do with catch up contributions and things like that they're going to allow you to maybe accelerate that path in retirement funds as well but you've got to

Starting point is 00:29:43 start working hard so the first thing is to make sure you're on track for retirement we talked about the top of the show the 4% rule so make sure you're on track in planning this out if you spend 80,000 a year you need $2 million saved up if you spend $40,000 a year you need $1 million saved up but just thinking through that and understanding hey am I on track for retirement or do I need to save these extra And then look at your risk reward in your portfolio. When you hit your 50s and you're approaching retirement age, that's when you want to reduce your risk level a little bit in your portfolio. You don't need extreme volatility.

Starting point is 00:30:14 You don't need extreme fluctuations in the market. You need to make sure that you have a steady state within your portfolio. And then you can start to consider Roth conversions. So if your income bracket is reduced and you're starting to approach retirement, you can start to consider doing those Roth conversions so that you can have that money available to you within the next five years, especially if you're going to retire. higher in the next five years think through that as well and then your estate plan so throughout all the ages you can start your estate plan but this is the time you really need to have one is in your 30s 40s and 50s

Starting point is 00:30:44 but your 50s especially so talk through there's a bunch of ways that you can do this you can go to an attorney which is probably the way that they will explain the most to you you can go to something like legal zoom or something like that as well they also do stuff like this but making sure that your hard-earned dollars are going to the people that you worked hard for is extremely important so if you're in your 50s, how much do you need to save every single month to become a millionaire by the age of 65? We're going to have to work a lot harder if you're in your 50s. So if you're the age of 50, you need to save $2,500 a month. Now, how do you do this? You can either allocate it in a traditional brokerage or you have catch-up contributions that you can give to your retirement accounts.

Starting point is 00:31:24 So for example, if you're doing catch-up contributions within a Roth or something like that, you can put an additional $1,000 a year into a Roth, and each type of retirement account has different catch-up contributions. So I can link them up in the show notes, so you can check out if I have a 403B, what's my ketchup contribution? If I have a IRA, what's my ketchup contribution? I'll leave a link to that in the show notes, so you can check that out if you want to see what my ketchup contribution be. And in addition, for the lump sum, if you're 50 years old, it'd be $250,000 to become a millionaire by the age of 65. So you see, in 15 years, $250,000, if you have that saved up, to become a millionaire at the age of 65, will turn into a million. So you can see the fast

Starting point is 00:32:02 acceleration of saving up that first $100,000, it starts to accelerate much faster. And then if you're at the age of 55, you're going to need to save $4,900 a month. So the 20-year-old only has to save $111 a month, and the person who's 55 has to save $4,900 a month to be able to retire. So that's extremely important to understand. The earlier you start, the less you have to work. And then for lump sum, if you're at the age of 55, you have to have $400,000 saved up where you don't have to put another dollar in to be a millionaire by the age.

Starting point is 00:32:32 age of 65. Now listen, no matter what age you're starting, you can absolutely do this. It's never over, but you're going to have to work harder as you get older to be able to get to that point. But it's never over. So just understand this. Take personal responsibility to say, hey, I didn't know this stuff, but now I do. And it's extremely valuable to start doing these things. And I'm going to start today. I'm going to start today. Make that commitment to start today because it's extremely important for you, your family, and your financial future. And if you have any questions, hit me up on Instagram at Master Money Co. And follow us on Spotify, Apple Podcasts, or whatever podcast player you love listening to

Starting point is 00:33:08 this podcast. And if you want to help out the show, leave a five-star rating and review on Apple Podcasts or Spotify. And also check us out on YouTube as well. We are Master Money on YouTube. Thank you guys so much for listening to this episode. I truly appreciate each and every one of you, and we will see you on the next episode. Frozen lasagna, medium power, 15 minutes. Sounds like Ojo time.

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The Personal Finance Podcast - How to Become a Millionaire (By Age)!

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