Pod Insights The Personal Finance Podcast How do Your Finances Compare by Age?! (Salary, Debt, Net Worth, Credit, Home) About this episode Most people are either ahead or behind financially for their age and have no idea which one.
Here are the real numbers by decade so you can find out right now.
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What You'll Learn in This Episode
The real median salary, net worth, credit score, and debt for every decade from your 20s through your 50s
Why the median net worth numbers are low across every age group and what wealth builders do differently
The one tip Andrew gives for salary, debt, net worth, credit, and home ownership in each decade
What it takes to be in the top 10% and top 1% of net worth at every age
Why your 40s are your highest earning years and the one mistake that wastes them
When it is actually okay to loosen up and start spending more of your money
Why a 19-year-old with $25K invested does not need to touch anything or overcomplicate it
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Episode/s Mentioned
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Watch Next
How to Retire in 10 Years or Less! https://youtu.be/nStwD03vJ64
The Hidden Cost of Playing It Safe with Your Money with Ben Carlson https://youtu.be/LG1Jr2xeuDo
The Patient Investor's Playbook with Noah Kerner - CEO of Acorns https://youtu.be/l5YZy2q_aVY
The Best Ages to Build Wealth (Ranked!) https://youtu.be/JIZ1WrS91v4
Should You Buy Into IPOs (SpaceX, Anthropic, or Open AI) https://youtu.be/e8r5h7RkOyo
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Question for you:
How do your finances compare to the median for your age right now? Drop your decade and the one area you are most focused on improving in the comments below.
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Transcript 10,839 words · 2 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Andrew Giancola? When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI Website Builder. I told it what kind of website I wanted, and I built the first version in minutes. No coding, no designer, or developer needed. And Hostinger doesn't stop at launch.
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1:29 Andrew Giancola? or piece of content that we record. And that's one of the things that I love about Wayfair. You can shop thousands of products across different styles and budgets, use customer photos and reviews to see how things actually look in real homes, and find something that fits your space. They also have Wayfair Verified Products that are hand-vetted by product specialists using a 10-point quality inspection. And with more than 20 million verified 5-star reviews, you can feel a lot more confident about what you're ordering. I've used Wayfair for this studio and our home, and I absolutely recommend them for your space. So transform your space with pieces that hold up to real life. Join Wayfair Rewards today and get 5% back on every single purchase.
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2:28 Andrew Giancola? On this episode of the Personal Finance Podcast, how do your finances compare by age?
2:42 Andrew Giancola? What's up everybody and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of MasterMoney.co. And today on the Personal Finance Podcast, we're going to be diving into how do your finances compare by age. If you guys have any questions, make sure you join the Master Money newsletter by going to mastermoney.co/newsletter and don't forget to follow us on Apple Podcasts, Spotify, YouTube, or whatever your favorite podcast player is. And if you want to help out the show, consider leaving a five-star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. Now today, we're going to dive into how do your finances
3:26 Andrew Giancola? compare by age. And we're going to go through a number of different categories so that you can see what the average is. We're going to look through the salary of the average person in the 20s, the 30s, the 40s, the 50s, and we're going to look at debt, net worth, credit, and home. And so this is going to be a really fun episode that I think we can look into some of the stats and see how they change over time. So at the end of this year, the new data from the US government and the Bureau of Labor Statistics, they are going to be releasing a lot of the new financial data. It's supposed to happen right around November of this year. So I can't wait to see how some of this stuff changes over time as we start
4:06 Andrew Giancola? to look into this. And so we took the information from the Federal Reserve's data so that we could look deeper into each person's finances. And so we're going to go through how your finances compare by age. And then for each decade, I'm going to tell you in each one of these categories, how to improve those if you are in your 20s, your 30s, your 40s, or your 50s. Then at the end of the episode, we're also going to be answering a few of your questions. So this is an action-packed episode. So without further ado, let's get into it.
4:38 Andrew Giancola? So first, let's talk about the 20s. Now, the 20s is a wonderful time to build wealth because you have so much time and opportunity for your money to grow and for your money to compound. But it is also the time where you potentially are making less than any other decade out there. And so we need to understand some of the things that we can do in our 20s in order to make sure that we come out on top. So first, let's look at the data and see exactly where folks in their 20s stand. So first, let's look at salary for individuals. So typically, we do this for individuals. If there are two folks in your household, you want to double some of these numbers. But the median salary is what I want to look at for an individual is $50,000 for someone in their 20s. Now, you may hear that number and say, "Well, I'm making a little more than that.
5:23 Andrew Giancola? I'm doing well," or maybe you're making less than that. But this is the starting salary. When I was in my 20s, I was making about $31,000 per year at my entry level job and then increased my income over time there. So this is the median for folks in their 20s. Their net worth is $6,600. Again, this is the median. And so we want to make sure this isn't overly skewed with the averages. This is going to be right smack in the middle. It's going to be more accurate data for most of you. The median credit score, and this is going to be really interesting, is 678. So some folks are starting off typically on the wrong foot with a 678 credit score. Debt on average is $34,328. And typically, we know that is because of student loan debt for most folks in their 20s. But they also could have a little credit card debt,
6:07 Andrew Giancola? maybe some personal loans from buy now, pay later. And 37.9%, this was a surprising number, actually own a home. And so when we look at some of these numbers, I want to see what are some of these things that stand out to you? Let me know in the comments below. If you're watching on Spotify or Apple Podcasts or YouTube, I want to hear what you guys have or what you think is actually standing out to you as we go through this. Now, here's what stands out to me. As number one, salary is right on par with where I thought it would be at $50,000. But net worth at $6,600, that seems pretty low, especially for the median in your 20s. Now, folks who are later on down the line, who have been in their career for a long time, maybe they are the ones that Could potentially skew this data, but for a lot of folks out there only having 6,600 bucks
6:52 Andrew Giancola? net worth is something where I want you to focus and work on that. Now debt's going to be a big factor into this. And so some people, if they start off life in debt, maybe you have a lot of student loan debt. That's going to be a huge deal, but definitely we want to work on that. And in addition, looking at the credit score, I think anything below a 700, unless you just don't have the credit history yet, is something we want to look deeper into. So let's talk about some of the ways that you can improve each and every single one of these categories. If you're in your twenties, so first I'm going to give you one tip for each. So for salary, changing jobs to get paid could be one thing that you want to consider. I want you to think about the job that you're currently in. Is there a trajectory or a path that allows you to get paid more?
7:33 Andrew Giancola? If not, now is the time to find that foundation where you can increase your baseline earning potential. So that over time, it just continues to move up over time. Your fastest raises, especially in this decade, are going to be changing jobs. You haven't built that reputation as of yet. And so instead you want to make sure that you are finding the companies that are willing to pay you for your value. If you are in an industry where you feel as though you should be making 2,000, 5,000, $10,000 more than what you are currently making. I highly recommend that you start looking for jobs when you don't need them. Because job switching allows you to make anywhere between 10 to 15% more over this timeframe.
8:15 Andrew Giancola? Also pairing that with building up high income skills, things like sales, things like negotiation and tactics that you need to understand will make you unstoppable. Once you get into your 30s. And so I want your twenties to be a time that you build as much as you possibly can. Two, let's talk about debt. If you are in your twenties and you are thinking about debt, I want you to do two things. Number one is I want you to think about taking on debt. If you take on any debt whatsoever, you really want to develop a policy for this. In fact, I would, if I could go in a time machine and move back to my twenties, I would create a policy for myself that I would not take on any consumer debt. I wouldn't take on car loans. I wouldn't take on buy now, pay later. I wouldn't take on any debt whatsoever. Why? Because you have so much more.
8:57 Andrew Giancola? Freedom and flexibility if you look at it that way. Now, a mortgage is something that I set aside because most people don't have hey, 400, 500, 600,000 dollars set aside for their mortgage. So instead, I want you to focus your time and energy on trying to avoid consumer debt. Now, if you already are in debt, maybe you have a little credit card debt on hand. Maybe you already did make the mistake of using buy now, pay later, and you have that debt. Maybe it's a personal loan. Or maybe you have student loans. I want you to think about most of those loans and prioritize paying off the high interest debt. So if your student loans are seven or eight percent, that's going to be something we want to make sure that we are attacking. Because anything above a 6% interest rate is what I classify as high interest debt.
9:41 Andrew Giancola? And I want to get rid of that as fast as I possibly can. And so we want to be really, really cautious when it comes to debt, especially when you're starting off your life. And if we can create a policy and say, you know what? I don't think I'm going to take on debt. I'm not interested in debt moving forward. The borrower is a slave to the lender. And I know that each piece of debt that I take on means that I gotta get up every single day. I gotta drive to work, go listen to my boss, come all the way home just to pay off that lender. Well, instead, I want to make sure that I am in control of my own destiny. And being debt free is one way to do that. Now, again, I have no issues with mortgages. I have no issues with certain pieces of debt. But you want to make sure that you do this very responsibly and understand the weight and the gravity of debt and how big of a deal it is. If you can understand that in your twenties, the rest of your life will be set.
10:26 Andrew Giancola? Three is your net worth. Now, when it comes to your net worth, there's a couple of things that you can do. Many of you in your twenties may be starting with a negative net worth because you have student loans on hand and you don't have many assets yet because you're working on your studies or your college and you did not have time to be able to start to build wealth in college, which is very normal for most people. And so what I would say is two things. One is you want to figure out how to move the needle in both directions. If you are starting off with student loan debt, paying down that debt like we just talked about would be very helpful, but also starting to invest your dollars. Getting your money invested early and often is going to allow you to build a tremendous amount of wealth. And I would not trade the amount of money that I invested in my twenties for anything. It built up this foundation.
11:07 Andrew Giancola? That allowed me to not have to stress or be anxious about money anymore. Instead, I had more options and I had the availability to go out and look at this. So, looking at some tax advantage accounts, the Roth IRA is wonderful for people in their twenties so they can grow their money tax-free. Look into Roth maxing. Try to max out your Roth as much as you can because you hear, you've heard of looks maxing, but what about Roth maxing? I want you to make sure that you're focused on Roth maxing. Every single dollar that you invest in your twenties can be transformational in your future. In fact, we have a free resource, if you go to mastermoney.co/resources, called the Wealth Builders Matrix. And the Wealth Builders Matrix tells you each dollar that you invest, based on your age, how much will it be worth by age 65?
11:51 Andrew Giancola? It is incredible how much money you could have on hand just by looking at that Wealth Builders Matrix. Four is credit. Well, if you are just starting off your life, maybe you don't have credit history yet, and so you really don't have a high enough credit score, you're just trying to build up that credit. Well, there's a couple of things that you can do. One is you can get a secured credit card. Chime has a great one that we can link down below in the show notes, but there are some other ones out there that I think are wonderful as well. If you have no credit history, getting a secured credit card works similar to a debit card, but you're actually going to be able to build up your credit score. So, you put a certain amount down on that credit card and then you can spend that amount and your credit score grows based on that. So, that's one thing you can do. Another thing to do is you can open up a credit card if you do have a high enough credit
12:35 Andrew Giancola? score to open one up and just make sure you keep that usage below that 15%. That is going to allow you to start to build up some credit and then from there, make sure you never, ever, ever miss a payment. So, those are some of the things that I want you to think about when it comes to credit. We'll talk about some more things in credit later on down the line. And then last thing, when it comes to a home and homeownership, do not rush to buy. Make sure you run the numbers before you consider buying a home. I bought my first home at the age of 25 and when I did it, home prices were very different than what they are now. I bought my first home, it was a three-bedroom, two-bath, 1,140 square feet and I bought it for $169,000. I think my mortgage payment when I first started was right around $1,100 and I put
13:17 Andrew Giancola? Down like 10% and so in reality this is going to be something where we are in a very different home market than when I even started and this was back in 2014 I think is when I bought my first home so this is something I think for a lot of you out there you do not want to rush to buy the market is very different than it used to be and renting in most areas is going to make more sense mathematically than buying now I want you to own a home I think homeownership is wonderful I think it's a great thing as a lifestyle decision but long term homeownership is going to be one of those things that you want to take your time if you rush into it then you could be stuck in a location for 10 years especially if the market has a shift or the market goes down
14:00 Andrew Giancola? we're seeing locations like Austin Texas for example right now where home prices are shifting back downwards again remember real estate doesn't go up forever and so we want to make sure that we are making the right choice when we are thinking about a home so that is the 20s now let's jump into the 30s alright so looking at the 30s let's look at some of the statistics here to see how you compare to some of the median averages out there so the median salary for folks in their 30s is $60,000 that one surprises me and we'll talk about why in a second net worth is $23,093 is what the median net worth is for folks in their 30s and the FICO score is 689 is what the average
14:42 Andrew Giancola? FICO score is and the average debt is $132,280 plus 61% owning a home so let's look at this for a second and kind of dive deeper into some of these numbers well first the salary number I think is going to be right around where the median of the US is right now and so in reality for some folks in their 30s this really isn't that big of a deal if you are in your 30s though we can talk through some of the things that you should do for your salary if you want to increase your income now net worth is the one $23,093 that we want to continue to increase over time and again we know in this country the median net worth is low in every single decade so we're going to see this time and time again I am going to say this number is low if you are a wealth builder listening to this podcast I want you to have higher
15:27 Andrew Giancola? Numbers in this, I want you to have a higher net worth than this. We are going to be overachievers when it comes to our finances. That's why you listen to this show. And so we want to make sure that we are getting to that point in time. Your credit score, this is ticking up to a much better level. I would like to see everyone's credit score above a 700. In reality, I'd like you to see a 750 or above. And so for most people out there, this is a good starting point. But as a wealth builder, our goal is to get to above 750. Debt, $132,280. Obviously, this is high, but mortgages factored in could be a big placeholder here. And so we want to make sure that we are looking at it that way. Again, remember, the salary is individual on this as we talk through this. And again, home, 61% own. That's actually a little higher than I thought it would be. And so one thing that we definitely want to look deeper into.
16:11 Andrew Giancola? So let's talk about some tips for folks in their 30s on how they can improve in each one of these categories. First, when it comes to your salary, if you haven't learned the skill of negotiation yet, now is the time because your highest potential earning years are this decade and the next decade. And we want to make sure that we are accelerating the amount of money that we are making over the course of the 30s. This is your steepest earning growth window. Usually in your 30s, people have the biggest trajectories of growth. I know for most of my friends and my peers around me who are high performers, they all have seen massive growth when it came to their income when they started to enter their 30s. And so this is the timeframe. You got to develop expertise. You want to try to develop some leadership skills if you can at your company
16:55 Andrew Giancola? or wherever you are working and you want to command that premium pay. You want to make sure that they know, hey, you are serious about making more money. You are known to be serious about this and try to get those promotions. Do the things you need to do to get those promotions. And again, if you have the job hop, you have the job hop. Loyalty doesn't pay anymore. So making sure that you look at your salary, you specialize, you negotiate. Those are the big things that I want you to do. Two is debt. Now, your 30s is an easy time for your lifestyle to creep. And it's going to creep in your 30s. And in fact, you should be A-OK with some lifestyle creep. Let's say, for example, you get a $10,000 raise. Well, if your lifestyle creeps up by $2,500, I'm A-OK with that. But if your lifestyle creeps up by Ten thousand dollars, well then we have a bigger problem.
17:40 Andrew Giancola? And that's how people go into debt is they allow their lifestyle baseline to increase all the way to the amount that they are making. So if you're making a hundred thousand dollars per year, and then all of a sudden you start to make a hundred and twenty thousand dollars per year, and you increase your spending per year by twenty thousand dollars. Well, you're still living paycheck to paycheck, my friend. You are still in the same exact position as when you started. So you did all that work to get that promotion. You did all the extra hours to make sure that you can make more money, and you're not using those dollars to buy back your freedom. What a shame that is. What a tragedy that is to do that. Instead, I want you to enjoy a portion of your money. But we also want to take a portion and put it towards our financial freedom.
18:22 Andrew Giancola? So that one point in time, we have the ability to be able to retire. So keeping those costs fixed and/or deciding to raise them slowly and have an intentional plan of how you're going to raise those can be very important. The bigger house, the nicer car. This is how people who start to make more money get into trouble if you're not careful. So cautiously add things into your life and really meticulously plan them. And then you will be able to build a tremendous amount of wealth. I promise you, just be cautious about the things that you add into your life. Because it's much harder to go backwards than it is to just remove some of the items before they even hit your bank account. Next is net worth. So when we think about our net worth, we get a portion of our raises,
19:06 Andrew Giancola? and we start to invest those dollars over time. We have that six-month emergency fund in place to protect our finances if anything is going to happen. And we increase our savings rate every single time we get a raise. Now, thinking about making sure you get your employer match, thinking about maxing out your 401K, thinking about maxing out an HSA, your Roth IRA, and taking advantage of those tax advantage accounts can be very important, depending on how much money you're making. And so to raise our net worth, we want to be aggressive with our debt paydown. And we want to be aggressive with the way that we go and invest our dollars. Investing your money over the course of the last decade has been one of the most amazing things that you can do. And the reason for this is because all of a sudden, when you go and look back at the course of the last decade,
19:47 Andrew Giancola? Return of the S and P 500 has been close to 15% on your money. Incredible. And so obviously, we've had amazing times. It doesn't mean that's going to be happening in the future at all. But we just want to make sure that we note that investing your money is really, really important. And if you want to invest in real estate or something else, that's something else to consider. Now let's talk about credit, for example. Keeping that utilization rate low is going to be really important. Now, if you don't know what your credit utilization is, this is across all the credit that's available to you. How much of it are you using? So let's say, for example, you have five credit cards and each credit card is $20,000. Now, across all five of those credit cards, if you're only using $10,000, that means you have a 10% credit utilization rate.
20:30 Andrew Giancola? That is a wonderful number and the perfect amount to have for someone with a $100,000 credit limit across the board. And so studies have been done that show that folks who have an 800 credit score or above usually use around 7% of their credit available. You know, the mortgage does add in a healthy credit mix if you want to go that route. But again, just remember, don't open up credit cards just for some of these reasons. You want to make sure you have a reason or a purpose for some of this stuff. And then buying a home. So 61% own a home in their 30s. And if you can buy less house than you can afford, I think that's one of the best ways to protect your downside. I always do this. I always buy less house than I can afford because I want to make sure that we're A-OK. Then down the line, if we decide, okay, I want to upgrade my house in a decade or so, then I will do that.
21:14 Andrew Giancola? But I'm not going to overextend myself and I'm not going to buy the exact amount I think I can afford. I actually always buy less than I can afford so that I have flexibility. When you're in your 30s, you need that flexibility. If you have kids, if you're getting married, if you've got all these different things happening and a lot of stresses happening at the same time, you want to buy less house than you can afford. Next, let's jump into the 40s.
21:36 Andrew Giancola? So the 40s is a timeframe where this is going to give you some really cool stuff is happening. Maybe you're earning more money, but you also are really, really busy and there's a lot of things happening at the same time. So let's dive into some of the numbers of the 40s and let's talk through some of the things that you can do and tips that can help you with each of these categories. So first, let's look at salary. The median individual salary is 67. Seven thousand dollars in your 40s. So we've ticked up again a little bit higher from your 20s and a little bit higher to your 30s. And now in your 40s, it's gone up even more. The net worth is 68,698 dollars. Still too low for most people, but people are getting their credit score together. Look at this, the median credit score is 700.
22:18 Andrew Giancola? It's pretty good to be honest for, for the national average, especially as bad as many Americans are with money. That is a really, really good one. Debt, the average total is 145,000 dollars. A lot of times that's mortgage added in there as well. You may have some student loans, stuff like that. And 69.5% own a home, which gives you the indicator of why the debt average total is around 145,000 dollars. So 69%, a few more own a home based on that. So let's talk about this for a second. In your 40s, let's talk about the salary because you want to convert your experience into leverage in your 40s. This is one of the best tips that I can give you when you are starting to think through how you want to earn the most. Is in your 40s, you are seen as someone who should have experience.
23:01 Andrew Giancola? These are peak earning years and you want to take advantage of them. If you have been climbing the corporate ladder for a couple of decades by now, I want you to use that experience to your advantage. Push into leadership, push into equity compensation, push into being able to consult for people. Have the ability to at least build an asset that earns money for you over time. Because these are some of the things that you can do to increase that income. Maybe you've always wanted to start a business. Well, start that business on the side and see if it can turn into an asset. Maybe you've wanted to climb the corporate ladder. Well, keep pushing, doing the things that you need to do. Talk to your boss about what needs to happen in order for you to get finally get that promotion that you have been working for and get it in this decade.
23:42 Andrew Giancola? I want to see you do it because this is the timeframe where I feel as though most people can really maximize their earning potential. You still have high energy, you still have the ability to really push and you have the experience in your corner. Those three all together can really make a big difference for a lot of folks out there. Now debt, let's talk about debt for a second because this is also a decade where you can really do some cool stuff for your financial. Future. I want you to think about a debt payoff plan. Meaning when you retire, when you get into your 50s and 60s. How do you want to think about debt? Do you want to have a mortgage on hand? Or do you want to have that mortgage paid off? How do you want to think about, you know, making sure that you don't have any credit card debt? Or car payments, or any of those different things? I would develop a debt payoff plan now.
24:27 Andrew Giancola? If you've got lingering student loans, let's get rid of those student loans. If you've got lingering credit card debt, let's get rid of that credit card debt. But we want to develop a plan now. Now, if you're just getting started and you're just getting your finances together. I want you to think through, okay, well, what do I want my finances to look like over the course of the next couple of decades as well? And then you can decide, well, let me try to prioritize debt. Or maybe I need to get investing first. And you can figure out exactly where you land based on that rate of return. Next, let's talk about net worth. This is the acceleration decade. And really, this decade is the one where you still have enough time for compound interest to really do some cool stuff. You're always going to have time. It's never too late. But this is the time where you can still have about 20 plus years for compound interest to really do its magic. And so I want you to try to make sure that you are accelerating
25:12 Andrew Giancola? the amount of dollars that you're putting into investments. For me specifically, if I was falling behind or I felt as though I was a little bit behind, I would just dump money in my investments in my 40s to try to get, you know, that money working for me as soon as I possibly can. Now, when it comes to credit, just making sure you protect your credit history is the most important thing. If you still have bad credit for some reason, making sure you fix it in your 40s before you get to your 50s is very important. Not much to do there. It looks like most people get their act together. They mature enough to be able to at least have a decent credit score. Pay those bills on time. Making sure you're using credit utilization rate is low. Never go into credit card debt, ever, ever, ever. But especially in your 40s, that's even worse. So making sure that you do all of those things is very, very important.
25:52 Andrew Giancola? And then home, I want you to run the math on payoff versus investing. So if you own that home. And you're locked into a low rate. Investing the difference often wins. So if, for example, I have a 2.5% interest rate on my home currently. And so for me, keeping that interest rate is in my best interest personally. You know, I'm going to make sure I run that thing all the way through its course before I pay it off early because 2.5% cannot compare to what the S and P 500 has done over the course of the last 10 years. So for me specifically, I'm going to make the minimum payments and pay off the difference. But if you have a high mortgage rate, well, maybe you want to run the math and see, do you want to pay that down quicker? Or what is your thought process there? For many people out there, just running the math will give you a good indication.
26:37 Andrew Giancola? And for many people, it's most likely going to be making the minimum payment and investing the difference, but you just want to run the numbers to make sure that is best for your situation. Now let's get into the 50s. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before. And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company. They're an online marketplace that lets you compare life insurance quotes from some of America's top insurers, side by side, for free. And their licensed team helps you compare coverage, prices, and terms,
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31:54 Andrew Giancola? All right, up next is the 50s. Let's look at the 50s and kind of see where we land. So when it comes to salary, the median salary goes down in your 50s, exactly what we thought potentially could happen. And so $63,000 is the median salary, which shows, hey, your highest earning potential years are your 40s. Net worth has shot up to $180,227, still too low for a lot of folks. Credit score or the FICO score has jumped to 709, which is a great FICO score to have. Debt is now $158,000. $105. It keeps going up and 75.8% of people own a home.
32:35 Andrew Giancola? So it jumped up another 6% or so on the amount of people that own a home. So what are the things that you can do in your 50s in order to protect your finances, build wealth, make sure you use this golden decade to make sure that you end it on top? So salary is the number one thing to talk through first. When it comes to your salary, you want to make sure that you try to peak it as much as possible, like getting it as high as you possibly can, but also protecting it. Making sure you're not taking lower compensation for other roles just because you're tired or whatever else. Well, if you are tired, try to find a company that allows you to work less, but make more. That could be one solution to look into. And then negotiating your final compensation, meaning the years that you have coming up, negotiating those hard and bank the high earnings can be really, really important
33:19 Andrew Giancola? instead of inflating your lifestyle. So some people in their 50s will inflate their lifestyle really high because maybe they have a midlife crisis or something happens. But instead, I want you to try to save as much as you possibly can with catch-up contributions. So I want you to think about your catch-up contributions, which are the additional contributions that you have available to you after the age of 50 in things like your Roth IRA, an extra thousand bucks, your 401K, which is a big, big difference on your 401K, your HSA or any of those tax advantage accounts. Those can be wonderful to help you catch up. Number two is debt. Aim to be debt-free in retirement. That may sound crazy to some of you, but that's what I want you to do. I don't want you to have debt in retirement because it's just another liability
34:01 Andrew Giancola? that you have to worry about that could derail your retirement plan if you're not cautious. So having more flexibility and having the ability to not have to worry about debt in retirement is a luxury that not everyone gets to achieve, and I want you to focus on achieving that. Being free and clear on your home is one. Making sure you don't have car payments unless you're really making good money or you have a lot of money in net worth. Those are going to be the types of things that we want to lower our fixed costs in retirement so we don't have to worry about it. Three is net worth. You want to have as high of a net worth as you possibly can. Now, if too much of your net worth is tied up in your home, I want you to shift and make sure that you get more net worth tied Up into investments because you can't draw money from your home in retirement unless you do
34:43 Andrew Giancola? something stupid like a reverse mortgage. And so you want to make sure that you are instead taking those dollars and putting them towards the things that matter most. Also, credit, keeping a high credit score is really important in your 50s. But if you're not going to be taking on a bunch of debt, it doesn't matter as much as it did maybe in your earlier years, but it still matters. It matters a lot for different things. If you downsize or you move, those are going to be things to think through. And then last is home. So consider downsizing if the kids are out of the house, or you don't need as big of a house as you currently have, because you can take those extra dollars from selling the home and put them towards retirement, or put them towards your financial future. Allows you to spend more in retirement if you put it in your portfolio. That could be a great thing to do. Plus, you don't really have to pay as much taxes
35:25 Andrew Giancola? if you are married filing jointly and you do sell your home, all the way up to $500,000 of the proceeds from your home sale. If you've lived in that home for the last two to five years, $500,000 is not going to be taxed. Or if you are single, $250,000. And then anything above that you will be taxed on. So that's just one thing to look into. And that is going to be something I think you really, really want to consider if the kids are out of the house, or if you've had some lifestyle changes over the course of that timeframe. So those are the 50s. Now, one last thing I want to do before we dive into your questions is let's look at the top 10% and 1% in each of these categories for the 20s, the 30s, the 40s, and the 50s. I just think this is an interesting stat. So we could see if you do want to be in the top 10% or the top 1%, what
36:07 Andrew Giancola? does this look like? Let's look at the table here. So in your 20s, a top 10% salary is $145,900. A top 1% salary is $195,000. If you're making $195,000 from your 20s, congrats to you. That is amazing. Net worth, top 1% in your 20s is 2.1 million. Top 10% is 297,000. Now, let's look at the 30s. So salary and net worth, top 10% salary is $248,600. Top 1% salary in the 30s is $460,000. And then net worth is $865,000. And for the top 10%, and 2.62, 4.72.
36:49 Andrew Giancola? Seven million, so it's in a range based on how old you are is the top 1%. Now, let's look at the 40s. A top 10% salary is 310,000 and a top 1% salary is 600,000. Net worth is going to be 1.18 million to 1.43 million. And if you're in the top 1%, it's 7.8 million to 8.7 million. And then lastly, the 50s, just because this is interesting. The salary actually goes up for top 10% at 312,300, just by two grand. But it goes down for the top 1%, 529,000 in the 50s. If you want to be in the top 1% of salary. Net worth top 10% is 2.58 million dollars to 2.67 million dollars.
37:32 Andrew Giancola? And if you want to be the top 1%, crazy. 13.2 million to 15.4 million. If you want to be a top 1% net worth in your 50s. So how do your finances compare by age? I want you to let me know down in the comments below how you feel as though you compare. What areas do you want to improve on? What are some of the areas you feel as though, listen, this section of my finances I want to improve on? Maybe you want to pay off more debt or maybe you want to make sure that you are increasing your income. Maybe you want to make sure that you're investing more and increasing that net worth. What are the areas that you want to improve on? Let me down to the comments below. I would love to hear more from you. And if you have questions that you want us to answer on the show, leave them in the comments below on Spotify, Apple Podcasts, YouTube and let me know. And you may get your question answered on the show, which will be really, really fun.
38:17 Andrew Giancola? By the way, a note before we dive into some of this other stuff. We are going to be taking live calls on this show. So if you are interested in taking those live calls, we will leave the form down below in the show notes so that you can check that out. And if you want to fill out that form, what we do is we are going to have scheduled live calls for the show. And we're going to be answering questions live. So we can dive into your situation here live on some of these live Q and A calls. So really, really excited for those. If you want to make sure that you get access to that, make sure you fill out the form down below and we will add you to the list. All right, let's jump into some of your questions.
38:54 Andrew Giancola? All right. So the first question is from Tim and I love this question. I think it's a really great thing that a lot of wealth boaters struggle with. So Tim says, when do you know if you have enough money invested that you can start living a little more freely? I'm 38 and my wife is 35 with an eight and a six year old and we make about $190,000 per year. That's absolutely incredible. Only debt we have is our house and I'm investing about $50,000 a year. And for the last two years, we currently have a little over $500,000 in all of our investments. We will both collect a pension when we retire, which is 67, but we both want to retire at 55. So when can we start living a little less frugal and not worry so much about spending extra money on vehicles and home upgrades, things like that?
39:37 Andrew Giancola? I'm bringing this question up because I'm looking at a new truck, but I really have a hard time wanting to spend $55,000 to $60,000 on a new truck. But my current truck is 14 years old and needing something more reliable. So Tim, I think you've won already. Okay. So what I want you to understand is that at $500,000 in your investments, depending on what you're looking at here, we're going to run a little math here because I did a little math before we dove into this. So I want to run the numbers for you, Tim, and I want to talk about your trajectory because I think it's a little stronger than you think. So you're 38 with $500,000 invested and you're adding $50,000 per year to those investments and you want out at 55. So that's 17 more years of compounding that you have available. Even at a conservative 7% rate of return, your existing $500,000 can grow to roughly
40:22 Andrew Giancola? $1.58 million on its own. Now your future $50,000 per year contribution adds about another $1.54 million. So you land right around $3.1 million by the age of 55 at a 7% rate of return. Now this is just rough back of the napkin math, but what that means is that with the 4% rule, it's $120,000 per year that can be drawn down. But that's before your pension pays you a single dollar. So let's talk about this for a second because these are just rough projections, but the margin is so wide for you and what you've done so far is so incredible that you could have an amazing retirement thus far. Now depending on what your pension is going to pay out, let's say your pension covers your baseline for you and your
41:03 Andrew Giancola? Wife and you have the ability to be able to cover a lot of your expenses and you have this additional portfolio available for you. That could be a really, really cool thing. So you could decide a couple of different things. One is you may already be coast fire. Because if you sit at this point in time and you realize, well, I'm only going to need another $60,000 in retirement. My pension, my social security and everything else is going to cover the rest. Well, then you may already be coast fire. But you just want to look and run the numbers. And I think if you feel as though you're crushing it right now and you feel as though you'd be comfortable with having a couple million bucks in retirement, then taking your foot off the gas can be something to consider. If I were in your shoes, I would run these numbers and I would say to myself, you know, can I take my foot off the gas? I think you could. Now, for those of you out there listening, I mean, Tim spent years here being disciplined.
41:47 Andrew Giancola? And now he has the ability to be able to have some more freedom and flexibility with his money. This is the beautiful thing about building wealth. This is why we do this. Because when you get to your mid 30s or your late 30s, then you have the ability to kind of have options here. You have options to do what you want. So let's look at this for a second. I would say the truck is a need and not a splurge. Now you can do a couple of different things. Obviously, I know trucks are expensive now and when you're looking at trucks, you know, you could, you know, go out and buy a used vehicle and you could, you know, find something that makes a little more sense. And it depends on what your tastes are and what you really want. What I like to do is buy a vehicle that's one, two, three years used. And I like to just drive that thing into the dirt, just like you are with your 14 year old truck.
42:29 Andrew Giancola? And so for me specifically, the last vehicle I bought, I bought a 2018 Ford F-150, still drive it to this day, obviously. And I'm going to drive that thing until it dies, or if I can give it to my son, I'll do it that way too. But it's one of those things where I bought it in 2019, it took the depreciation hit already. I bought it for like $24,000 or $25,000. The car market was different then, obviously, but it allowed me to then just keep my expenses low, paid that thing off within a year or so. And, you know, now I'm just driving a paid off vehicle and I'm just going to continue to do that. And so for you specifically, if you have a similar plan in place where you are just going to, you know, find a vehicle that makes sense for your finances and you decide, okay, well, I'm going to make sure my vehicle that I purchase is within the parameters that I can afford. So 12% or less is going to be spent on things.
43:13 Andrew Giancola? Like your car payment plus, you know, any maintenance costs, those types of things. You're going to drive it for 10 years or longer. You're going to put that 20% down or at least have the trade in for the 20% down. All of those things based on our rules and having that loan for four years or less allows you to, you know, have a couple of years where you're spending maybe a little more on a truck, on a nice truck that you've wanted for a long time and you already got your finances set up here. So instead of saving $50,000 per year, maybe for a couple of years, you're saving $40,000 per year, but all of the sudden you also are enjoying a little more of life. You're enjoying a little more of what you can do with your money. That is going to be AOK, especially if you have a pension in place. And so I want you to think through, you know, what expenses that pension is going to cover,
43:57 Andrew Giancola? what expenses eventually social security is going to cover. And then also thinking through any extra income that you have in place. It's really, really important to make sure that you note, I think you have the flexibility here. And this is the beautiful thing is you can live like other people aren't able to live because you set yourself up financially. So I believe that you can proverbially take your foot off the gas. If we're talking about a truck here and go buy the truck if you want to. I mean, this is something you've earned the right to live a little. Go buy the truck. Absolutely love this question and congrats on everything that you've been doing. The next question we will hit is from Gabriel. So Gabriel says, hi Andrew, my biggest money question is for something a little bit more down the road. I currently have about $25,000 invested between my Roth IRA and HSA. About 95% of it is invested in the S and P 500 index fund.
44:42 Andrew Giancola? I make sure to choose a fund with a low expense ratio, but I'm wondering if there's anything else I should add to make my portfolio more well-rounded. Since I'm 19 and I'm just getting started, would you recommend keeping it simple for now or diversifying further? Thank you so much. And this is from Gabriel. So Gabriel, this is a wonderful question and at 19 with $25,000, that is absolutely incredible. I mean, that is absolutely amazing, but you don't have to over complicate this. A low cost S and P 500 is not under diversified. I think you're owning 500 of the largest companies or the largest, you know, companies in the US stock market. Could you add more funds to it? Sure. So what are some things you could add? You could add in some simple international ETFs if you wanted to go that route. If you feel as though international is something you
45:23 Andrew Giancola? Need to hold, you could add in something like a QQQM, which is something like the NASDAQ 100. It's just the lower expense ratio. For those of you out there that don't know this, there's QQQ and there's QQQM. QQQM typically has that lower expense ratio that you could look into. That's another thing you could look into if you wanted to have the NASDAQ 100, but there's going to be some overlap with the S and P 500 there for sure. If there are things that you feel as though you have big conviction on, maybe you want to own some AI ETFs, maybe you want to own some technology ETFs because you have conviction in AI. I see nothing wrong with that. Maybe you want to hold some, you know, sector ETFs when it comes to some other sectors. I have no issue with that either, but just holding the S and P 500 is also completely fine. Or if you wanted to hold the
46:05 Andrew Giancola? total stock market, that is also completely fine because they are well diversified investments. Now, if you're saying to yourself, you know, I really want to get aggressive on some of this stuff, then you can look at some of the more aggressive funds, like a QQQM is more aggressive than, you know, a VOO, which is VOO is the S and P 500. So you just want to look at, you know, your time horizon, which is a very long time horizon. And so for me specifically, if I were in your shoes, I'd be looking at the longest possible time horizon I could get. So me specifically, if I was in your shoes, I'd be trying to get as aggressive as I possibly could get with some of my index funds and ETFs. And so I think VOO, VTI, those things are great too. But having too many funds, I think is just overkill upfront. Build that foundation, start to work towards building
46:46 Andrew Giancola? up that 80% of your foundation. So you can really, really get the ball moving. Once you get that foundation built up, then you can kind of start to go towards other things. And so if you haven't heard our episode on the portfolio pyramid, we will link it up down below in the show notes below, but that's going to be how you build out your portfolio and you're at your first 25,000 right now. That 25,000 is going to compound to some big, big numbers just by having that that early. I didn't have $25,000 at 19, so you're ahead of where even I was. And so that I think is really, really important to note. And a couple of places I would put this is looking at the Roth IRA, for example, especially when your income is lower. Maxing out that Roth is a big thing I would do in your shoes. And then looking at some of these other accounts can be really, really important from there. Then pour a lot of your energy. I would automate this process and pour
47:31 Andrew Giancola? a lot of my energy into My income, finding ways to increase my income so I can invest more. I mean, you have the potential, starting at 19 with that amount, if you increase your income enough, you have the potential to retire in your 30s or 40s if you're really aggressive with this. So I think for you specifically, this is wonderful, you know, what you've done already. Congratulations to you. That is absolutely incredible and you have a very bright future financially, my friend. I think that is going to be something that is really, really cool. So you've asked the right questions. You can add in some more diversification if you wanted to, if you wanted to add in some additional funds, maybe in additional sectors, you absolutely could, but finding those sectors and seeing which ones work best for you depends on your risk tolerance and kind of where you stand. So again, look at the portfolio pyramid, build
48:15 Andrew Giancola? that foundation first, then you can diversify into other different assets if you're interested in that. Listen, thank you guys so much for sending in these questions. If you want your question answered on the show, feel free to join the Master Money Newsletter by going to mastermoney.co/newsletter. You can join there, respond to any of those newsletters and you may get your question answered on the show, just like this. You can also send us a DM on Instagram and/or you can comment down below on these episodes. We read the comments on Spotify, we read the comments on YouTube, and if you may get selected based on those comments to also get your question answered on the show. My goal is to bring you as much value as I possibly can. I hope we did that today. If you wanted to dive deeper with me,
48:56 Andrew Giancola? we have something called Master Money Academy. We have a seven day free trial down below if you want to check it out, where I do live coaching calls, just like this, where I answer your questions every single week. And yes, it's me personally, live every single week, answering your questions. You can get in there, you know, check out some of the courses we have in there, check out some of the content. You can, you know, interact with some of the members in the community. That's where the real wealth builders are there. We also give you our 25 step wealth building system called the Wealth Builders Journey inside of Master Money Academy. So really cool stuff. Would love to invite you to join, would love to meet you inside of there, talk to you live on a call or two. And if you love it, we would love for you to stay. If it's not for you, no worries, nothing wrong with that whatsoever.
49:37 Andrew Giancola? But we're giving you 50% off and we're giving you a seven day free trial down below. So check out the show notes for that. Okay. Thank you guys so much for being here on this episode. Make sure you follow, subscribe, like, do all the fun stuff. Help us spread this message that we believe anybody in this world can build wealth and we will see you on the next episode.
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