X% of Americans Over 50 Have NOTHING Saved…

What happens if you turn 50 and haven’t saved a dime? We break down how to turn things around with tools like catch-up contributions, Social Security planning, and flexible retirement timelines. Then we answer your questions about profit sharing, maintaining a 25% savings rate, self-employment, and a whole lot more! ⁠⁠⁠⁠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. 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

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• 0:27Speaker 01

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• 0:54Speaker 01

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• 1:02Brian Preston?

  Unbelievable. This percent of my peers have absolutely nothing saved for retirement.

• 1:08Speaker 03

  Brent, I am so excited to talk about this because I think that we can change it. I think this is a statistic that is sad and frustrating, but I believe that it's one that you and I, sitting right here, can improve on moving forward.

• 1:23Brian Preston?

  So the big reveal. If we were, because let's just go right out of the gates and tell, now I want to flip this into the glass is half full. Fortunately, 80% of my peers are actually saving for retirement, but unfortunately, 20% or one in five have absolutely nothing saved.

• 1:43Speaker 03

  It's pretty dire, right? When you think about turning 50, hitting that threshold, hitting that mark, most people, if you're thinking about a normal retirement timeline, you're thinking about age 65. Well, by the time you get to 50, 65 isn't so close. I mean, it's not like right around the corner, but you can see it. You can see the landing approaching. And for folks who have done nothing, who have not prepared at all, I gotta believe it's a pretty frightening and pretty scary experience to be in.

• 2:10Brian Preston?

  So that's why, let's, let's actually bring people to the bridge. And by the way, if you're younger than 50, which 87% of you are, because I went and pulled the stats this morning. Still stick around because we got some great stats on how you can do this differently. You don't have to be the passive player in your own financial life and wake up when you're 50 plus and go, oh my gosh, how do I catch up? How do I actually make this work? So for, we're going to hit the pause button for you, young people, and just try to give some love to, love to the people who are 50 and older to let them know, you know, it's, it's scary, but we still think there's some steps you can do. And then we're going to bring this back around and give you the motivation if you're under 50. So you don't have to be in this desperate situation in your future.

• 2:54Speaker 03

  Yeah, there's some key takeaways we want you to be aware of. The first of which is if you're over 50, know that your dollars are still powerful. There's still a lot of ground that your dollars can cover from age 50 out to a normal retirement of age 65. Now, it may not be the same as your 20 year old counterpart, but they can still work pretty hard for you.

• 3:16Brian Preston?

  Yeah. If you need to, don't skip out on our, our resources. Go to moneyguy.com/resources. We actually have a wealth multiplier calculator. I don't care what age you are, you can actually use this calculator and see how powerful every dollar in your army of dollar bills can be for you. It even tells you how much if you want to have a million dollars, if you want to have $2 million, what do you need to be saving to actually make your money work harder than you can with your back, your brain, or your hands?

• 3:40Speaker 03

  And here, here's what I love about this calculator. There's sort of a twofold thing you can do. Obviously, number one, you can put in how much money you can save. Hey, if I save $10,000 this year, what can it turn into by the time that I retire? But the other thing that you can do, if you have saved something, now we know that one in five have nothing saved, but even if you've only saved $20,000, $30,000, $40,000, if you put that number into the wealth multiplier, it will show you without saving anything additional, what you are on track for. So let this be some motivation. Let it be something that causes you to make that next right step toward a better financial future. So that's the first takeaway is that your dollars are still powerful. The second one is there are still some tools

• 4:21Speaker 03

  at your disposal, even if you are at age 50, it's not like there aren't levers that you can pull. And the first of which, my Be you may need to adjust your retirement timeline. Maybe age 65, full retirement is no longer the plan that makes sense for you. Maybe you have to work a little bit longer, or perhaps maybe when you retire, you ease into retirement, you have a pseudo retirement timeline that allows you to have a few additional years to save.

• 4:47Brian Preston?

  Yeah, there's nothing wrong with if you go take a part-time job with benefits, or you do something to kind of help offset, so you're not pulling so much out of your portfolio before it has time to kind of reach that critical mass point. You can be creative. There are tools at your disposal that you can make work. The second thing, don't forget, there is a social safety net out there. Social Security. What I remind, because look, I don't think if you are somebody who's probably under 50, you probably have to be a little nervous about what does Social Security look for you? Are they going to add means testing? Are they going to change the structure? But I do think that it's probably reasonable to assume that if you're over 50 and beyond, they're not going to rip the carpet out from underneath you. So you probably do have some coverage that Social Security can cover some of your expenses in retirement.

• 5:32Speaker 03

  And if you've heard like, okay, Social Security, it's confusing, and there's all these different options, we have a great resource you can go check out. If you go to moneyguy.com/resources, we have sort of this Social Security checklist. It kind of helps walk you through, when should I claim? Should I draw at 62, or should I wait until I'm age 70? How do I decide? What are the trip wires I need to be aware of? So if you are someone who's thinking about Social Security, who wants to know how it works, make sure you check out this checklist, so there can be a resource to help you make those wise financial decisions.

• 6:04Brian Preston?

  And it's almost like our government recognizes that. There's probably going to be a lot of people who wake up when they're 50 years old and go, holy cow, I need to be saving for retirement. This thing's right around the corner. And that's why we do have catch-up contributions. You know, look, they've even added, I don't even know if I'm going to get the language right, the super mama jama catch-ups.

• 6:23Speaker 03

  No, I think that's what it was. That was what was in the tax law, right? Super mama jama, was that?

• 6:29Brian Preston?

  Let's go through this. If you are 50, it's the year you turn 50. With IRAs, whether it's Roth or traditional IRAs, you can make a bigger contribution. You know, there's all, your 401K or your 403B, there are catch-up contributions once you hit that that status. And now there's even, like I said, it was.

• 6:48Speaker 03

  From 60 to 63.

• 6:49Brian Preston?

  So even if you defer even more, they're going to give you even more opportunities to catch up. Take advantage of those things. There's a reason the government's trying to give you tools to allow you to invest for yourself in making your great, big, beautiful tomorrow.

• 7:02Speaker 03

  And then the last takeaway, and we just want you to think about this. If you're someone who is under 50, you're not here yet, don't let yourself be in the statistic of those one in five people who have saved nothing because you still have time on your side. We say this all the time. The absolute best time to start saving and investing was yesterday. That means that the second best time to start saving and investing is today. So don't delay. You would be amazed at how powerful your dollars can be if you will just begin putting them to work.

• 7:33Brian Preston?

  And you get to choose your heart. Look, if you're starting out at 50, it's going to fall on your discipline. You're going to have to do more and more of the work. A lot of this weight falls on your shoulders. But if you're somebody watching this, and like I said, 87% of you guys are under 50 years of age. We looked at our demos. A lot of you, the lion's share of you are still in your twenties. And if you look at that, I want you to understand, a 20-year-old has to work basically a quarter of the hard. It's a quarter of, it's four times harder if you start at 30 versus 20. If you are 40 years old, it is 10 times harder than the 20-year-old. So if you're somebody who's in your twenties, let that power of time do the heavy lift for you guys. You get to choose your heart.

• 8:18Brian Preston?

  The earlier you start, the easier it is. You have to just defer a little bit of your happiness now to really build something magical. It's all about that incremental decision making.

• 8:27Speaker 03

  And the sooner you figure this out, the more exciting it is. We talk about the wealth multiplier all the time. For a 20-year-old, $1 has the opportunity to turn into $88. For a 30-year-old, $1 can turn into 23. For a 40-year-old, $1 can turn into 7. So no matter how old you are, your dollars still have the ability to work for you. So make that small decision today, if you can, make small decisions. Or maybe that big decision that you need to make so that you can start working towards your great, big, beautiful tomorrow. Brian, I love that we get to talk about this kind of stuff. I love that we We get to share these kinds of ideas with our audience and I love that we get to answer the things that you are curious about. It's why every single Tuesday at 10 a.m. We do a

• 9:12Speaker 03

  live stream where we want to know what are your questions? What are the things that we can answer? What's the information we can share with you that might be valuable? So if you have a question, we would love for you to get it in the chat right now. We have the team out in the wings, collecting your questions. So with that, Creative Director Rebi, I'm going to throw it over to you.

• 9:30Speaker 04

  Yes, we're going to kick it off with Renata's question about the 238 car buying rule. It says, "The 238 rule says car payments shouldn't exceed our monthly investments. Mine fits that rule, but it's a 9% interest. Should I divert investment money to pay it off faster or stick with that rule? Thank you."

• 9:51Speaker 03

  So one of the things, Renata, I'd want to know is how old are you? Because 9% certainly sounds high interest. It sounds less than ideal when it comes to not a loan. But one of the beautiful things about 238 and the way that we, the reason why we constructed it the way we did is we know that if you are paying down that loan and you have it confined inside of that 36 month or three-year period, that interest, while it's still going to be costly, you're going to be able to knock it out pretty quickly. It's going to take you at a maximum three years to knock that out. And so what I would want to make sure of is, okay, I am staying inside that 238. And then I'd want to go look at, okay, based on my age, if I'm in my twenties, I know that as a 20-year-old,

• 10:33Speaker 03

  $1 can turn into $88. Or even as a 30-year-old, $1 can turn into $23. As much as I dislike that 9% interest, as much as I dislike that compound interest working against me, I know that I have it inside a cage. I know that I've got it inside this 36 months where I can knock it out. So so long as you're doing that, rather than getting super aggressive and paying that off, I want to make sure that you're still being true to building wealth for the future and working towards that 25% outside of the 238. Agree? Disagree? Want to fight?

• 11:03Brian Preston?

  I think that, I think I want more structure in the answer is, and I bet Renata does too.

• 11:09Speaker 04

  Sounds like maybe.

• 11:10Brian Preston?

  Let me give more, let me put some clothes on this thing. Is that, um,

• 11:13Speaker 03

  It's naked right now.

• 11:14Brian Preston?

  Yeah, it is naked right now. Because right now she's scratching her head going, was that a, was that a yes or no? Because it's 9%. That sounds kind of high. Here's the, here's, let's get them out of the cold.

• 11:26Brian Preston?

  If you get a match from your employer, that's a step two. Step two. Probably a 50% to 100% guaranteed rate of return. We're not at 25, by the way. So, so get in there and get that free money from your employer. Make sure you're doing the 401k. But I will say for somebody who's even at 25 years of age, a 9% interest rate sounds high. And then step number three of the financial order of operations, by the way, it was hidden under my book, Millionaire Mission, check it out if you don't know about it, is the foo. We have a foo sighting here and the fact that high interest debt, you're going to want to focus on that, but you know, and that does fall before even emergency reserves. You know, it falls before the Roth IRA, but that should scare you to death because Bo is exactly right.

• 12:11Brian Preston?

  I mean, I want for a 25 year old, we know that every dollar has potential to become somewhere between $44 and $45. That's magical. That's, that's something that's really incredible, but yet you, here you are paying 9% interest. You ought to figure out, is there a way for a moment in time, a season, that I can quickly pay off this loan, maybe even ahead of 238? Cause 238 still works under the umbrella of the financial order of operations. And, and look, and you look at this and you say, maybe I could even pay this car off in less than a year because of this? And I'm, I'm going to be ticked off that I don't get to max out my Roth this year? Let that be motivation versus what I don't want you to do is just let this thing drag out there.

• 12:55Brian Preston?

  I know you, it sounds like you disagree with that, but I would rather somebody gets so motivated that they maybe even go figure out, is there a way I can even knock this out in six months, 10 months? Make it a season because you ought to be really upset that you're not maxing out your Roth. You ought to be really upset that there's other money that's sitting on the table because you have this, this car loan that's at 9% and get really serious about knocking it out.

• 13:21Speaker 03

  Great.

• 13:22Brian Preston?

  You disagree.

• 13:23Speaker 04

  He absolutely disagrees.

• 13:25Speaker 03

  Man, for a 25 year old, I just know how powerful. You've already done the hard work of putting it inside that 238 confines. And so in my mind, I'm thinking, all right, hide your debt on an auto loan. You know, if it's less than 10% in your twenties, I know that sounds crazy. That sounds egregious, but if it's less than 10% in your twenties, man, and you're paying it off inside that 36 months, I love the idea of you maxing out that wrong.

• 13:48Brian Preston?

  But I worry, I worry that that gives comfort in, in the fact that somebody would, would be like, okay, well, it's all right. And then they, they could do more. And, and I hate to ask that because I know in your twenties, you're already feeling like you're lean. You don't have a lot of money, but a little bit goes a long way. And I, and I like squeezing that behavior as much as possible because 9% just, I mean, it's, it's kind of like when I see somebody has credit card debt, I'm like, man, it's, there's certain levels of interest that it's a shame that it's going to the bank instead of going into your back pocket.

• 14:22Speaker 03

  I agree with you on that.

• 14:23Speaker 04

  Yeah. I mean, I think you align that 9% is a little high, but also that if you get outside of the three years of the 238, then you're doing it wrong. Then you gotta, you gotta cut, you gotta make some changes.

• 14:34Brian Preston?

  This is the unsaid part. You're 25.

• 14:36Speaker 04

  Yeah.

• 14:36Brian Preston?

  So we get super excited because it is so, you can, it's almost hard to screw it up when you're 25 years old because the power of your time is so just working for you. That's why Beau is putting, and that's why you're kind of flipping a coin because of the just incredible opportunities. So you ought to, you ought to be excited about that because we are so excited for the power of every dollar that comes in your army of dollar bills, but also don't sleep on it. Because that's the thing, I hate it. And then that's why we started the show off, that so many people procrastinate because they think that, you know, I don't have to worry about my twenties. I don't have to worry about it in my thirties. I'll have time as I make more money. I'll save more then. That is a trap. That's an, that's a fool's errand that you really ought to be focusing on.

• 15:20Brian Preston?

  How do you get anything working for you? And I know that's probably goes more to Beau's point, but then there was also this opportunity cost of you're paying 9%. How are you ever going to get ahead?

• 15:29Speaker 03

  Yeah.

• 15:31Brian Preston?

  That's why they're in conflict.

• 15:32Speaker 04

  Even though we kind of gave a couple of choices for you there, I think that was a good answer. It gives you all the things that you need to consider and make an informed choice that works for you. So thanks for being here and asking the question, Renata.

• 15:45Speaker 03

  Someone in here asked Brian said, also, has Brian been working out with Bo? You've been getting a lot of, a lot of like health related compliments here recently. Have you noticed that in the chat?

• 15:55Brian Preston?

  Oh.

• 15:56Speaker 03

  People just saying, my man, he's like Benjamin Button over here. He's reversing and he's aging in reverse, right? Isn't that awesome?

• 16:03Speaker 04

  That's pretty awesome.

• 16:03Brian Preston?

  I do a morning walk now.

• 16:05Speaker 03

  That's the key to it. That's the key. You go for a morning walk.

• 16:08Brian Preston?

  What's funny is you get up, you get a little bit of that morning sun in your face. Set the, was it circadian?

• 16:14Speaker 03

  Rhythm, yeah.

• 16:15Brian Preston?

  The rhythm and you, you, you tend to lean out if you're, if you're walking two miles in the morning.

• 16:20Speaker 03

  Do you, um, do you do it barefoot?

• 16:22Brian Preston?

  No, why would I do that?

• 16:23Speaker 03

  My, hey, my wife is all about, do you do this? She does like the morning sun and the grounding. It's like this whole thing.

• 16:28Speaker 04

  Okay, but he's walking on the pavement.

• 16:31Brian Preston?

  Farm and you can walk through a field. Me walking on asphalt?

• 16:34Speaker 03

  Well, no, no, I wouldn't walk on asphalt.

• 16:36Brian Preston?

  In the morning is not going to get everything done.

• 16:38Speaker 03

  There's like ground.

• 16:39Brian Preston?

  That's my childhood, by the way.

• 16:41Speaker 03

  I mean, I wouldn't walk on the asphalt barefoot, but isn't there, grounding is a thing, right?

• 16:46Brian Preston?

  Yeah, but that's walking grass in a field or something.

• 16:48Speaker 03

  I don't think it has to be a field. I think it's just generally grass, like earth.

• 16:51Brian Preston?

  Well, it's not asphalt.

• 16:52Speaker 03

  It's definitely not asphalt.

• 16:54Speaker 04

  Yeah, I don't think this is the same thing, Bo. I think that's where we're.

• 16:56Brian Preston?

  If you're walking two miles.

• 16:58Speaker 03

  I'm not saying walk at a walk.

• 16:59Brian Preston?

  There's no way, there's nowhere I can walk two miles and I'm not on, walking on asphalt.

• 17:02Speaker 03

  I, I know your neighborhood, there are front yards all over.

• 17:05Brian Preston?

  Oh, that's where I won't. I'd be stepping on every dog poo pile in the neighborhood. I would spend just as much time cleaning my feet and getting the poo off my feet as I would anything else.

• 17:16Speaker 04

  Oh, man, you guys are.

• 17:17Speaker 03

  They ever start scooping up that, they don't scoop up that poo?

• 17:19Brian Preston?

  Not in my yard, they don't. I mean, I let my dog just go wild. Wild on it. It's, I don't pick up in my, I pick up in their yards, but I don't pick up in my yard.

• 17:27Speaker 04

  Talking about his yard specifically.

• 17:29Speaker 03

  Just a bunch of landmines in your front yard?

• 17:31Brian Preston?

  If my dog goes in my yard, I let the rain take care of it.

• 17:33Speaker 04

  Walk at your own risk.

• 17:34Brian Preston?

  As God, as God meant it to be.

• 17:37Brian Preston?

  Now, I don't want their Great Dane, I have a little seven pound mint, you know, little mini dog.

• 17:42Speaker 03

  Little hamster running around.

• 17:43Brian Preston?

  So, I mean, it's not like, I mean, it's like a rabbit pellet, you know? The dog, as far as rain, it's gone. But the Great Dane that walks through my neighborhood, I do want them picking up their human sized issues.

• 17:53Speaker 03

  Now, if they, if they left their deposit in their yard, would you be okay with them letting it hang out?

• 17:57Brian Preston?

  Yeah, it's their yard. Free America, do what you want.

• 18:02Speaker 04

  Wow. Um, learned something new there about Brian's home.

• 18:08Speaker 03

  Note to self, if you walk through Brian's front yard, walk delicately.

• 18:12Speaker 04

  Dred carefully. All right, let's bring it back to the personal finance questions. I've got one queued up from WebGoli. It says, I'm a little short on step four of the foo currently. Thinking about cashing in my HSA money to change to cash. I have about 10K in saved receipts dating back about nine years. Thoughts? Is this a bad idea?

• 18:37Brian Preston?

  It doesn't have to be an all or nothing. You could actually, within the HSA, free up additional cash. So it's still in that awesome structure of being in a health savings account. And then that gives you the buffer or the margin to, as your life, in your actual savings rate is allows you to build up actual step four. Then you can always go back and then reinvest in step five, that health savings account. But if you pull that money out, you're not gonna be able to get it back in. And that would trouble me. So I think it's kind of, you're bringing up a solid point that the cool thing about a health savings account. We know 96% of the public typically uses this thing as a cash clearing account. You put the money in, you take the tax deduction, and then you reimburse yourself for your medical expenses.

• 19:21Brian Preston?

  The Financial Mutant way is you actually put the money in, take the tax deduction. But then the goal is you eventually invest this money, let it grow upon itself, and then you reimburse yourself for the expenses. And you let all that compounding growth pay you back, but also just build you something even better. It's really an incredible thing. But if you got yourself in a pickle where you're like, okay, maybe I should just go ahead and take some of this health savings account, put it in my step four emergency reserves. I would say, why not do this, continue to go the Financial Mutant route, free up cash in the health savings account. So if you got caught where you need, had a, you know, a need for cash, you could always go get the, you said you have nine years' worth of medical expenses that you could reimburse. It's the best of both worlds.

• 20:04Speaker 03

  Yeah, so I like that idea. I'm gonna, I'm gonna make one small little like tweet, tweet to it. I love the idea. It doesn't make a ton of sense to me to pull that money. Out of the HSA and then put in your emergency fund because you've already gotten the HSA. You protect that structure. One of the questions I want to ask Webb is, okay, how short on your emergency fund are you? Meaning, is your goal six months of living expenses and emergency reserves? And you're at like four and a half months? Okay, that makes me feel pretty good. What I would say is rather than like selling the HSA dollars and immediately taking those dollars and have them sitting in cash. Could I just put things on pause and start back in step four? And just build up my emergency fund over the next month, two months, three months? Rather than selling assets that are already working for me. Meaning, I've already got them in the HSA. I already have them invested.

• 20:50Speaker 03

  Do I need to sell and liquidate those if I've already got, you know, four and a half, five months in my emergency fund? Now, if your emergency fund is so lean that you've got, you know, two weeks of living expenses? That's an entirely different conversation. But if this is something that you can rectify in the next one, two, three months? Just by adjusting how your future savings are going, I think that that would be okay and permissible as well.

• 21:12Brian Preston?

  Just to clarify, because I don't want, I want to make sure that we're not letting Webb Gully turn into an access to cash trap.

• 21:18Speaker 03

  No, no, no, he's got to have the funds there.

• 21:20Brian Preston?

  Very sure. And that's why I love that you clarified if this is something you can fix in the next few months? That, that strategy works. But if it is something that you're like, oh man, I have woefully underfunded my emergency reserves.

• 21:31Speaker 03

  Well, then you gotta go different.

• 21:32Brian Preston?

  Place the trade in the held savings account to turn that into cash so that you're not counting on that if things go ugly? Or sideways, that you're going to have to go sell this account down at the world's worst time too.

• 21:43Speaker 03

  Agreed.

• 21:44Speaker 04

  Well, Webb Gully, thank you for that question. I hope that helps you think through your emergency fund.

• 21:50Brian Preston?

  Oh, kudos, kudos for them actually structuring it that way. At least giving you options. I love the mindset. Now let's just make sure we don't get so out ahead of our skis trying to maximize food that we don't actually finish off each step.

• 22:03Speaker 03

  Love it.

• 22:06Speaker 04

  All right, Trey HS3 has a question. It says, "My wife is a self-employed hairstylist. What kind of accounts are available for her to fund retirement and take advantage of being self-employed?"

• 22:20Speaker 03

  It's so funny, Brian, back in the day, when you were a CPA, you're still a CPA, I'm not going to take that away from you, back in the day, when you were a tax preparer, this was one of the coolest parlor tricks that you would do. Someone would come in, they sit down, they meet with you, and they're like, "Brian, I have this small business, and I had this success last year, and I didn't know that was going on, and man, I just wish that there were a way for me to decrease my taxes," and you would say, "Guess what? I have a treat for you."

• 22:47Brian Preston?

  Well, it's gotten even better. I mean, what Beau was talking about is, back in the day, you would just do SEP IRAs, because they'd allow you, and that's all employer-funded money, and it was a really cool thing that you could show for self-employed individuals. But here's the cool thing, it's gotten even better. Trey, your spouse likely could qualify for a solo 401K, where not only, because here's why it's great, is that it's very similar to a SEP in the fact that you could do 20% to 25% of the profit of the company that's subject to, any of the income that's subject to self-employment taxes or payroll taxes. You would qualify that as an employer contribution, it would be completely deductible, but then

• 23:28Brian Preston?

  on top of that, because this is why it's better than a SEP, you still qualify for what's called salary deferral contributions. When we talk about the $23,500 that employees can put into their 401K, your spouse could do that for themselves, and a lot of these, what's crazy is, this has gotten so good, is it used to be you'd have to go traditional, meaning you'd take the deduction when you make those contributions, but now some of even these custodians are allowing Roth contributions to come on the scene as well. So, don't sleep on that. Solo 401Ks are your friend, they keep making the tax provisions even better, because there's usually, I have to give an asterisk and say, "But here's the problem with solo 401Ks," but they keep improving it with every new tax legislation that comes out, to where these

• 24:13Brian Preston?

  things are pretty fantastic. For self-employed individuals.

• 24:17Speaker 03

  And there are only, you know, two things that I would caution you to be aware of if you do go the solo 401k route. Uh, one is you can't have any other employees. It has to truly just be you or you and your spouse as employees of the entity. As soon as you have your first other employee, you can't do a solo. You can still do a SEP contribution, it'll be a little bit more expensive, but you can't do a solo. You gotta do a traditional 401k. And then if you do this for a while, for an entire working career, one of the beautiful things of solo 401ks is they don't have annual filing requirements like other traditional 401k plans. Until the assets reach a certain level, once the assets in the solo 401k plan cross over $250,000, you do have to remember to file an annual Form 5500.

• 24:58Speaker 03

  There are no taxes due on this filing, it's just an, uh, filing that you must do. But if you don't, the penalties are pretty steep. So you just want to make sure you're keeping an eye on that, especially if you're gonna do something like roll other retirement plan assets into your solo or run, roll IRA assets in. Uh, so that you do not run afoul of that. So long as you pass those two things, solo 401ks are awesome.

• 25:20Brian Preston?

  And even when, uh, fast forward to a few years of success and you get this account to 250, it's not the world's worst thing.

• 25:25Speaker 03

  No, it's not hard.

• 25:27Brian Preston?

  You can fi- find an accountant that would probably file the 5500 for a reasonable cost and then even have the opportunity, because hopefully as you grow your business and maybe even add employees, um, down the road, you could just turn it into a traditional or normal safe harbor type 401k. Yes, you'd have to do the annual filings and so forth, but you'll, you'll be justified at that point.

• 25:46Speaker 03

  Yep.

• 25:47Speaker 04

  Great. Well, Trey, thank you for the question. Thanks for being here on the live stream today.

• 25:51Speaker 03

  Ruby, can I throw a curve ball at you?

• 25:53Speaker 04

  You can.

• 25:53Speaker 03

  I don't know, I'm gonna ask you a question, don't know the answer to, which is incredibly dangerous on a live stream.

• 25:57Brian Preston?

  Don't do that in a live stream.

• 25:58Speaker 04

  I'm excited.

• 25:59Speaker 03

  Someone just said this, uh, they said, hey, I've got this idea. You ought to have your top contributors in the live stream on the show as like a special guest. That obviously how you do. I don't know if you know this, we actually just released a react yesterday of us reacting to listener confessions of you guys sharing with us. Hey, here are the things that we did with money and here's them, something that I did and here's a thing that I happened. And that's actually available out. There. So Aviel, that thing that you're looking for, us reacting to some of our top commenters and top people, we actually did one of those yesterday, and I think we're gonna probably do more of those coming up.

• 26:36Brian Preston?

  So moneyguy.com/confessions.

• 26:39Speaker 04

  You got it. I was about to say it.

• 26:41Speaker 03

  So that was the part I didn't know.

• 26:43Brian Preston?

  Look at that. Old dog, new tricks.

• 26:45Speaker 04

  You got it. Moneyguy.com/confessions is where you go, if you have a money confession or a crazy money story to share, you could be on the show. Your actual voice could be on the show.

• 26:56Brian Preston?

  Can I clarify two things?

• 26:57Speaker 03

  She said your actual voice.

• 26:59Brian Preston?

  Rebi was not one of the voices. In the comments, I'm like, what are people talking about? We get enough feedback from you guys. We don't have to prime the pump with Rebi changing her voice and pretending like she paid taxes in another state.

• 27:12Speaker 04

  Yeah, it was like a tax story in like Washington DC. And I was like, I don't, yeah, I don't even think I could have that experience.

• 27:19Brian Preston?

  You got a sister from another mother out there with your same voice.

• 27:22Speaker 03

  Imagine, imagine if we did try to do that. Like, we tried to, we read the questions, we tried to disguise our voices. What accent would you go with to disguise your voice when you ask a question?

• 27:32Brian Preston?

  It would be the worst.

• 27:34Speaker 03

  I think we all want to hear it, right?

• 27:36Speaker 04

  Let's just say it would be painfully obvious. Like, you would know, for sure.

• 27:40Brian Preston?

  Yeah, I'm John calling in for the Money Guy Show.

• 27:44Speaker 03

  I totally thought he was gonna go Australian or something like that.

• 27:47Brian Preston?

  Well, I have a, my, my, oh.

• 27:49Speaker 03

  There you go.

• 27:49Brian Preston?

  It's the Money Guy Show.

• 27:51Speaker 04

  Oh, okay.

• 27:52Speaker 03

  We would never know it was him. We would literally never know it was him.

• 27:56Brian Preston?

  Yeah.

• 27:56Speaker 03

  That's awesome.

• 27:57Brian Preston?

  So obviously, they're not using me for the fake voices. No, it's legit. I mean, and by the way, Reacts are Reacts with us. We don't, we don't fake it.

• 28:07Speaker 03

  First time we saw him.

• 28:08Brian Preston?

  Cause even after we recorded that show, I was like, is that gonna be anything? And then I was surprised to see how, what I've realized is that you don't realize that, and how many times can I say realize in a sentence, is Bo and I, just our facial expressions. I mean, that's where, that's actually where the show was. I didn't, I didn't realize we reacted that strongly to things.

• 28:27Speaker 03

  I want to make sure that I'm understanding this correctly, because I'm trying to keep up with the chat as this is coming in. Am I understanding right, team, that Mr. Thrifty Underpants is in the livestream, right?

• 28:36Speaker 04

  What?

• 28:36Speaker 03

  Bro, honestly, maybe one of the most shocking things that I've ever, like, done on air is listening to you tell your underwear story.

• 28:45Brian Preston?

  Please come do a studio tour with your spouse.

• 28:47Speaker 04

  And spend a little money, man. Buy some clothes.

• 28:50Brian Preston?

  I think I can improve this marriage.

• 28:52Speaker 03

  Wear pants, the team is saying. Make sure you do your studio tour. By the way, if you have not listened, you want, if you have no idea what we're talking about, you may want to go listen to yesterday's react because we reacted to a gentleman, Mr. Thrifty Underpants, telling a story of how he makes his consumption decisions when it comes to apparel. And you don't want to miss it. So if you're not subscribed, you didn't get a notification. So make sure you subscribe so that you can know when we put new content.

• 29:16Brian Preston?

  There were comments that said, please don't start the next show. And I think they were alluding to the fact that this might've been PG 13. And so I was like, I mean, we tried to keep it as clean as possible, but Thrifty, hopefully you got some new drawers.

• 29:27Speaker 03

  That's something.

• 29:30Speaker 04

  Oh, man, that's great.

• 29:32Speaker 00

  As wish lists grow, you know where to go. Head to Ulta Beauty. We have gifts they'll love from brands like Tato One and Rare Beauty by Selena Gomez. Shop beauty faves to give or keep from Shark Beauty, Sol de Janeiro and more. Not sure what they want? You can't go wrong with Baumann, Clinique or Redken. And don't forget to put yourself on the list. Book a salon moment or add a little more sparkle to your season. Shop holiday in store or at Ulta.com. Ulta Beauty.

• 29:59Speaker 01

  The best part of waking up? A full cup of Folgers coffee and music on full blast.

• 30:26Speaker 01

  Shop Folgers K-Cup Pods and more at your nearest retailer.

• 30:30Speaker 04

  All right. You ready for the next question?

• 30:31Brian Preston?

  See, this is where if we were better at business, we'd have like a, I'm not going to give any brand any free love right now, but we'd have an underwear manufacturer just lined up with like an affiliate code or something that we would say, you too can have the same underwear that Brian and Bo wear.

• 30:46Speaker 03

  How ridiculous team is it going to be when the very first merch we roll out is like Money Guy drawers? Like that's the very first merch.

• 30:53Brian Preston?

  I'm so excited.

• 30:58Brian Preston?

  That just writes itself.

• 30:59Speaker 04

  Let's just uh.

• 31:00Brian Preston?

  Just writes itself.

• 31:01Speaker 04

  Don't worry, don't worry everyone, I will uh make sure that doesn't happen.

• 31:05Brian Preston?

  I got them. It's like a sniper around here.

• 31:08Speaker 03

  Oh my goodness.

• 31:11Speaker 03

  Since bought 12 packs.

• 31:12Brian Preston?

  Oh goodness gracious.

• 31:13Speaker 03

  You just got a round of applause in the studio.

• 31:15Brian Preston?

  That is the cheapest Jordan. Nobody sells 12 packs of underwear except for like mass. He's got even some Fruit of a Loom or Hanes.

• 31:23Speaker 04

  Listen, all it needed to be was new, so that's fine.

• 31:27Brian Preston?

  And they're probably tighty whities because nothing sells that unless it's just such a small amount of fabric that they can put 12 of them in a pack. So it's, I don't know if it was an upgrade.

• 31:39Speaker 04

  Oh man, okay.

• 31:40Speaker 03

  That was awesome.

• 31:41Speaker 04

  I am gonna try to transition us back to personal finance.

• 31:43Brian Preston?

  Please do.

• 31:44Speaker 04

  I am glad we talked about reacting to money.

• 31:46Brian Preston?

  Thank you Thrifty for the, for the, the input. I'm assuming Sovereign Citizen is not out there. Cause they're like good tri-feds or nice tri-feds, whatever.

• 31:55Speaker 03

  Nice tri-feds.

• 31:57Speaker 04

  Okay, Chris H. wrote, I know as a married couple making under 200K, we can count our employer match in the 25% investment rate. That's some Money Guy guidance that we talk about. But as we approach that 200K mark, how would you recommend working up to the 25% investing mark? And this is kind of a good point, cause if you have a decent employer match, this is kind, this could feel like a big jump, right? Is there any type of mindset or practical thing that he should be thinking about?

• 32:29Speaker 03

  And Chris, one, it just shows me that you're a financial mutant, that you're even thinking about this. Like, oh, I'm about to cross over this threshold. How do I prepare for it? And my answer is gonna be, uh, the best way that you can, right? Like that's how you should get ready for this, cause here's what I want you to feel like, man, alright, I'm saving 20% and I've got this 5% employer match and I'm crushing it, crushing it, crushing it. And then all of a sudden, my income crests over 200,000 and like, oh, I'm only saving 200, I'm only saving 20%. No, I'm a failure. No, that's not the thing. If that's what's going on, figure it, okay, what can we do as, as my income in. Did I also increase how much I was saving? If I got a pay raise, did I have 60% of that pay raise go towards my saving?

• 33:12Speaker 03

  And then 40% of that net pay raise go towards spending and consumption? And if you do that, what's going to happen is that 20% or whatever your number is savings rate will naturally trend up to 25. It's not like something like a line in the sand. You have to make it right today. That's not the way that the real world, that's not the way that real life works. But so long as you have a plan to get there, I think that you're going to be fine.

• 33:35Brian Preston?

  Look, I don't mind sharing that I think that here's the spirit of why we put this rule in there. If you're, Chris, if you are somewhere between 20 and 40 years of age, you know, likely and you cross this threshold, that's an important thing that you probably need to plan ahead that, man, you got, that's a blessing, first of all, that your income is going to exceed 200,000 as a household. Y'all need to act accordingly and plan. Man, we actually probably are getting our lifestyle, might even be going beyond the social safety net, so it's going to put more of the responsibility on us. But I don't want somebody who's out there, who's watching this, who's 60 years old, and just it so happens that on their 59th birthday, they cross 200,000, like, oh, my God, now all of a sudden this rule has caught me and it doesn't count.

• 34:21Brian Preston?

  No, it's, it is the, it's in the spirit of what does your life look like on what you're saving and opportunities to build? And if the majority of your life, you never, and we know there's a lot of you, you financial mutants, who will never make $200,000 as a household, but I don't want a one-off year to make you feel like, oh, my God, now that I don't get to count this. No, if you're 60 years old and you had a one good year where things popped over 200, it's, it's no big deal. I mean, the lion's share of your money was made in this spirit. But if you are on the other side of this, you're 30 years old or 33 years old, and all of a sudden you've gotten some promotions and it looks like next year's going to be even better, you should take that to heart and act accordingly and start really.

• 35:04Brian Preston?

  Rip out the safety net. You've lost the, if you think about the trapeze artist who loses the net when you go to the circus, that's you. So you need to act accordingly, realize this is a serious situation and make sure you're being disciplined with, with your success.

• 35:20Speaker 03

  But keep in mind, it's not like this thing happens that as soon as you don't get to count the employer match, like your employer match goes away. It's still there. So if you were saving 25% and you cross over that threshold and you save an additional 1%, so you're saving 21%, you actually have 26% going in for you technically. You just don't get to count that 5% match. So your money is still going to continue growing, still going to continue working for you. We just want you to improve upon it as your lifestyle improves. But what a great spot to be in.

• 35:53Brian Preston?

  Definitely.

• 35:54Speaker 03

  That's awesome. Good job, Chris.

• 35:55Speaker 04

  Excellent. Thank you for the question, Chris. Leah F. has a question. She says, "I'm 28 and I'm about to inherit 900K in a traditional Roth IRA and a fixed income annuity IRA. Does a growth annuity make sense to move, uh, does a growth annuity make sense to move the annuity to during the 10 years we pull it out? Does that make sense? And do I need an advisor?"

• 36:22Brian Preston?

  Okay. First of all, Leah, I'm sorry, because obviously you've lost somebody in your life to, to come into this type of money. So that's, that's the first thing. But wow, wow, what a legacy opportunity for somebody who obviously is in your life that was very successful, is leaving you this sum of money. You get a great opportunity to kind of really turbocharge your financial future. I will tell you, and I'll let Beau fill in the, the void here. When I'm reading your, your question, or having Rebe read the question, nowhere in this was, I was like, "annuity?" It was the first stop on the train stop, especially for a 28-year-old. Look, you can choose an annuity, um, but that's something typically...

• 37:06Brian Preston?

  Annuities are something I see people who are trying to, it's like the equivalent of a fixed income for the future. If you want to do an immediate annuity or something like that, uses it as a tool to take some of the risk off of you. I don't immediately typically think of that for a 28-year-old though, Bo.

• 37:21Speaker 03

  Well, here's what's interesting. The question is, it's going to be difficult to answer this, not knowing the specifics of what you have inherited. But here's what I'm understanding you to say. I'm inheriting $900,000. Some of it is in Roth IRA.

• 37:34Speaker 04

  It's traditional IRA.

• 37:35Speaker 03

  Some of it's in a traditional IRA, and some of it is inside of an annuity, inside of an IRA. There's two different pieces we have going on. Well, one of the beautiful things is oftentimes, if you inherit an annuity, you might think to yourself, man, well, I can't, I can't really do anything with this because there's going to be taxation if I'm trying to get out of it or change that. So I might want to do some sort of exchange from a lesser fitting annuity into a better fitting annuity for my age and my risk tolerance. The fact that it's inside of an IRA, though, might give you some relief where

• 38:06Brian Preston?

  Another option.

• 38:07Speaker 03

  If you're past a surrender period, and if there aren't any, you know, anything causes you to lock it up, you may be able to just surrender that entire annuity inside of that IRA and get out of the annuity structure altogether. Now, the problem is, is not all annuities are created equal, and not all situations and circumstances are the exact same. So this is something where, at the very minimum, you're going to want to call the insurance company, call the annuity company and say, hey, what are my options here? If I just want to surrender this into an IRA, what are the implications of that? If I want to keep it, what's that like? If I want to exchange it or trade it, what's that look like? And yes, unfortunately, or fortunately, depending how you look at it, this might be one of those times where it does make sense to get a second set of eyes on this,

• 38:48Speaker 03

  likely from someone who does not sell products. Meaning, don't, don't ask an annuity salesman, hey, should you sell, should I go buy an annuity? Because there's a chance that the, the guidance might be biased potentially. But ask an independent third party who's not paid based on the products that they're selling, hey, what makes the most sense? Or what are my options? How should I approach this? And there's a really good chance that you might be able to get out of the annuity structure altogether with no tax consequence. So that you can then invest those dollars the way that you choose and you can take your requirement distributions on the timeline that you choose without having to be stuck in the same type of structure that it was when you inherited the assets.

• 39:29Brian Preston?

  So let me, because there's going to be the trolls who crawl from the bridge and go, all the financial advisors are crooks. You guys would immediately, you have a conflict too, because you would want to manage the money. Ask that question of the, if you were interviewing financial advisors, because that's the thing that I always, your financial advisor, if you're talking to somebody, it's part of the eight questions. By the way, go to moneyguy.com slash resources.

• 39:50Speaker 03

  Great resource to pull up.

• 39:52Brian Preston?

  These are the questions you want to ask anybody who's going to give you guidance. And I don't think it should be off limits to say, hey, obviously if I pay off my mortgage or I pay off some debt or I do this, you guys make less money. How do you navigate that? Don't be scared. Embrace the conflict of the hardness of that question to see how transparent the person that you're interviewing. Cause this is important. This is supposed to be a relationship, a fiduciary relationship where they're putting your interests first. I don't think questions like that should be off limits.

• 40:23Speaker 03

  And I'm going to, at 28, I'm going to go out on a limb and assume that $900,000 is a life changing sum of money. I mean, if you go to moneyguy.com slash resources, just drop $900,000 into the wealth multiplier to see what that potentially could turn into for you by the time that you get to retirement. It's substantial. It's a significant amount of money. So you're just going to want to make sure you understand all of your options. Not, I mean, there's not necessarily one exact, complete, right answer, but you want to know what all of your options are. So that either you can choose or you can have someone help you choose which one of those options absolutely makes the most sense for your situation.

• 40:59Brian Preston?

  Look, here's the thing, because sometimes when you have these big life events, you need somebody to just to tell you the truth of, take a deep breath. You probably do need to figure out the structure questions first. But if you need a little time on what's the best way to invest this, you don't have to get in a hurry. You do need to figure out the tax implications, the structure questions. Find somebody to help you that, but then you can slow down the process. You don't have to feel like. Like you have to go invest all at once or make a big lifestyle decision right now. It's okay to take some time to process, figure out the best thing, but do figure out the structure. So we can make that as efficient as possible.

• 41:38Speaker 03

  And this, again, here's just 10 cents of free advice. Not all annuities are created the same. So sometimes we'll have clients who come to us and they're, they have an annuity and it's not great. And it's stuck inside this structure and it might be possible without triggering a bunch of taxes, for us to do some sort of like rescue annuity, which doesn't have all the commissions, doesn't have all the expenses, doesn't have all the frills and expensive bells and whistles. But it just gets you, if you're stuck in that structure where you might be able to get into a better product. So even if they say, hey, we can't, you can't get out of this annuity. There might be an option for you to get in something that's better, that allows for more flexibility, for you to have a better plan, better suited for what you're ultimately trying to have these dollars accomplished for you.

• 42:18Brian Preston?

  You're, you're going through this for the first time. Go find somebody who's done this hundreds of times so that you can navigate it well.

• 42:25Speaker 04

  Great answer. Hey, if you are to Leah or to anybody else who is resonating with this conversation, make sure to go to moneyguy.com/resources first of all, to download those eight questions to ask an advisor. And then in the same place at moneyguy.com, there's a little button that says become a client. Maybe you'd be interested in that. Just go check it out. We're happy to just have a conversation with you. See if that is a good fit for you. So be sure to check those two things out.

• 42:50Brian Preston?

  I just read it as Leaf, because it's Leah F.

• 42:53Speaker 04

  Leah F. Yeah. Leaf.

• 42:56Speaker 03

  Somebody asked, hey, what's Brian's mug? It looks like a jellyfish. It's not a jellyfish.

• 43:01Brian Preston?

  That looks like a jellyfish?

• 43:02Speaker 03

  Oh, well, it was turned sideways. If you saw it from the back, maybe.

• 43:04Speaker 04

  It's a stormtrooper.

• 43:06Brian Preston?

  Now, look, I have, I still have, I have my other mugs that y'all have seen, but this one I'm kind of proud of just because of financial mutant access. Last time I was at Disney, I see that they're selling this mug still for like 20 something bucks. Somehow it was on the clearance rack with Disney, one of the Disney.com or whatever. I got this for like six bucks.

• 43:25Speaker 03

  Oh, wow.

• 43:26Brian Preston?

  So for some reason, the coffee just tastes better.

• 43:28Speaker 03

  Because you know you got a deal.

• 43:29Brian Preston?

  It's so cheap. I mean, it was so good. So I was like, man, this thing ain't a secret.

• 43:34Speaker 03

  It's so on brand.

• 43:35Brian Preston?

  I will tell you, the reason that this, I got this one.

• 43:37Speaker 04

  I'm not sure.

• 43:38Brian Preston?

  The reason I got this one though, is because when we went to Disney Paris. I bought a stormtrooper mug that I loved, but somehow it got broke. You know, because I had it on my desk at the office and I think the cleaning crew, they broke it and they didn't fess up at first, but I was like, where is my stormtrooper? And then I tried to replace it by buying one on eBay, showed up broken. So I was like, you know what, until I go back over to Europe, I guess I'm not going to get the stormtrooper. And it was kind of sad because I was, you know, Avery's graduation gift. But this is kind of, it makes, I think it filled the void because I got a good deal on it.

• 44:18Speaker 03

  I love that.

• 44:19Speaker 04

  Love it. Well, now you know, it's a stormtrooper mug that Brian got a great deal on.

• 44:22Brian Preston?

  Do you see how I can, we can make stories out of anything? We could walk around and point to things and tell you all the crazy knickknack stories.

• 44:30Speaker 04

  Yes, you could.

• 44:31Speaker 03

  We're all terrified of that. That's true. That is the thing that can happen.

• 44:34Brian Preston?

  This is why we can make a two-minute show into 12.

• 44:39Speaker 04

  Okay, we have another question on deck from Darnit Dave.

• 44:44Brian Preston?

  Darnit Dave?

• 44:46Speaker 04

  It says, when should we listen to anxiety versus quiet it? We are at step eight, seeing progress, but spending on once, like a nicer home or better vacations feels like a setback. How do we balance enjoyment and long-term goals?

• 45:05Speaker 03

  Very first question I want to ask you, Dave, or Darnit Dave, is feels like a setback from what? What are you setting yourself back from? Meaning if you're on step eight, that means that you have passed, Brian, do you have the thing, can you have the thing up? That means you've passed through the first seven steps of the financial order of operations. You're saving in addition, you're saving in excess of 25% of your gross income. And I hope at this stage, you've likely kind of defined what your finish line looks like. If you've not done that, we have a great resource. You can go to learn.moneyguy.com, check out our know your number tool to figure out what's your number you're working towards. Well, if you've done that and you know where you are presently and you know the goal that

• 45:46Speaker 03

  you're ultimately working towards, if you were to upgrade the home or go on the vacation, yes, it's going to consume. Some of your resources, but are you certain that it's actually setting you back? Is it moving you further away from financial independence? Or are you actually at that stage where now you get to do the things that you want to do on your terms, the way you want to do them, when you want to do them? Because if that's the case, that's the reason why you save. That's the reason why you've built up this wealth so that you can use it for those types of things. So that's the question I would ask is, why does it feel like a setback? What do you feel like you are setting yourself back from? Now, if you arrive at the conclusion, okay, I'm not at financial independence.

• 46:29Speaker 03

  And if I do this, I'm going to have to work for five more years or da, da, da, da, da. Then yeah, maybe it doesn't make sense, but you ought to sit down and have a realistic conversation, you and your spouse to figure out what are the goals that we're working towards? And when are we going to begin to be okay flipping the switch and starting to use the resources? We've spent our entire lives building.

• 46:49Brian Preston?

  Realize there's a final line between financial mutant and financial miser. My biggest thing is trying to make sure you live a life without regrets. So I would ask you, it's one of those happiness exercises. If you had unlimited resources, what would you do with the money? I mean, what would you go do more of? If that's like going out to eat, if that's going on vacations, maybe your answer is a bigger house? I mean, I don't know. It's just that I try not to put my thoughts, but that's one of the things I was like, a bigger house wouldn't do it for me, but definitely going on more trips, doing more things. I would try to lean into and then say, look at my financial life and go, well, I'm on track to where I should, so I don't have regrets when I'm 50 something and go, and I wish I'd have done more in my twenties, I wish I'd have done more in my thirties.

• 47:33Brian Preston?

  I would, I would start asking yourself some of those big life questions of what is, brings you happiness or what, what makes the memories? What is the, the things you find fulfilling? Are you doing enough of that? Because it doesn't necessarily, now, maybe it is you want to have a nicer car. Cause there are, look, there are people, I was, I was talking to some neighbors and we were in, They were talking about exotic cars. And, and, cause you know, some of these guys are really into it.

• 48:00Speaker 03

  Like they were pro exotic car?

• 48:02Brian Preston?

  Well, one of my friends shocked me is that he told me he put himself, now he didn't buy it, but he put himself on this list to buy a Ferrari.

• 48:10Speaker 03

  Okay.

• 48:10Brian Preston?

  Cause I didn't realize that you have to, there's like some crazy waiting list. And it shocked me.

• 48:14Speaker 03

  And they have to approve you. Like, there's a whole thing you gotta go through.

• 48:17Brian Preston?

  But, but you know, after he talked about it and I could see him, he was talking to this other neighbor and all the glee in his eyes, I was like, I would never buy a Ferrari. But, but I could see that for him, this might be like this big life achievement thing that, and if he's not sacrificing, you know, his financial success, then okay, that, that's, so there might be things that you can do, but it's just that you have to go through the exercise and figure out the why, what brings you happiness. And then what likely you're going to find out is you're way ahead of the curve. And if that's the case, then you just need to make sure that you don't move on without, with big regrets. Cause that's the thing, I get financial mutants who write me and say, my family doesn't like to travel with me because we're putting six people in one hotel room.

• 49:00Brian Preston?

  We're still using the closets with sleeping bags and I'm like, or, you know, or we go, and we're driving 12 or 14 hours instead of actually buying plane tickets for everybody. Even though we're sitting there with millions of dollars, there, there's, there is a threshold where you've lost the plot. Now, maybe if your family loves 14 hour road trips and this is just part of the fun. Cause I look at, there was a season in my life with my, all my high school buddies. I felt like we had more fun doing things in the car, like riding on road trips and stuff like that, than even when we got to the destination. And if that's your life, that's one thing. But if you find out that, you know, you got small dogs and, and, and, you know, and you're having to pull over and, and it's just miserable, you know, there's a better way.

• 49:42Brian Preston?

  Use the money as a tool to, to, to make sure you're maximizing this life that you get.

• 49:46Speaker 03

  Love that.

• 49:47Speaker 04

  Yeah. Good stuff. Darn it, Dave, thank you for the question and hope that helps you think about.

• 49:52Brian Preston?

  I will say one, I hate to do string answers. This is one of the big things that a financial advisor does. Everybody thinks that financial advisors. They think that we're the stereotypical 1990s Suzy Orman saying, no, no, no. It's just the opposite. Typically, I'm having to tell my financial mutant clients, go do more, go live your best life. And it's very freeing because usually in a couple, one will be super tight and they need some coaching and you ought to see the dynamic in the relationship when a financial advisor is working with that one that's more leaning towards financial miser than mutant. And we get to give the analytics as well as the

• 50:33Brian Preston?

  coaching on ease up, relax, and what that does in the dynamics of the relationship is pretty amazing.

• 50:39Speaker 03

  It happens to the best of us. I was at, you know, I was at the beach this past week and you know how many times my wife had to say to me, Bo, we're on vacation. Bo, it's okay. I was like, hey, we can't order, don't order any appetizers, any drinks until 2 o'clock because from 2 to 5, they do, that's when everything goes to the test. Like it's half appetizer, half. And she was like, babe, it's 11 o'clock.

• 50:58Speaker 04

  It's like, we came all the way here.

• 51:00Speaker 03

  I want some food. Like, let's get food. So even, you know, even we need a little bit of coaching. My wife is more than happy to help coach me through that. Love you, honey.

• 51:10Brian Preston?

  She's not watching.

• 51:11Speaker 03

  I know.

• 51:12Speaker 04

  I think we all just had that same thought. Like, she's not gonna hear that.

• 51:14Brian Preston?

  She ain't, she ain't watching.

• 51:17Speaker 04

  Oh, maybe she will though. Jenna, if you're out there, that'd be awesome. Okay. Alejandra has a question for you. Um, question, if I'm not eligible to contribute to a Roth due to my tax filing status, but my employer offers a Roth 403B, would that be the best option versus a pre-tax 403B or a pre-tax 457?

• 51:41Speaker 03

  So here's what's, here's what's awesome. One of the downsides of Roth IRAs is that there are income limits that if you make over a certain income, you cannot contribute directly to a Roth IRA anymore, depending on your filing status, whether you're, you know, single, head household, married, filing jointly, whatever. One of the beautiful things about employer sponsored retirement plans is that there are no income thresholds. So you could make a million bucks a year and you could still contribute to a Roth 401k or Roth 401k or Roth 403B and you can do up to $23,500 into that. So it's an awesome benefit. Now, the question I have to ask is, okay, does that make the most sense for my situation? Now, Alejandra said something interesting in there. Did you hear it?

• 52:23Brian Preston?

  Oh yeah. Well, that's what we'll give you. We'll give you the legal answer, but then be careful what you ask for because we might actually be like, gosh, I was just trying to get a simple answer and these guys just put more on me. We think that what you, whether you, because your real question is, is Roth versus pre-tax. You know, if you're, if your tax rate, your marginal rate, both federally and state is 25% or less and you're, especially if you're under like 40 years of age, yeah, that leans kind of towards Roth. I mean, without a doubt, because you get so many years of, of compounded growth, you're not in a historically high tax rate. 25 to 30% tax rates is kind of in that gray zone where it could go either way. And that's where probably your age, your goals, how you're going to use the money

• 53:05Brian Preston?

  really, really impacts it. And then for income taxes, tax brackets greater than 30, we're hoping that there's a tax arbitrage opportunity from the time you leave the workforce to when you, the government makes you take the required minimum distributions, maybe do some Roth conversions or, you know, pay a lower tax rate than those high working years. But what Bo is picking on, so that's the technical answer is you've got to kind of go through that gauntlet of tax rates and figure out what fits in with your retirement goals. But what Bo is saying, and you just kind of gave it away in the fact that if your income is so high that you don't qualify for making Roth contributions, you might qualify for this really cool double dip situation where you could do the, the 403B, whether it's

• 53:50Brian Preston?

  pre-tax or whether it's Roth, but then you also can fully load up a 457 because it's two different tax code structures. You probably work at a hospital, you work for the government or something because that's the only people that get these double dip opportunities where you can actually do two $23,000 500. So yes, that's right. You could do, you know, close to 50 grand worth of savings into these retirement plans. That's why I say be careful writing us with these questions because we might really turn it around on you and say, what are your goals? What are your opportunities and how do we maximize this? It doesn't have to be full 23,500. You might be able to.

• 54:26Speaker 03

  Maybe it's $30,000.

• 54:27Brian Preston?

  You do one, you know, you load up this one. And the other cool thing about 457 is it doesn't have early withdrawal access issues. So if you're one of these people that's part of the FIRE movement and you want to leave the workforce at like 50, man, oh, man, you having a good income with these tools is going to be super powerful.

• 54:44Speaker 03

  Love it.

• 54:47Speaker 04

  That's great. Alejandra, thank you for the question. Thanks for being here in the live stream today.

• 54:52Speaker 04

  All right, let's go to Richard S.'s question. Can I count profit sharing as part of my 25% contribution rate? I'm the exact average with mine and my employer match contributions totaling 14%. But every year they have a 10% profit sharing contribution to my 401k. So it sounds like that's on top of 14% if I'm reading that right. What do you think about what should count towards 25%?

• 55:20Brian Preston?

  Well, and Bo, I'll let you kind of fill in, but we do have an employer that we do the 401k with very generous. And it sounds like your employer is very generous, Richard. Where, what is it? Employees put in five and essentially it's the equivalent of 15?

• 55:32Speaker 03

  That's exactly right. Yep.

• 55:33Brian Preston?

  So I mean, what a powerful thing when your employer. And so I would imagine with that power comes great responsibility. What is the responsibility or the decision matrix for people to figure out if they should count that or not?

• 55:47Speaker 03

  Yeah, I think one of the, I think the first sort of like litmus test you had to run through is okay, where's my income fall? Am I in the income threshold where I get to count my employer contributions? Do I not get to count? And it's 100,000 for single folks, 200,000 for households. But if you're someone who has like a ton of employer contributions, and I'm not clear here if your employer contributions are 14% or 24%, either way, it's a lot of money that your employer is putting in.

• 56:12Brian Preston?

  It looks like his plus the employer is 14, and then there's an additional 10.

• 56:17Speaker 03

  So they might be 24% total. One of the things that you have to recognize is that when you, when you think about the pot of money you have coming in every pay period, the less that you save, the more that you spend, and the more that you spend, the more that you're going to have to replace later on in life if you want to be able to maintain the same lifestyle and financial independence. So if you are someone who has one of these employers who's putting in 10, 15% of your pay into a retirement plan, what I don't want you to do is begin living off of 90% of your compensation and only saving 10% because there's a chance, even with that employer match, you're not going to be able to save to the point that you can maintain that same standard of living.

• 56:58Speaker 03

  So what I would say to do is first do the income test and second, okay, see what's reasonable. If my employer's putting in money and it's guaranteed, like I know I'm going to get a match, okay, I'm going to count that, but profit sharing is not a guaranteed thing every single year. Profit sharing most often is discretionary for employers. So your employer might decide one year, hey, we're not going to fund this, and the next year, hey, we're not going to fund this, and the next year, hey, and if you go through a long string of your employer deciding they are discretionarily not going to fund the profit sharing, but you have not been saving the way that you should have been saving on your end, there's a real good chance you could get behind and say, man, I wish I would have been structuring my life in such a way so that I could save appropriately. Agree? Disagree? He wants to fight.

• 57:42Brian Preston?

  No, no, actually, I'm so distracted because we have done it, Bo. I thought about, here, let me just go and do it.

• 57:49Speaker 04

  What did you do?

• 57:51Brian Preston?

  We said something, obviously, so wild on the show that... The team out there, the administrators are sending an internal Slack telling the entire office that they need to go to 23 minutes of today's show for everybody to go watch. And I'm sure it's about old thrifty pants, McGee.

• 58:09Speaker 04

  You or that or the

• 58:11Brian Preston?

  So I'm so distracted because I'm seeing all this and everybody, the internal dialogue on Slack. This is the problem with having notifications on your watch come up.

• 58:18Speaker 03

  A lot of you ask in these live streams, hey, why doesn't Brian have a computer in front of him? Hey, why isn't Brian in the chat?

• 58:25Brian Preston?

  If I had that, I would know.

• 58:27Speaker 03

  You just saw it in real time that what I was telling Richard is, I think if his employer offers a ton of

• 58:36Brian Preston?

  Hey, if I'm in trouble, by the way, there are people in this room working on this content as we speak, who are responding to the internal Slack thread.

• 58:43Speaker 03

  He's still in there.

• 58:44Brian Preston?

  They're convicted. I'm looking, I'm looking straight ahead.

• 58:47Speaker 04

  Okay, but it's different.

• 58:49Brian Preston?

  Huh?

• 58:50Speaker 04

  You're answering a question right now.

• 58:52Brian Preston?

  Oh.

• 58:53Speaker 03

  So.

• 58:55Speaker 04

  He said, I'm not on camera. It's true. Different. We can respond to the Slack.

• 58:59Speaker 03

  So do you agree?

• 59:01Brian Preston?

  What's the question?

• 59:05Brian Preston?

  This is why you can't not give me a screen.

• 59:08Speaker 03

  If, so Richard is in a situation where his employer is putting in some number, it's probably 15 to 20% of compensation.

• 59:16Brian Preston?

  Oh no, this is, we're back to Richard with 24%?

• 59:18Speaker 03

  Yeah.

• 59:18Brian Preston?

  With counting his contribution and the profit sharing.

• 59:20Speaker 04

  We're still there, Brian.

• 59:22Brian Preston?

  Question?

• 59:22Speaker 03

  My answer is, I don't think you should count all of it because the employer could decide any given year not to fund profit sharing. So I want him still saving at least.

• 59:33Brian Preston?

  I want to fight you because look, if we know this, because if this employer does it, I mean, like I think about our employer that we do the 401k with, that every year you put in five, it turns into 15. They've been doing that forever.

• 59:46Speaker 03

  Sure.

• 59:47Brian Preston?

  So while, as long as your income is less than 200 for a married couple, less than 100. Why wouldn't you count that if they're doing it every year? Now, if it's a one-off because they had a great year? I mean, you have to go through that decision matrix. Is this because like we're generous?

• 1:00:01Speaker 03

  Hey, so let's say.

• 1:00:01Brian Preston?

  We do 8% for our employees every year. I mean, that's, do you think they should next year not count on that?

• 1:00:08Speaker 03

  No, I'm just saying, let's, let's look at this scenario, right? Let's say that we have 14% going in between employer and employee. So seven and seven, employer matches 10. So your employer puts in 17%. You're going to tell this person, hey, you only need to save 8% to get to 25. You can live off the other 92% of your money.

• 1:00:22Brian Preston?

  Okay, well, I, I get your point in the fact that if you, there's one more decision matrix you have to go through. What are your actual living expenses?

• 1:00:29Speaker 03

  There you go. The less you save, the more you spend.

• 1:00:31Brian Preston?

  If you're living off of 90% of your income or even 80, because there was a stat I saw on social media, and I'm so bad that I don't send this to the content team. There was some larger than expected percentage that I saw of people who actually retire, and because they're in the go-go years, they spend greater than the income that they were actually making when they retire.

• 1:00:53Speaker 03

  Mm-hmm.

• 1:00:54Brian Preston?

  That's a, that's a, meanwhile, most financial planning, this is why you have to be careful is just using back of the napkin financial planning tools, is you know, they're counting on 70, 80% replacement ratios. And if you're in those go-go years and you're actually spending greater than 100%, that would be a problem. So you need to kind of run it through the decision matrix of what type of expenses are you going to have in retirement? And if you're spending a lot, and you know.

• 1:01:17Speaker 03

  You have to replace a lot.

• 1:01:18Brian Preston?

  It might, you might need to be a little more responsible with your savings rate.

• 1:01:23Speaker 03

  So the answer was he agrees with me.

• 1:01:25Speaker 04

  I think we got there.

• 1:01:26Speaker 03

  He does not want to fight with me.

• 1:01:27Brian Preston?

  This is such a distraction from my Slack thread that I was trying to keep up with.

• 1:01:32Speaker 03

  Note to self, take Slack off of Brian's watch.

• 1:01:35Speaker 04

  You don't always have to take your watch away, too. What?

• 1:01:38Brian Preston?

  You know, what's funny is that there's like, anybody who's ever had sleep issues and you, you find out about sleep hygiene, one of the best things you can do is not look at the clock.

• 1:01:50Brian Preston?

  I feel like maybe I shouldn't wear a watch when I'm doing the show. Maybe I'm just that type of personality that we shouldn't have access to.

• 1:01:56Speaker 03

  It only took us 20 years to figure that out. 20 years in to take the watch away.

• 1:02:00Speaker 04

  Oh, man. Well, this has been fun. Thank you for being here on the live stream with us, letting us have some fun. Also talk personal finance. We will be here every Tuesday at 10 a.m. Central. But until then, make sure you go check out moneyguy.com/resources. A lot of the resources that are free to you were discussed today on the show and will help you go deeper with all the topics that we covered, even when we turned the cameras off today. So be sure to go check that out and thank you again for being here.

• 1:02:27Brian Preston?

  Hey, despite all the goofiness, without a doubt, I mean, this is why you have to show up for the live streams because you never know what we're going to say or do. We do believe wholeheartedly that there's a better way to do money and we load you up. If you're not going to moneyguy.com/resources and checking out all the free stuff that we are hooking you up with so we can turbocharge your journey and then fulfill the abundance cycle. So hopefully you get so successful from our system. How crazy is that, that we actually give you the recipe and then tell you, don't even come back until you know, you've had enough time for this thing to catch traction. And then at that point, when it gets so complicated, your success creates so much

• 1:03:08Brian Preston?

  complexity, we're going to leave the lights on so that you'll consider potentially hiring us. So go check it out. That is the abundance cycle fulfilled. I'm your host, Brian Preston, Mr. Bo Hanson, Money Guy team. Out.

• 1:03:21Speaker 03

  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.

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