This One Expense Is Breaking People’s Retirement

Fidelity released their 24th annual Retiree Health Care Cost Estimate, which revealed that a 65-year-old retiring in 2025 can expect to spend an average of $172,500 in health care and medical expenses throughout retirement. We walk you through our thoughts on Fidelity's study and talk through how to financially plan for the retirement of your dreams. Then stick around as we answer your financial questions! Please note: this episode was recorded live on September 16, 2025. The Financial Mutant survey referenced is now closed! ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠NordVPN.com/MONEYGUY⁠⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Welcome to the 50th Hunger Games.

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  Witness the beginning of the revolution.

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  The Hunger Games: Sunrise on the Reaping, November 20th, rated PG-13.

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  The Legend of Zelda: Ocarina of Time, a Nintendo Switch 2 exclusive. Game and system sold separately. Game rated everyone 10 and up.

• 0:51Brian Preston?

  This one expense is breaking people's retirement.

• 0:55Speaker 04

  Brent, I am so excited to talk about this because I think so often people don't think about this. They don't plan for it. They don't take it into consideration and this expense can be a huge part of how much you spend when you actually retire.

• 1:08Brian Preston?

  Oh, I think they think about it. It's just they think about it at the wrong time. So that's what we're hopefully going to be able to put the train back on the tracks so you don't fall into this trap for your own retirement.

• 1:20Speaker 04

  So we found that 63% of Americans, this is according to eHealth, 63% of Americans age 60 to 70 say that healthcare costs are their top concern in retirement. It's the number one thing that they're worried about that could potentially derail their retirement.

• 1:38Brian Preston?

  Now, this ranks higher than if you look at number two and three. It was running out of money was 58%. Inflation was 53%. But I know a lot of you are probably looking left, right, and you go, guys, I'm not 60 to 70. We know you're not 60 to 70. We know what our demographics are for our audience, but this is still something I think you ought to pay attention to because think about this. The majority of bankruptcies in America is because of medical things that happen.

• 2:05Speaker 04

  The leading cause.

• 2:06Brian Preston?

  So healthcare is not something just for retirees. We need to be thinking about this for all of us because this definitely falls into the financial order of operations of making sure you don't put your life in the ditch because you haven't prepared accordingly.

• 2:19Speaker 04

  And when we actually look at numbers, we can put some hard data to this. Fidelity does an annual study and they found that the average 65 year old retiring in 2025 can expect to spend over $172,000 on healthcare and medical expenses in retirement. So this is stuff like out of pocket drug costs, Medicare, part B and part D, copays, coinsurance, deductibles, all the things that get wrapped into healthcare fall into this number and it is substantial for most retirees.

• 2:54Brian Preston?

  Yeah. And then I think if you, you roll that in, this is back to, I think people don't think about this until it's too late because if you look at the next stat, one in five Americans say they have never considered healthcare needs in retirement. So remember what I was talking about? Yes, you're not in that 60 to 70 age group of who was interviewed for this survey, but you definitely probably fall into the category of just not giving this enough mental awareness.

• 3:19Speaker 04

  Yeah. I think even this says one in five have never considered. That means that one in five have never planned for it, have never factored it into their retirement plan. And what makes me concerned about that is that if we fail to plan for something, if we fail to think about it ahead of the time, it's going to make it that much harder. I mean, when, when we sit down with clients, Brian, one of the things we want to do is we want to kind of iterate, what are all the possible outcomes that we could see? What are all the things that we think could happen? What are all the unknown unknowns that we could apply some estimations to? And the better we can do that, the better prepared we can be for retirement. And yet, one in five folks aren't even thinking about this. It's not even crossing their radar. So the ultimate question then becomes, okay, well you, sitting out there

• 4:03Speaker 04

  in audience land, what can you do?

• 4:06Brian Preston?

  Well, you know, once again, applying this back to the financial order of operations, we love the fact that why not start out and see if you even qualified for a health savings account?

• 4:17Speaker 04

  And for those of you that don't know, HSA, health savings account, is literally a triple tax advantaged savings vehicle. When you put money in, you can get a tax deduction on the front end. If you're like 13% of Americans that recognize this, you can then invest those dollars to grow for the future. And if you use it for qualified medical expenses, you get to pull those dollars out completely tax-free. So you get a tax deduction on the front end, tax deferred growth, and then tax-free distributions for medical. It is literally triple tax advantaged. It is an amazing savings vehicle that you can use both for current or intermediate-term medical expenses as well as future retirement medical expenses.

• 4:56Brian Preston?

  Even in our show meeting this morning, one of our video editors, when he saw the $173,000 that Fidelity estimated, he goes, "Woo-hoo, that's a big number." But then you jumped right to this point. This is something we want to kind of change everybody's perspective. Remember, you're more than likely, if you're watching this and you're in our key demo, you're somewhere between 25 to 45 years of age. Your number is not the same as the 60 to 70-year-old. So, look at this. A 20-year-old who woke up and realized, "Oh, my gosh, I better make sure I have my healthcare covered in the future." We're only talking $33 a month, or $4,000, a little under $5,000 lump sum right now

• 5:36Brian Preston?

  for the 30-year-old, $76 a month, little under $11,000 for the 40-year-old, more realistic, probably thinking about these type of things, $182 a month, or a little under $24,000. And even for the 50-year-old, my fellow brethren, actually, I'm older than that now, it's $499 a month, or a lump sum of around $52,000. Still a big chunk of money, but if you take that into, that's a third, less than a third, of the $173,000 that you know is sitting out there waiting for people as they approach retirement.

• 6:09Speaker 04

  Yeah, I think when we think about $173,000, it's this, it's this big mountain that we think we have to overcome. You just said, Brian, whether you are age 20, all the way out to age 50, if you can just save somewhere between $30 to $500, and you can just do that consistently, you can be prepared for these expenses. These don't have to be things that slip up on you. So a little bit of preparation can go a long way. And that is also true in how you incur your healthcare costs later on in life. And so one of the things that we would encourage you is be proactive with your health. Obviously, the decisions that you're making today, no matter what age

• 6:51Speaker 04

  you are, will have implications to the standard of living that you have later in life. So the earlier you can make healthy decisions around how you feed your body, how you move your body, and how you recover your body, the earlier you figure that out, the likely, the lower the probability is, you're going to have higher healthcare costs later on in retirement.

• 7:11Brian Preston?

  Well, Bo just put a lot of words to basically saying health as well.

• 7:14Speaker 04

  That's it.

• 7:15Brian Preston?

  And look, Bo has done a great job of keeping himself fit, but he's always just kept himself game ready. Let's be honest here. Whereas I am the better before pitcher that has definitely created. So I think I would be on the pitcher element of somebody who just took my health for granted, and then one day realized, you know what, probably in my late 30s, about the time Bo is right now, I realized, you know what, I'm not headed to be where I want to be from a health perspective, maybe financially. And I think a lot of you guys, if you look at yourself in the mirror, you'll say, yeah, I'm doing a great job as a financial mutant, but am I applying the same discipline? Am I applying the same mindset of I'm preparing

• 7:56Brian Preston?

  for the future with deferred gratification to my health? And I think if you put it through that lens, a lot of you, like I said, you're in that key demo, 25 to 45 years of age, go ahead and start investing in that right now, because you know what's great about being a financial mutant and having all this wealth that will come to you at a later date is being healthy and being able to actually use this and create memories and live your best life, not only financially, but also from a health perspective.

• 8:24Speaker 04

  There's no point in having all the money. Money saved up and not actually being able to enjoy, not actually being, being able to carry out those goals that you have. And if you're a financial mutant, this is just something worth noodling in the back of your mind. It is less expensive to prepare to be healthy than to wait and get sick and have to spend money on that. Prevention is much cheaper. So if you can begin making those decisions early on, there's a really good chance that you can set yourself up for success. But maybe you are someone who is later on in your working life cycle and you're thinking about entering into this stage where you have to make some decisions around things like when

• 9:05Speaker 04

  am I going to take social security or how am I going to cover my healthcare costs? Make sure that when you get to that stage, you measure two, three, four times and you select your Medicare plan carefully because the fact is the type of insurance you select when you hit age 65 can have a huge impact on the costs that you incur as you move through retirement.

• 9:27Brian Preston?

  Well, I think that this, this transition is perfect is because we're not the only people that say health is wealth. You can go out there and find so much content on eating better, living better, exercising. But when you go out there and try to find content on how do you choose the best Medicare plan? It gets much, much harder. You know why? It's because, once again, personal finance is very personal and everybody's got different structures. They've got different health needs. So it all gets very personalized very quickly. And that's why it's a great transition. Guys, as you create success, we can give you all the content in the world telling you how to get there, but you go quickly realize as you create success, it's going to have more

• 10:09Brian Preston?

  complexity in your personal life, not only for your health, but for your finances. And that's why we say this is why we can fulfill the abundance cycle. We can give you all this free information because we know if you just do what we tell you to do, you're going to be so successful that you go, okay, this must be what the guys are talking about because I just, I need to know what Medicare plan to do. I don't know what to do. There's a lot of options for me. And we're going to leave the porch light on for you and let you know we are taking client. All across the country, this has been the greatest success point that my passion that started in 2006, and then we fulfilled this thing where we hopefully give you all this free education to be the best version of yourself. There is a payoff point down the road after

• 10:52Brian Preston?

  you've created monstrous success that you'll say, hey, I remember those guys planting those seeds in me. I would love to, you know, the seeds of information that have turned into nuggets of just gold wealth and just living my best life. Why not give these guys a chance?

• 11:08Speaker 04

  There are, there are unknown unknowns that are going to come your way when you retire and when you reach financial independence. But if you can plan for them, if you can think through them, if you can have some logical problem solving while you're in your working years, they don't have to be scary. They don't have to be frightening. Yes, there are going to be things that are unknown. Yes, there are going to be costs that you did not know were going to happen. But the better you can plan, the more comfort you can have when you reach that stage. And that's exactly what we're here for. We want to take all the confusion and all the chaos, and we want to turn that into confidence. That's why

• 11:50Speaker 04

  we show up here every Tuesday at 10 a.m. to load you guys up because we want you to be confident in your great, big, beautiful tomorrow. We want you to understand that there is a better way to do money. And so if you have a question that you want us to weigh in on, that you want to get our take on, make sure you get it in the chat right now. We've got the team out in the wings collecting your questions so that we can load you up. So with that, Creative Director Rebi, I'm going to throw it over to you.

• 12:17Speaker 05

  Yeah, I have some questions queued up. And I just wanted to share, there's another way that you can tell us what you care about, what you're working on in your financial life and what your situation looks like. And that is going to inform us so that we can make some really awesome episodes that show where the Financial Mutant family is and their journey, and also hopefully speak to some of the pain points that we see. And that thing that you need to go do to help us do that is our Financial Mutant Survey. You can go to moneyguy.com. com/survey and today is your last chance to take it. So that's why I had to tell you about it at least one more time because we would love for your voice to be included in that. So go to moneyguy.com/survey.

• 12:58Speaker 05

  It'll just take like four or five minutes tops to fill out and it will really help us build the show and hopefully make it even more helpful for you.

• 13:06Brian Preston?

  Well, I resemble this in the fact that all the time, you know, you're listening to your favorite podcasts or you see something come across on YouTube and you go, oh, that's super exciting. I want to do that, but then time passes and you're like, I didn't do it. So guys, this is, don't be the procrastinator. This is the last day to do these surveys and it's super exciting for us because I was blown away when we started doing surveys on our millionaire clients. I loved the content that came out of that because it reminded me of Millionaire Next Door and I remember how motivating that was for me when I read that book for the first time. So to be able to kind of take it decades in the future now and update the data to what our clients doing. And then when we had the brilliant idea that we were like, you know what?

• 13:51Brian Preston?

  Maybe we ought to see where the financial mutants of our audience overlap with our clients so we can kind of know who's out there listening to our content. Ding, ding, ding. That happened last year and you guys showed up in force, but we've actually realized it's like most things. Last year, we'll call it the beta. You know, we didn't know what we were doing completely. It was great content that came out of that, but this year it's even better because we already have two or three show ideas. We just need the data to now kind of shape that content even better. And so this is the new and improved version. So I really would strongly encourage you, please, if you want to help shape financial mutant content, go out to moneyguy.com/survey and get that in there because this is your

• 14:36Brian Preston?

  last day. We're not going to pepper you with too much stuff, but we do want to kind of make sure that we get that data in the system so we can create great content.

• 14:44Speaker 04

  What I love is how well synced our team is because I was literally going to lean over and say, hey, guys, we ought to do a poll. Have you done? And as I'm thinking that in my mind, it pops up right here, wondering, have you done the survey yet? I'd love to know, just in our live stream audience and like our die hardcore group of folks, have you done the survey yet?

• 15:05Brian Preston?

  But isn't there going to be some bias in that survey?

• 15:08Speaker 04

  Yeah.

• 15:08Brian Preston?

  Because if you did the survey.

• 15:10Speaker 05

  I mean, our live stream family is like.

• 15:12Brian Preston?

  If you did the survey, you're gonna be proud to say I did this.

• 15:13Speaker 05

  They rock.

• 15:14Brian Preston?

  If you're a procrastinator, you're like, well, I don't want to let the other.

• 15:16Speaker 04

  No, no, this is a human psychology, social contract. You're gonna see it, but I'm gonna go do the survey real fast, come back, click yes.

• 15:22Speaker 05

  So then it's all good.

• 15:23Brian Preston?

  Because it's gonna say like 97% of the audience said yes. And it'll be like 300 people did it out of, you know, the thousands of people in the live stream. I don't know, it's.

• 15:33Speaker 04

  Oh, you're right. Hey, let's take down the survey quick to get rid of it.

• 15:35Brian Preston?

  I don't know. Okay. Shame on me.

• 15:37Speaker 05

  Well, let's jump into.

• 15:38Brian Preston?

  Glass half full, Brian, come on.

• 15:40Speaker 05

  Jump into some questions. Like I said, I've got a lot of good ones queued up. The first one is from Carly.

• 15:44Brian Preston?

  You're missing something.

• 15:45Speaker 05

  What?

• 15:46Brian Preston?

  This is a Tumblr day.

• 15:47Speaker 05

  I was gonna tell them that after the question, Brian.

• 15:49Speaker 04

  Now the questions are gonna start coming in. No, no, I like it. I like it.

• 15:53Speaker 05

  Totally fine.

• 15:53Speaker 04

  So if you do have a burning question today, we would love to put a Tumblr in your hands. So make sure you get the question in the chat right now.

• 16:02Speaker 05

  If we answer your question, we'd love to send you a Tumblr. And so we will kick it off with Carly N. She says, can you count reinvesting dividends and capital gains into your saving 25%? I make over 10K in passive dividends and paying taxes keeps me below the 25% savings rate.

• 16:22Speaker 04

  Okay, I gotta think through the math of this. The answer is no, but let me make sure I understand the question. I make over 10K in passive and paying taxes keeps me below the 25% savings rate. In my mind, when we think about dividends and capital gains or capital gain distributions, those are two components of return. So when we invest, there's generally two different ways that we get a return on an investment. We either get income that flows in, that's dividend, or we get price appreciation. I bought a thing for $10 and now it's worth $12. Like, those are the two ways that we get returns. So when I think about dividends and capital gains coming in, I'm thinking about that in terms of, in terms of a total return perspective. That is an ROI, return on my investment.

• 17:07Speaker 04

  What I don't get to do is I don't get to say, oh, well, my portfolio did so well. I don't need to do my part. No, no, no. Until I reach financial independence, until I have defined what my number is, until I understand what's the goal that I'm trying to work towards, I still need to be saving 25% of my gross income. But what's fun is, and if you've not done this, we have a number of milestone episodes that you should go check out. What's fun is, is right now you see those dividends and those interests. I think you said it was like $10,000 that just came in for you this past year. And that, that's amazing. What gets really exciting is when the amount your portfolio makes in terms of dividends and capital appreciation is bigger than what you save. That's awesome.

• 17:52Speaker 04

  And then what about when the amount that you have in dividends and appreciation is more than what you spend? That's awesome. And then what happens when you reach that point that the dividends and capital gains and appreciation you see from your portfolio actually makes more money than you do? It actually is working harder than you. That's when the seesaw begins to tip towards financial independence. And so what you're looking at is awesome, but it is not permission yet to take your foot off the gas pedal.

• 18:21Brian Preston?

  Yeah, I love it. You know, we do have that resource because people are like, where did this 25% even come from? So if you go out to moneyguy.com/resources, we have, you know, what you should be saving or what 25% can do for you. So how much you should save is actually what the resource is titled. The content team threw it up there really quick. I know I'm slow.

• 18:40Speaker 04

  No, no, it was like three different names, but we've caught it all three things.

• 18:43Brian Preston?

  I was trying to give, I was trying to give the content team enough time to give me the little prompt to be able to see it. Bo kind of shared, you know, I hate giving only bad news because we just basically said, no, you don't get to count that because that's part of the rate of return. So I wanted to kind of give the offset of first, the motivation. Why, where did we come up with 25%? That's what we've already shown you that illustration. I will give you one little asterisk that does offset this is that if your income, household income is less than $200,000. For a married couple, $100,000 for a single individual, you can actually count your employer match in that number though. Because that's where a lot of people will get overwhelmed by the 25%, especially if you're in your twenties where it's very much an aspirational goal

• 19:27Brian Preston?

  because you're just brand new to this whole wealth building journey. It's nice if your employer, especially if you have a really generous employer. We have employers out there who are doing, you know, somewhere between seven to 10%. You can imagine if the goal is 25% and you have an employer doing 10%, this thing gets a lot easier at 15%. So go out there and take advantage of that match offset. And then maybe you're somebody, because when I first read this, I read the $10,000 as bigger than per year. It could have been, which it's not, but I'm just saying, but it's important because we're giving you a benchmark to of what you should be saving because you're at the beginning of your journey. And sometimes those benchmarks are rules of thumbs

• 20:12Brian Preston?

  or other things we can give you are great starting points because it makes something that's somewhat complex with lots of variables, something very approachable and easy. But there will come a point, once your assets, and that's why I love that Beau was talking about the milestone episodes we do. There will come a point to where your income coming in from the portfolio or the appreciation or the change in value is going to match either what your savings rate is or even what your income is. And you're going to quickly start realizing, hey, that savings rate means less to me because my assets are at some critical mass or boiling point that is obviously changed for me. So I need to know if I'm ahead of the curve, behind the curve, or right where I need to be. And that's where we've tried to create resources with the know your number. But also ultimately it ends to the abundance cycle is that if you have started

• 20:57Brian Preston?

  being the field general or the CEO or chief financial officer for a soon to be approaching seven figure, you know, enterprise, get some help because you just don't know what you don't know. And we'd love to leave the porch lights on for you to keep, you know, you help fulfill that abundance cycle. So you don't have to try to figure this out the first time and only time you're going to approach this. You'll have somebody who's done this hundreds of times.

• 21:23Speaker 04

  Love it. Can I, can I throw one more little, little thing out there? You may. You know, me personally, what I like to do in my portfolio, I like to have all my dividends and all those capital gain distributions automatically reinvest. One of the beautiful things is when you do that inside of your account, it naturally just sort of creates some automated dollar cost averaging. Now, if you're someone who's like taking distributions or you need the capital for some reason, maybe it makes sense to pay into cash. But if you're someone who's just buying like low cost index funds and it's things that you don't mind personally more of, I love those automatically reinvesting so that a hundred percent of those dividends, a hundred percent of those capital gains that come out, just end up going right back in, making this thing rock and roll.

• 22:02Brian Preston?

  That, um, this is outside the question, but I, I fell prey because I, I follow prey to social media trends, just like you guys who are watching the audience. A few years ago, this is the worst performing asset in my portfolio and that's not a testament for or against what I'm about to share with you. There was a trend on social media that said, if, hey, if you, if you drink Starbucks coffee, if you will just go put this sum of money into Starbucks coffee, their dividends will essentially buy you a cup of coffee. Every, you know, I, I figured out how much coffee I drink. It's not a ton. It's not like Bo, Bo level. But it was enough to where I figured out how many shares I would need to buy. And, um, and then it's, it through the, the automatic reinvestments, it's buying that much in coffee.

• 22:47Brian Preston?

  I've done that. It's actually, it is fun from a non-financial perspective. It is fun seeing, um, you know, my quarterly statement, the reinvestment of those shares.

• 22:56Speaker 04

  Coffee coming in.

• 22:57Brian Preston?

  All those cups of coffee's coming in, but I'll tell you from overall, because we all know return is made of multiple components. It's not only the dividends. It's also what does the stock price do from a capital appreciation? And it's had some fits and starts, you know, there was a time where it was really good. And then I've quickly realized Starbucks, you know, it has some ups and downs. It's not, it's not the S and P 500.

• 23:20Speaker 05

  Interesting stuff.

• 23:21Brian Preston?

  But I don't like being transparent. If you get caught up in those trends, it's okay as long as it is part of the fun money.

• 23:29Speaker 05

  Right.

• 23:29Brian Preston?

  You know, that was essentially the basket of vacation money. It's not the eating money part.

• 23:33Speaker 04

  Love it. Vacation money, not eating money.

• 23:35Speaker 05

  Absolutely. Carleen, thank you for the question. Since we used your question on the live stream, we'd love to send you a Tumblr email [email protected].

• 23:44Speaker 04

  Awesome. Did you see the, I think our poll results came in.

• 23:47Speaker 05

  They are here, yes. We have 76%

• 23:51Speaker 04

  Look at that.

• 23:51Speaker 05

  Have taken the financial means survey already and we've got 23% who said they will write after this.

• 23:57Speaker 04

  So 23%, that's like one in four of you need to go take that survey. So we can get.

• 24:03Brian Preston?

  Look at our honest audience though. I mean, cause I would assume if you had not. No, you just, it's easy just to stay silent and not, but our audience, our financial means guy, yeah, I'll tell them I haven't done it yet.

• 24:15Speaker 05

  Yeah. We did have a few comments too, saying like, ah, just took it, just took it. So we appreciate you guys.

• 24:19Speaker 04

  It should not take long. We tried to make it.

• 24:21Speaker 05

  Moneyguy.com/survey.

• 24:25Speaker 05

  Levi S. has the next question. It says, can I, can you explain what a real world use of the mega backdoor Roth would look like? For example, I get paid weekly and after maxing my 401k, I would like to put $100 a week into the mega backdoor. So can you explain how this actually works?

• 24:47Speaker 04

  Sure can. You want me to or you want to go?

• 24:50Brian Preston?

  No, I would give you explain. I'm just, at first.

• 24:53Speaker 05

  Yeah, Brian's like, his brain is working.

• 24:55Brian Preston?

  No, when I've done the episodes on mega backdoor, I think of, um, what's the, what's the type of predator, apex predator? There is no way. So I always think about, you know, so I immediately you think about like great white sharks, but then you're like, no, but I think orca wells take out great white sharks. So they're not an apex predator. And then I start, somehow this transitions into Godzilla and, um, you know, fighting in the city and in your eyes, oh my gosh, you know, well, how do you use this super powerful entity that you, you've set up?

• 25:28Speaker 05

  So mega backdoor is Godzilla now?

• 25:30Speaker 04

  All this happened in your mind between when she started the question.

• 25:33Speaker 05

  I saw the wheels turning. That's what it was.

• 25:36Brian Preston?

  This is why you saw my face go, you know, it was like, like the air, you almost like a pin prick and you're.

• 25:43Brian Preston?

  Where it's deflating, I saw a hundred dollars a week. And I was like, well, okay, that's, that's more of like a little extra. Cause mega, what makes mega is, I mean, we're talking about, you can go up to, what's the new threshold under 415 limits? Is it 70,000? 70,000 dollars. That's Godzilla scream big. When you, when you see 70,000 dollars, when you see a hundred dollars a week, I hear, you know, it's, it's, it's, it's a predator. He just might be a, um, I don't know, barracuda or something and swimming around in the water.

• 26:18Speaker 04

  Okay. What's a barracuda make?

• 26:20Brian Preston?

  I don't know. They scare you, they still scare you though. If you see them in the ocean.

• 26:24Speaker 04

  I wouldn't want a barracuda near me. So, um, so for those of you that don't know, when you contribute money to your 401k, most often we know that we have two different ways we can do that. We can do pre-tax contributions or we can do Roth contributions, but there is a third type of contribution that is allowable. If your plan has implemented this, and that's called an after tax contribution. And the way that after tax contributions naturally work is you put money in, you don't get a tax deduction. Those dollars then grow tax deferred. And then when you go to pull those money, that money out in retirement, you get your contributions back tax free, but you got to pay ordinary income tax on the earnings. That's the way that it normally works. And so Levi's saying, hey, okay, walk me through that's works, how this works practically.

• 27:09Speaker 04

  Well, a lot of plans will work in such a way, the same, hey, before you can even do after tax, you gotta max out your salary deferral. You gotta max out the 23.5 into your either pre-tax or your Roth, and then you can start doing after tax. So it sounds like Levi's done that. And now he wants a hundred dollars every single week to be going into his after tax bucket. Well, my first question for Levi would be, man, if you've already maxed out the 26 at this, or the 23.5 at this point through the year, you've been saving like a certain dollar amount every paycheck. Why drop down to only a hundred bucks? It's exactly what Brian said. The great thing about after tax contributions is you can go all the way up to the section 415 limit of 70,000 dollars. They are not capped at the 23.5.

• 27:52Speaker 04

  235. So one of the things that you can do if your plan allows is you can every week or every pay period, put money into the after-tax contribution. Well, then if your plan allows it, you can either convert those after-tax contributions to Roth, or you can do an in-service rollover where you take that after-tax money that you put into the after-tax portion of the 401k, convert it to Roth, or roll it to Roth, and now you've turned those dollars into tax-free dollars. And once they start growing, on the Roth side of your ledger, not only are your contributions going to be able to be pulled out tax-free, but also all the earnings that those contributions make are going to be able to be pulled out tax-free. So it is an amazing thing to figure out, okay,

• 28:37Speaker 04

  one, is it available to me? Does my plan allow it? Does my plan allow either the in-service rollover or in-service conversion? And am I at the place in the financial order of operations? Have I thought through this, that I'm in step six and I've gone to step seven? Thank you so much. Where it makes sense for me to do mega backdoor? Or might I be better served if I'm going to go into the after-tax bucket? And I want to start building up that third bucket. You want to think through, when I think about my next dollar, what's the very best next use of it? And if you're someone who happens to have the mega backdoor available, might be something worth taking advantage of.

• 29:14Brian Preston?

  And I think to my point, put words to bring this back in even better perspective context, is that 52 weeks, that's how many weeks during a year, $100 a week, that's $5,200. That's less than what you can even put in the Roth IRA. So when I first heard this question, Levi, I was like, it sounds like I would just confirm, if you make too much money to do a Roth IRA contribution, we would have you under the financial order of operations under step five. At least check out the backdoor Roth contribution, if you have the right account structure. And then of course, get to step six, which is max out. But that's why when I saw the number was less than even what the annual IRA contribution limits are, it didn't feel, I didn't know if it

• 29:58Brian Preston?

  meant if it really wanted mega, because mega means we're going well beyond what, you know, what we can annually put in, what the government typically allows you to put into the Roth or 401k.

• 30:11Speaker 04

  It was more Barracuda than Godzilla.

• 30:13Brian Preston?

  Definitely.

• 30:14Speaker 04

  Got it.

• 30:15Speaker 05

  Barracuda versus Godzilla. There you go. Levi, thank you for the question. Just email winner at moneyguy.com if you'd like a Money Guy Tumblr.

• 30:22Brian Preston?

  Um, can I have one, another sidebar? I know we have a lot to get through, but I just can't help myself. So last night I needed to, um, I was looking for something fun. I was in between books and y'all know where I'm going with this. I downloaded and I'm a little, I'm a little disappointed in our audience. I'm a little disappointed and I don't know if Nate put this in there as an Easter egg or a love letter to me. And I just, I want him to know that I had the secret decoder ring and I saw, I saw it Nate. I just wanted you to know I saw it. And if you planted the seed, I'm here, I'm here for it because you know, he lives not too far from here.

• 30:56Speaker 05

  What if you want to say who Nate is?

• 30:59Brian Preston?

  I know that might be a little, but it could have been because what's the odds that he has the same speech impediment that I have? If you listen.

• 31:08Speaker 04

  Okay. Give everyone the context. You haven't said who this is or what you were listening to. Only us are on the inside. Let's let all of our friends on the inside of this.

• 31:18Brian Preston?

  So I don't offend the guy I'm trying to went over Nate's last name, Brigazzi? Brigatz?

• 31:23Speaker 04

  Yeah, Nate Brigazzi.

• 31:24Brian Preston?

  Did I get it right?

• 31:25Speaker 04

  Yeah, yeah, you nailed it.

• 31:26Brian Preston?

  Okay. I was, he was going to give me grace because I have the same speech impediment he has. Um, but if you listen, he has this book out. I don't even know how long the book's out. It was just, it was in my audible suggestion list. And I was like, you know what? I like Nate. So let me go ahead and hit the, yeah, I'll listen to this. And it was the Big Dumb Eyes. Not Big Demaze, Big Dumb Eyes. You know, this is, um, like I said, we have the same speech impediment. So his jokes work for me too. The thing though, is if you listen to the intro chapter, there's a section where he's going to go, he's setting up the essentially the ground rules to listen to his audio book. And one of the things he says that he struggles with is he was like, Bowl and boil are going to sound the same.

• 32:09Brian Preston?

  Like, Super Bowl is going to sound the same as boiled peanuts. And I was like, oh, my God.

• 32:15Speaker 05

  You're like, this is my guy.

• 32:16Brian Preston?

  He obviously knows about the bowling point and knows I struggle with the exact same issue. So I was excited that Nate had planted this seed out there for me to discover, essentially to go out there and unearth. This is like, you know, all these new kids do all this geo splunking, where they go around and find like a bottle and then they've signed their name on it with the coordinates. Nate put that stuff out there for me. I found it. Shame on my financial mutants. Either we don't overlap or you guys, just nobody brought it to our attention. Cause I think this book's been out for a while.

• 32:46Speaker 04

  Yeah.

• 32:47Brian Preston?

  I would have thought you guys, when you heard that he couldn't say those B words, that we were in the same boat.

• 32:53Speaker 05

  Maybe they just haven't read it yet and you're just spreading the word.

• 32:56Speaker 04

  You know what? And everyone's going to go check out the book now.

• 32:58Speaker 05

  Or here's a crazy thing. Maybe they read it and didn't listen, read it. Wait.

• 33:02Brian Preston?

  So now, since Nate really does not live far from here.

• 33:06Speaker 04

  That is true. If you read it, you wouldn't have known.

• 33:08Speaker 05

  You wouldn't know. He wouldn't have had that just playing the audio book.

• 33:10Brian Preston?

  Now, if you guys, if you'll start peppering him with, hey, I found this book because Brian from the Money Guy Show was telling me he suffers from the same speech impediment, being Southern, as you, Nate. You know, maybe we can make some collab happen here.

• 33:24Speaker 04

  I love it. Could you imagine a react video with Bargatze?

• 33:27Speaker 05

  That'd be so fun.

• 33:28Speaker 04

  That'd be awesome. Hey, Nate, if you're out there, we'd love to do a react video with you.

• 33:34Speaker 05

  I was just making sure Brian had told his whole story.

• 33:37Brian Preston?

  It's just the odds that that needle is planted in that haystack. I think it was a love letter to me. I think it was for me.

• 33:43Speaker 05

  Brian played us the clip this morning and it was very, it was very on brand for Brian, speaking to him a little bit.

• 33:49Brian Preston?

  Oh, my gosh. You should have seen me walk in the neighborhood when I heard that clip. I was like, oh, my gosh. I have to clip this so I can play it for the content team. Cause this is, what's the odds?

• 33:58Speaker 05

  All right, let's dive back into personal finance questions. It's okay. I loved it. It was a boiling point, bowling point sidebar that people needed to know about. Well, we've got a question from-

• 34:09Speaker 04

  Before you had the Tesla.

• 34:11Brian Preston?

  Yeah.

• 34:12Speaker 04

  When you had to take your car in for maintenance every like three to 5,000 miles?

• 34:16Brian Preston?

  Yeah.

• 34:17Speaker 04

  What were you do- what were you taking it in for?

• 34:19Brian Preston?

  Oil changes?

• 34:20Speaker 04

  Oil change. Yeah, just making sure. I was making sure.

• 34:22Speaker 05

  Oil changes.

• 34:23Speaker 04

  I want to make- an oil change.

• 34:25Brian Preston?

  Oh, people say that weird? I say that weird?

• 34:26Speaker 04

  Well, it's just the last half of oil.

• 34:29Brian Preston?

  You know, the other thing, I'm surprised he didn't bring up is, um, um, birthday, birth, uh, birthday, and then like Monday, Tuesday.

• 34:40Speaker 04

  Oh, yeah, yeah.

• 34:41Brian Preston?

  Southern people, we eat, we eat, we, we, we say it a little differently.

• 34:45Speaker 04

  Instead of A's at the end, it's E's at the end. Monday, Tuesday, Wednesday.

• 34:48Speaker 05

  Oh, yeah.

• 34:50Speaker 04

  Thursday. I can keep going on this review if you need.

• 34:52Speaker 05

  I'll just go into the question. You know, I think we've heard enough. Thank you, though.

• 34:58Speaker 05

  All right, Remfo has a question. It says-

• 35:00Brian Preston?

  Ohio girl's like, I'm done with this.

• 35:02Speaker 04

  Yeah, this, I'm out.

• 35:03Speaker 05

  Oh, no, I loved it. Um, but I wanted Remfo to get his question answered. It says, is it better to wait to age 70 to claim social security so the benefits max out while drawing down your portfolio, or claim early and let your army of dollars keep working?

• 35:20Brian Preston?

  If, you know, look, the easy answer is that, yeah. We want you to take it at 70, and I'll tell you the positives, and I'll tell you why that's not, it's not the perfect answer, because personal finance is personal. Is, it is, a lot of people don't realize that full retirement age, a magical thing happens once you hit full retirement age, and then the deferral to age 70 is that your benefits will go up 8% per year. And there's not too many guaranteed rates of return that, that are like that high as 8%. So that's why there is a lot of school of thoughts. If you don't need the money, um, you know, deferring social security is a good thing. But there is a big thing in the background that I'm a victim of, my family is, and anybody who else has

• 36:04Brian Preston?

  lost, you know, a loved one at a young age, is that if you die without taking your benefits and you're, say, your spouse and you make about the same amount of money, so it's not like one has a big benefit over the other, your death benefit on social security is like $255.

• 36:21Brian Preston?

  So there's, um, now look, I'm glossing over some other benefits because there are survivor benefits, but like I said, that's why I put that caveat. If you make about the same amount of money as your spouse, those survivor benefits just ain't as, they're not as, as, as popping as they would be if, um, if there was a big disparity there. So I'll, I don't know if I left any meat on the bones for you, but.

• 36:41Speaker 04

  The answer to your question, Repose, you said, is it better? And the answer is, it depends. And a lot of people don't recognize that the decisions you make around social security can have huge implications in retirement. And we mean huge to like hundreds of thousands of dollars, depending on your unique circumstance. Uh, we have had clients that have retired early and we have recommended, hey, you need to start drawing at 62. And here's why. Even though you're going to take a reduction from your full retirement age benefit, but based on their account structure, based on their living needs, age 62 made the most sense. There have been other clients who have said, hey, you really need to wait until age 67 because you're still earning income or whatever else. We don't want you to get penalized because

• 37:24Speaker 04

  of income that you're making. And then there have been others where we've said, hey, it makes sense. You make all the way till 70 because it's some of the best longevity protection you can have inside of your portfolio. But then it's not only an individual decision. When it comes to social security, if you are someone who's married, then it gets even more nuanced because you might even say, okay, well, I'm going to start drawing early on my record at 62, but then when my spouse hits full retirement age, they're going to start drawing. And based on the disparity between our earnings, I'm actually going to get an increase to the spousal benefit. And so it can be incredibly nuanced. And so often we'll see people come in and we'll kind of work through this social security analysis

• 38:05Speaker 04

  with them and we'll recognize, hey, the, the plan that you had or the plan that you're, you're like, you're leaving some money on the table. Like you should really think through this. And we've even had this before where somebody said, oh, you know, I'm going to, I'm going to start drawing at 62 because I paid in, I want to get my money out. I don't, I'm nervous about it. And we've actually walked into the analysis saying, hey, just so you know, this is how much it's costing you by making this decision. Let's actually make the decision to go. Do this election. Let's see if we can go back in time and change this because it was that significant of a change. So social security is one of those things you want to make sure you make the decision well and you factor in all the other pieces of your financial life because it can have huge implications when it comes to your retirement.

• 38:49Brian Preston?

  So the big thing, because I think social security is one of those, it's, it's, it's part of the, the public, you know, discussion. We always, social security is just part of society, but I think it has very strong emotions depending upon how it's been used or, or like for me forever, I was so mad about social security because of what it did for my family with my dad dying in his 50s and watching those benefits just evaporate to where my gut reaction at first was when I turn 62, I'm taking that money. Don't let this be an emotional decision. There is actually a lot of moving parts and it is once again, back to the personal impersonal finance. So just don't let those, those falsehoods

• 39:31Brian Preston?

  or those other things that, you know, just kind of somehow seep into our beings, guide you into thinking this is what you're going to do with social security. There's actually a big analysis that needs to go into it where it's very personalized, not driven by emotions, but actually what the, the nuts and bolts of your financial success are built off of.

• 39:49Speaker 04

  Love it.

• 39:50Speaker 05

  That's great. Rembo, thank you for your question. We'd love to send you a money guy Tumblr since we featured your question on the show. Just email winner at money guy.com.

• 40:00Speaker 05

  Next question is from Cranny. It says, my employer just announced they are going to stop matching out 401k contributions, which is a bummer. Any advice on what I should be doing or changing, which is a great question because 401k match is step two in the financial order of operations for a reason.

• 40:19Brian Preston?

  I would love to know, I'll let Bo do the technical part, but I'd love to know the context on why an employer announces that because that sometimes can be a very big red flag.

• 40:26Speaker 04

  Sure.

• 40:27Brian Preston?

  I would first want to go know the financial strength of my company if they were shutting down because most employers, when you turn on doing these benefits, you kind of know this is a switch. When I flip this switch, I kind of need to be prepared that I'm going to fund this every year because you know, it's kind of a. A promise I'm making to my employees. And so for an employer to now say, we're going to shut down doing matching funds. I'd love to know, was there, is it going, is that money going to something else? Like, are they firing up a pension in the background or a cash balance plan? Or where the same amount of money is being diverted to be used in a better or more strategic way?

• 41:11Brian Preston?

  Or is this a red flag that there might be problems in the operations of this company? I'm not trying to scare you. I'm just trying to tell you, this is one of those things when I see a change in benefits. I'm like, hmm, I wonder what's going on there.

• 41:25Speaker 04

  Now, we have done this before where we've, we've had a plan come to us and working with the owners. And we've analyzed, they had a match in plan, a place in plan, they had a match on their plan in place. Because that's the way it was set up, you know, eight, 10, 12, 15 years ago. And what happened is when we analyzed, we said, you know what? Hey, this match is actually costing a lot of money. It would be more effective for you to move away from this match over to some sort of safe harbor formula. We're going to do non-elective contributions and a profit. Like, so it could be that, it could be that. But perhaps not. And perhaps it is one of these red flags that you ought to look at. And so what do you do? Well, first thing I think you should do is I think you should stop and go to moneyguy.com/resources

• 42:09Speaker 04

  and download your copy of the Financial Order of Operations. Because Rebi already alluded to this. Employer match is step two. It's a free money step in the Financial Order of Operations. But now, if that ends up going away, I want you to re-triage your situation. I want you to say, okay, do I have any high interest debt? Do I have high consumer loans? Do I have high auto loans? Do I have credit card debt? Should I now redeploy what I was doing to get my match to go extinguish that? No? Okay, great. Do I have a fully funded emergency fund? Do I have at least three to six months of my living expenses in liquid cash readily available for the unknown unknowns of life? Okay, if I got that, check. Boom, then I go to step five. Am I doing my Roth IRA?

• 42:54Speaker 04

  If I'm married, is my spouse doing their Roth? IRA, are we doing a spousal Roth IRA? And am I eligible for a health savings account? Am I putting money into an HSA? Okay, if I check that, boom. Then I get back to step six. Then I can say, okay, even without a match, there are still compelling reasons to fund a 401k. There are great tax benefits. I either put the money in and get a tax deduction on the front end if I'm justified in doing so. Or maybe I put money in the Roth. And even if I'm not getting a match, there's still some really exciting tax benefits that can happen from that happening and compounding through time. So I think in your situation, Cranny, what I would do is I'd go back, rework through the foo and figure out where those dollars will best be deployed.

• 43:39Speaker 00

  Welcome to the 50th Hunger Games.

• 43:41Speaker 01

  Witness the beginning of the revolution.

• 43:44Speaker 00

  Hey Mitch, you've been trying to take down these games from the start.

• 43:47Speaker 01

  Filmed for IMAX.

• 43:48Speaker 00

  Make them remember you.

• 43:51Speaker 01

  The Hunger Games: Sunrise on the Weeping, November 20th, rated PG-13.

• 43:55Speaker 02

  Hey, listen. Power up your play with Nintendo Switch 2 and experience Link's legendary adventure, now reborn in vibrant detail on our fastest and most powerful system yet.

• 44:09Speaker 02

  And harness the power of the Ocarina with the built-in microphone.

• 44:17Speaker 02

  The Legend of Zelda: Ocarina of Time, a Nintendo Switch 2 exclusive. Game and system sold separately. Game rated everyone 10 and up.

• 44:25Speaker 05

  Well, Cranny, thank you for the question. I think that you've got a lot to think about there and a lot to consider. If you would like to sip on some coffee while you consider from a Money Guy Tumblr, just email [email protected] because we would love to send you one.

• 44:38Brian Preston?

  Or to keep that icy beverage cold as a koozie.

• 44:41Speaker 05

  That's right. It could also be a koozie as Brian proudly models for us on the show.

• 44:47Speaker 04

  Are we, I'm seeing we get some audio issues. Everything good back there, audio team? We all cool?

• 44:55Speaker 04

  Okay.

• 44:55Brian Preston?

  They're all looking like they didn't know that.

• 44:57Speaker 05

  Seems good on our end, yeah.

• 44:58Speaker 04

  A bunch of people in chat said the audio was kinda cutting in and out. Uh, so just wanna make sure it's not something on our end that's happening.

• 45:05Speaker 05

  We will double check that for sure.

• 45:08Speaker 04

  And if they wonder if this is really live and we really look, we really look at the chat.

• 45:11Speaker 05

  It's really live.

• 45:12Speaker 04

  We actually do.

• 45:14Brian Preston?

  Bo does. Reeve does. They don't, they don't let this guy see it.

• 45:18Speaker 05

  We don't let him see the chat.

• 45:19Brian Preston?

  Be like, squirrel!

• 45:21Speaker 04

  I thought it'd be hilarious. What if we had a huge screen in the back of the studio?

• 45:24Brian Preston?

  Oh, it would be like, Brian!

• 45:25Speaker 04

  Where the chat was just scrolling.

• 45:27Speaker 05

  He would be like, just reading it in real time.

• 45:29Brian Preston?

  Did you listen to Cranny's question? They're like, sorry, I got distracted.

• 45:32Speaker 05

  Um, alright, we do have some more questions. Let's go on to David G's question. It says, "What are your thoughts about private equity investments for someone when they first reach the point of qualifying to be an accredited investor?"

• 45:48Brian Preston?

  Hang on, we have to, we have to start the question over. Because, this is to prove the point of what we were just talking about.

• 45:53Speaker 05

  He distracted it already.

• 45:55Brian Preston?

  And our advisory team just sent a money guy blast, because we got an audience member who said something really nice about us to the advisory team, and they just blasted it to the team. Well, that notification shows up on my watch. So I'm over here and I'm like, "Oh, don't read it, Brian, don't read it." So we just proved the point. Okay, start the question back there.

• 46:14Speaker 05

  That's a great example of why you don't see the chat in real time.

• 46:17Speaker 04

  You're gonna take off your wearables now. You're gonna like, take off the watch during the show now.

• 46:21Brian Preston?

  Yeah.

• 46:21Speaker 04

  That's hilarious.

• 46:23Speaker 05

  Alright, let's start this over. David G asks, "What are your thoughts about private equity investments for someone when they reach the point of qualifying to be an accredited investor?" And we should probably define what an accredited investor is. I think so. Go for it.

• 46:41Speaker 04

  So Brian, you, you have some experience with private equity and where you've seen that be used and recommended? Uh, so what are your thoughts on this one? Because it sounds like it's my microphone that's cutting out.

• 46:53Speaker 05

  Oh, it's you.

• 46:54Brian Preston?

  Oh, it's me.

• 46:55Speaker 05

  It's Bo's microphone that's the problem.

• 46:56Brian Preston?

  Bo is the issue. Oh, my gosh. Oh, wow.

• 46:59Speaker 05

  You have to answer this question.

• 47:00Brian Preston?

  I feel like mom spaghetti moment just kicked in here. Eminem's starting to play in the background. That's all right, we're ready for it. Here's the thing, yes, when I was working for a very large fee only firm, we put clients, it wasn't just private equity, we did a lot of private placements. We would structure real estate deals, we'd structure hedge funds, we'd structure all kind of things where we would go market to our wealthy clients, hey, this is where you should put your money in. And look, and a lot of these things, they can be very good. I mean, one of my neighbors works for a private equity firm and they seem like they have tremendous success for how they're managing money.

• 47:40Brian Preston?

  And I'm assuming, you know, so a lot of these things, they do well, but it's all like anything else. Who are you going into business with? Because they're not all created equally. And is this, so that's one thing. Is this private equity firm that you're thinking about investing in going to be cream of the crop? Or are they just, you know, taking advantage of this is what rich people think they should be doing and they're, they put together this product that they're now marketing well to get you in? Or, you know, the other thing I always say is, do you need it? Because what I found when I was managing people's money at this other firm is that there were a lot of incentives for us to put the clients in this. Because you realize when you put a client into a private placement, this product probably

• 48:25Brian Preston?

  they can get out of for seven to 10 years. I mean, it is going to have, there is going to be, it is going to be something that will lock them down for close to seven to 10 years likely. Can you imagine from a client retention perspective? That's brilliant. I mean, that's a feature of you putting your wealthy clients in this thing. The other thing is, is that once again, the whole accredited investor, what's an accredited investor? A credited investor means you have enough money that the government's saying, hey, you're rich enough that we're not going to put the basic protections that we require on the general public to make sure you're not getting ripped off and other things. We're stripping a lot of those protections away because you're rich enough that You know, buyer beware because you're on your own and that's why they're required to give you all these offering packages and other things and they'll write down the

• 49:10Brian Preston?

  date that you received it is because then they can go, you know, this is a rich person. They're not protected. We can take their money if we need it. I'm oversimplifying, but that literally is kind of what the breadth of this thing is. I feel like I'm still dancing.

• 49:28Speaker 04

  The only thing I'd added that and you kind of alluded to this a little bit. A lot of people feel like they don't want to dance with the one that brung them. Like I got to this, I got to the accredited investor status, you know, I hit the, I don't remember what it is for this year. It's like $2 million liquid or $2 million liquid or there's a net worth threshold or whatever the accredited investor.

• 49:50Brian Preston?

  And the income, it used to be like 250. I don't know what it is now.

• 49:53Speaker 04

  Yeah. And people, people realize, I got here by saving 25% of my gross income and by investing in low cost index funds and by having very simple publicly traded investments and, and I was able to build this wealth by doing that. Well, now all of a sudden I've hit this new threshold, I must need to do something else. I must need to go do something more complicated or more, or more different. A lot of people would be surprised to find, Brian, a lot of our clients who have substantial portfolios, I mean, talking about seven figure, eight figure, multiple eight figure portfolios, still do the same type of investing that folks who are at a million dollars or $2 million do. It doesn't have to be more complicated. That's, that's not to suggest that you should

• 50:38Speaker 04

  never do private equity or that's never a viable option, but I think far too many people think, oh, it's the natural graduation point. Just like, okay, well, if you don't own a rental property, then you're not serious about money. That's not true at all. If rental properties don't make sense for you and it's not something you want to do with your dollars, you don't have to, private equity and venture capital and those types of investments are the exact same. If it's not something that you want to be doing and it's not something you understand well, it's not something you have to be doing in order to be able to build wealth.

• 51:09Brian Preston?

  I mean, I don't mind sharing. At our firm, we don't do private places. Yeah, we don't. I mean, I just, um, cause I saw, like I said, there are a lot of features for the person who were selling it. I didn't necessarily think it was necessary for, and that's not an indictment or say something's bad. It's just that I just wasn't compelled to feel like I needed to, when I was designing my wealth management firm, I didn't feel like it rose to the level that this was going to be something that I needed to add as a feature because a lot of what I try to do as a fiduciary advisor is treat your money like it's my money. And if I don't have my own money in some of these private deals, I'm like, why would I put a client? Yeah, it'd be great for me that I get to lock their money down for 10 years, but is that in their best interest? And it just didn't rise to the

• 51:53Brian Preston?

  level. It doesn't mean these things are bad. I will, this, I will give an editorial statement on something I've noticed in the economy. Um, like I said, I have friends that work in private equity, so I'm not against private equity, but I, but I do think the whole game with private equity is, is that they put a group of holdings together and they're trying to get bigger because the bigger you are, the bigger your, your, your multiple is, your, your valuation multiple is going to be bigger. So they take a bunch of small things, bring them together and then they get to be a bigger multiple and then they hopefully in three to five years get to roll up and do this whole transaction all over. What that has created in society, and it drives me crazy because it's landscapers, it's your dentist, it's your, it's your, you know, your, your third party administrators. Oh my gosh, your TPAs.

• 52:38Brian Preston?

  It's, um, all these industries because they're just trying to get bigger, not better, bigger, so they can get the higher multiple. I think people have forgotten how to run businesses. And, and you know, they, they go in there and they target sticky businesses. It's very hard for you to go fire somebody for, and, and the service goes to pot and it drives me crazy. So it has nothing to do with this question that David G. asked, but I think that it's just something we as a society ought to be looking at. And it was like, where is the value add on, on what's actually increasing? Cause it's basically, it looks like it's just a math game that people are playing. And, and there's gotta be, trees don't grow to heaven. And if we're all trying to get bigger and bigger and get higher valuations, but we're not actually making the product better.

• 53:22Brian Preston?

  Because that's the thing I've always liked about markets and systems is you create a better product and you do something, a service better than anybody else. The customers go and naturally want to give you their money and then give you their money over and over again. This is kind of working against that in a way and the fact that it's just saying, no, let's go find sticky transactions where it's hard for people to want to move from this, from this product. And then let's just cut all the service or the features out of this to save money. And then let's see if we can turn this into a bigger operation, just because it's worth more on paper. And that,

• 53:56Speaker 04

  It's not great.

• 53:57Brian Preston?

  That I don't love it. Okay. I probably went too far.

• 54:00Speaker 04

  No, no, we

• 54:01Brian Preston?

  Probably hear it from my neighbor.

• 54:05Brian Preston?

  Hey, why did you pick on private equity?

• 54:07Speaker 04

  Why'd you go? No, I think, no, look, there's, there's a, there's a place, um, there's a place for it. And there's like a time where it makes sense. And there's a lot of times that private equities will step in and create liquidity for a business or an owner who otherwise would not have had the ability to do that. Uh, I just don't know for the everyday investor, or even the everyday accredited investor, which is kind of a wild way to say it. I don't know that that's something that you have to be doing with your money. And again, you want to, if you are going to do it, measure two, three, four times, make sure you underwrite the deal well to know if it actually makes sense.

• 54:42Brian Preston?

  Are we helping people get married now? Is the money guy show turned into? Cause I just got a note from that, from the content team. Hey, Kang, you please give a shout out to my fiance, Noah W. He's a huge fan, but doesn't know that I'm listening too. We're getting married in 11 days. Love, Kenzie K.

• 55:00Speaker 04

  Kenzie and Noah, congratulations on your pending nuptials. Uh, that's super exciting. Uh, and if you'd like to, if you have a compelling and interesting story that the world could benefit from, you should consider coming on Making a Millionaire.

• 55:15Brian Preston?

  Some places have kiss cams. Now we have just shout outs, you know,

• 55:18Speaker 04

  That's it.

• 55:19Brian Preston?

  Two fiancés.

• 55:20Speaker 04

  Uh, so if that is something that you want to check out, go to make, uh, moneyguide.com slash apply if you want to apply to be a guest on Making a Millionaire. Cause we love telling interesting stories about folks that are doing awesome stuff with money. And that might be you guys entering into this new marriage. So congratulations.

• 55:37Brian Preston?

  Hey, by the way, I'm glad you have a microphone. It made me, you know, swimming out there. This is, this is what I felt like, is this must, what Bo must feel like when he's swimming in the ocean. Is because, I mean, I was just, I was, you know, I have.

• 55:50Speaker 05

  That's a sick burn.

• 55:51Brian Preston?

  Because I have, I had this, you know, I do this every week and you would think talking, but then when I was told, no, you're on your own, Brian, all by yourself. It just felt like, oh my gosh, I miss, I miss my, my man Bo.

• 56:01Speaker 04

  If you would have said something that was like wrong or off, or I felt like I like needed, I would have like leaned, I'd have been lean.

• 56:08Brian Preston?

  Everybody like.

• 56:09Speaker 05

  He would have walked over to my desk and been like, alright, Raby, we, I need this microphone.

• 56:13Speaker 04

  I think you did awesome though.

• 56:15Speaker 05

  Yeah, you did, actually. It was great.

• 56:16Speaker 04

  Honestly, I think probably at least one or two questions every live, and we all just take my microphone away and just watch.

• 56:21Speaker 05

  Brian Solo.

• 56:23Brian Preston?

  With Josh running around trying to feverishly throw a line into, into yours.

• 56:27Speaker 04

  Yeah, shout out to the AV team. I don't know if you know this, they actually replaced my mic cord during that question and I bet it was all done off camera. I bet they had the close on, I didn't see it, but I bet they had the close on. It's amazing.

• 56:39Speaker 05

  Nobody would ever know.

• 56:40Speaker 04

  Professional team over here.

• 56:41Brian Preston?

  They'll never know.

• 56:42Speaker 04

  They're gonna know.

• 56:44Speaker 05

  Well, David G, if you would like a Money Guy Tumblr, just email [email protected] and we would love to send you one.

• 56:50Brian Preston?

  Man, it's almost like in The Matrix, though, where you, we're trying to show people this is a live show. You know, because we've had people accuse us that this is not a live show and we're like, okay, let's make sure on this episode that we put enough gimmicks in there that people will say, yes, definitely gotta be a live show.

• 57:05Speaker 04

  Yeah, if this, if this is what the show will like after high production value.

• 57:10Speaker 05

  What are we doing? That's funny. Well, Amber H has a question for you guys. She says, can y'all explain what a step up in basis means?

• 57:19Brian Preston?

  Oh, yeah.

• 57:20Speaker 05

  In relation to inheriting property. So we're, it's a little game of what does this word actually mean? Please explain.

• 57:25Speaker 04

  Brian, you are CPA by training. Stuff like this one is right up your alley.

• 57:31Brian Preston?

  Well, what's, what's funny is that this actually came into my life yesterday. Had a, because it's, since it's a, a client slash mother-in-law.

• 57:41Brian Preston?

  We met with my mother-in-law's attorney yesterday on the phone and we were talking about just some quirky things, you know, that my mother-in-law, sometimes she listens. So Ramona, if you're listening, big shout out to you. Love you. But it's so funny to me is that I say this to my wife, I'm like, everybody listens to me, but the people that I love sometimes is because, you know, it's just some quirky titling that has been done without my, my knowledge. And we're working on, you know, getting all that fixed up on the estate plan for my dear, dear mother-in-law who gave me the gift of my beautiful wife. But it is one of those things where you have to be very careful with how you title assets. Just don't start strapping loved ones onto accounts

• 58:24Brian Preston?

  because you can very closely or very easily screw up this awesome benefit called step up in basis. And what this means is, is we have an estate system. Now, look, there's issues and they're slowly, because if, you know, if you die with too much money, the government will tax you. But for the majority of Americans out there, you're not going to reach those estate exemption or limitations. So for most of you, the way the tax laws are written is that if you die with appreciated assets, it can be real estate, it can be your, your investment portfolio. But if it's appreciated, when you die, your beneficiaries will actually inherit the assets at the new market value of what it was at the date of

• 59:06Brian Preston?

  death versus, you know, all of your unrealized basis. Your basis actually gets stepped up, just like the name implies. As you can imagine, that is a huge benefit for, for most Americans. Think about it, you bought your house with real estate being as crazy it is right now. You think about like my, I think about my parents, they bought their house in the late seventies for $60,000. It's wild. Now, they're, they're in South Atlanta, so it hasn't run up as much, but still if they sold this for Or they pass away with $400,000 value. You don't pay the income taxes on the $340,000 of gains. You get what's called a step up in basis. Your grandmother, who's from, I'll use another Atlanta example because we're both from Atlanta.

• 59:50Brian Preston?

  You know, great grandma bought into Coca-Cola. You know, back when Coca-Cola was just, you know, trying to figure out how to get the cocaine out of the recipe. Um, you know, I don't know if that was ever in the recipe. By the way, that was a joke. That was a bad joke, bad joke. Maybe it was because I think they did have coca in the recipe. But anyway, great grandma got into Coca-Cola back when it was pennies, pennies. So you could buy tons of shares of this thing. Well, now, you know, if she passes away with it, you don't pay income taxes on that appreciation. Now imagine how this gets if you screw this up, whereas all of a sudden grandma is sick. And then, you know, at the last minute, y'all go in and say, you know what? She's got all these shares of Coca-Cola.

• 1:00:35Brian Preston?

  Um, we don't want to pay income tax on that. So let's just, we'll just start changing. We'll gift it. We'll gift it, put it in your name. That is a disaster, but somehow people do this all the time. They go in, they put loved ones' names on accounts or they just start gifting shares without understanding that you might be screwing up one of the greatest financial benefits of passing away with highly appreciated assets.

• 1:00:59Speaker 04

  Yeah. And, and just to close the loop on that, if you end up gifting the appreciated securities or the appreciated property or whatever it is, your basis in that carries over to the gift receiver. So rather than getting the step up, if they were to sell it at some point in the future, from a tax standpoint, they're going to have the same basis you had on it. So it's much better for your heirs to inherit property than it is for you to gift property. Now, if you are someone who's over the estate limits and you're over $15 million or as a couple, you're over $30 million, uh, first you should go to moneyguy.com/workwithus and reach out. And secondly, you might employ some strategies where you want to begin gifting assets.

• 1:01:41Speaker 04

  But for the vast majority of Americans, that's not the case. For the vast majority, it's much better for your heirs to inherit. So make sure you understand that. And If you happen to unfortunately be the beneficiary where someone passed away and left you assets, a lot of times, people don't automatically do this. So maybe there was a property or a home or a commercial building. One of the things you're going to want to do is you will want to go get an appraisal, a property value on that thing, or you want to know the value of the securities on the date of passing so that you have a record of what those market values were. So that at some point in the future, when you do sell it, you can say, no, no, this got to step up in basis on this date at this value. And

• 1:02:25Speaker 04

  this is my new tax basis in this property.

• 1:02:28Brian Preston?

  Hey, did I say enough so we don't get another cease and desist letter?

• 1:02:33Speaker 04

  He's like, man, I'm trying to, what's the second one?

• 1:02:35Brian Preston?

  Sometimes, I mean, this thing, this brain is so much faster than my mouth filter is. So I just want to make sure that we did, do we put enough disclaimer in there? So we don't get the cease and desist. I think we're great.

• 1:02:44Speaker 05

  I think we're okay.

• 1:02:45Brian Preston?

  All right.

• 1:02:47Speaker 05

  Great, Amber H, if you would like a Money Guy Tumblr, it'd be good. Fill it up with some Coca-Cola if you want to. Just email [email protected].

• 1:02:58Brian Preston?

  Sorry.

• 1:02:58Speaker 05

  I had just never heard that. So you just sent me on.

• 1:03:00Brian Preston?

  You never heard it?

• 1:03:00Speaker 04

  There goes that sponsorship.

• 1:03:02Brian Preston?

  Oh, gosh.

• 1:03:04Speaker 05

  I don't know. I don't, I can't comment.

• 1:03:07Brian Preston?

  Oh, man.

• 1:03:08Speaker 05

  Oh, my goodness. This was fun. We really love being here, live streaming, hanging out with you, but also talking personal finance, hopefully helping you think through your personal situation and feeling a little more confident in what you're doing with your next dollar. And hey, if you have not kind of put your voice out there and shared your story.

• 1:03:26Brian Preston?

  It's not telling jokes. We should have been telling everybody, go moneyguy.com/survey. I don't feel like we boosted that enough today.

• 1:03:32Speaker 05

  We didn't. Well, I was about to do it. So now you really, you really did it for me, which I'm very grateful for. Moneyguy.com/survey. Go share your story, your financial situation with us to inform future episodes. We would greatly, greatly appreciate it.

• 1:03:45Brian Preston?

  Hey, has anybody heard from Nate yet?

• 1:03:48Speaker 05

  Bargatze.

• 1:03:48Brian Preston?

  Yeah, I figure he's he in the live stream?

• 1:03:50Speaker 05

  I didn't see him in the chat, but I mean, he could be watching.

• 1:03:53Speaker 04

  I did. There was a Nate in here whose name was just Nate, but I don't know if it was him.

• 1:03:58Brian Preston?

  Okay, well, you know.

• 1:03:59Speaker 05

  Nate, if you're out there.

• 1:04:01Brian Preston?

  I'm still thinking it's happening. I just am such an optimist. I'm like, there's zero chance that is by coincidence.

• 1:04:07Speaker 04

  Somebody, somebody made this call. They're like, oh, wow, Nate Bargatze, he goes from like hosting the Emmys to like hanging out with the money guys. And that that seems reasonable to me.

• 1:04:14Brian Preston?

  The timing.

• 1:04:15Speaker 05

  Seems potentially related.

• 1:04:16Brian Preston?

  His star has risen to the point that I realized this yesterday on my walk. That's, that's just unfortunate timing.

• 1:04:24Speaker 04

  You know, I told you, this was two years ago, three years ago, I mentioned this on the show before, I was at the Williamson County Fair here.

• 1:04:30Brian Preston?

  Yeah.

• 1:04:30Speaker 04

  And he was just over there standing by the ride, waiting for his family to get off. This is before the Netflix special, before all that, but you know, I was a fan pretty early on.

• 1:04:36Brian Preston?

  See, that's what.

• 1:04:37Speaker 04

  And he was just hanging out there at the fair, just a dude.

• 1:04:39Speaker 05

  So really, Bo missed the opportunity.

• 1:04:40Speaker 04

  I should have, I should have, I should have gone to say hello.

• 1:04:43Brian Preston?

  So he didn't run up to you?

• 1:04:44Speaker 04

  He did not act like it, but he may be a new listener.

• 1:04:47Brian Preston?

  That works against my theory then. That's not good if he didn't run up to you.

• 1:04:50Speaker 04

  He may be a new listener, potentially.

• 1:04:52Brian Preston?

  Okay, that works against my theory that he planted that for me.

• 1:04:57Brian Preston?

  All right, because he would, anybody who knows me would see old, big, old, beefy Bo out in public and be like, especially at the Williamson County Fair.

• 1:05:04Speaker 05

  I don't really know why that would happen.

• 1:05:06Speaker 04

  She said, maybe he would just recognize you and wouldn't recognize.

• 1:05:08Speaker 05

  I was just trying to make Brian feel better, but that's pretty unlikely because you guys are kind of a package deal.

• 1:05:12Brian Preston?

  So, did you go to Williamson County Fair this year?

• 1:05:15Speaker 04

  I didn't go this year.

• 1:05:16Brian Preston?

  I still went twice.

• 1:05:17Speaker 04

  My, my wife and kids went, but I had something going on that evening, so I couldn't go. So they were super juiced about it, but I did not make it this year.

• 1:05:24Speaker 05

  Too bad.

• 1:05:25Brian Preston?

  There's, Bo, I have yet to hear, go to the Williamson County Fair and not hear about celebrities roaming around.

• 1:05:33Speaker 04

  It happens all the time.

• 1:05:35Brian Preston?

  So, okay, well, I have really taken the energy out of this. So that is a horrible, guys, I'm your host, Brian. This is Bo Rebe. Go check it out, moneyguy.com/survey if you haven't done it. You know, there's probably only six of you left at this point. And if you haven't gone and taken advantage of all of our free stuff, it's moneyguy.com/resources. Money Guy Team, out.

• 1:05:57Speaker 04

  The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through The Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.

• 1:07:51Speaker 00

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  The Legend of Zelda: Ocarina of Time. A Nintendo Switch 2 exclusive. Game and system sold separately. Game rated everyone 10 and up.