How To Build a Financial Plan (By Age)

Most people know they should have a financial plan, but what should that plan actually look like? We break down a personalized financial strategy for every decade: 20s, 30s, 40s, and 50s+. You’ll learn how to overcome key challenges, build smart habits, and make the most of your time, money, and opportunity. From wealth multipliers and Roth IRAs to estate planning and tax strategy, this is your financial roadmap - no matter your age. ⁠⁠⁠⁠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

  I love football season. The games, the rivalries, the food, getting everyone together. No game day feels complete without a trip to Total Wine & More. I can find everything from cold beer and canned cocktails to wines and spirits for the whole crew. And if I want to bring something different to the watch party, the Total Wine team always has ideas. Plus, it's nice knowing I'm getting the lowest prices. Get your game day lineup ready at Total Wine & More. Spirits are not sold in Virginia and North Carolina. Drink responsibly. B21.

• 0:29Speaker 01

  Witness the beginning of the revolution.

• 0:31Speaker 02

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

• 0:34Speaker 01

  Film for IMAX.

• 0:36Speaker 02

  Make them remember you.

• 0:38Speaker 01

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

• 0:42Brian Preston?

  78% of people believe that having a financial plan will ease their stress. But what does that plan actually look like?

• 0:50Speaker 04

  Brian, I am so excited about this because as financial advisors, our job is to help people craft financial plans that are customized to their situation and we help them live the life that they want. So we want to share some of that knowledge that we have with everyone out there.

• 1:06Brian Preston?

  So here's what we're going to do. We're going to steal that knowledge down into a basic financial plan for each decade and walk you through the challenges, the goals, and the most important things you need to focus on at each stage in your financial journey.

• 1:19Speaker 04

  After all, having a plan is great, but having the right plan for you is the key to true wealth building. So let's jump right in. And Brian, what better place to start than right at the beginning with folks in their twenties?

• 1:32Brian Preston?

  So let's start with the hard stuff first. Challenges for a 20-year-old.

• 1:36Speaker 04

  Yeah, so at the twenties, you're at the

• 1:37Brian Preston?

  Twenty-something.

• 1:38Speaker 04

  At the twenties, you're at the very beginning of your financial journey. You're just starting out. You have your whole life ahead of you, but that doesn't necessarily mean that it's easy because a lot of 20-year-olds, when they're just starting out, the reality in this world today is there's a really good chance that you have a bunch of student loan debt, or at least a bunch of debt on your balance sheet.

• 1:59Brian Preston?

  So debt's an issue, but also, let's face it, when you're in your twenties, you're not like in peak earning years. So you also have limited cash flow, meaning you have to make the Little coming in go a long ways and here we are trying to also tell you to invest. How do you make all that happen?

• 2:16Speaker 04

  And then remember you have been in your parents' household. You've been in college, you likely now have your very first big person job. And so there is this temptation that, hey, I'm on my own. I want to go out and buy those fancy cars and take those fancy trips and have those nice clothes. When you haven't yet put in the work to build up a safety net to allow you to make those sorts of decisions. So you're already naturally further out on the risk spectrum.

• 2:41Brian Preston?

  So those are the challenges. Now let's talk about the goals. So how these things all intersect with each other is how do you get your feet under you? How do you actually start getting traction with your financial life?

• 2:52Speaker 04

  Yeah, you have to know where you are. You have to know where your money is going and you need to have some sort of plan, even if it's simple. It does not have to be complex. It does not have to be complicated, but if you can at least have a plan in place, it will automatically put you far out ahead of your peers.

• 3:08Brian Preston?

  The next thing, look, make the most of your time. You are a billionaire of time. Let's actually turn that into something.

• 3:14Speaker 04

  Okay, so what should your financial plan look like in your twenties? When you're thinking about how to craft this simple, not overly complex plan, what should it look like? Well, there are two areas we think you ought to focus on. The first is your cash flow and your spending. And the second is that what you do with your savings and your investments. Let's talk, Brian, about the cash flow first.

• 3:34Brian Preston?

  Yeah, this is what's the first ingredient to wealth building? It's discipline. So you have to first conquer, can you live on less than you make?

• 3:42Speaker 04

  And then as you're doing that, the way, the tool, the mechanism that's going to allow you to do that is actually making a budget. And a lot of people, unfortunately, when you come out of primary school or maybe when you come even out of college, no one's taught you how to do this. How do I line up all of the expenses I'm going to have in a month and figure out, okay, where should my dollars go? And how can I make sure there's some left over? There's some at the very beginning that goes for my future self, not just my today self. That process right there is what is budgeting.

• 4:12Brian Preston?

  As you come out of primary school. Tell me you have kids your age. The other one is of course eliminating consumer debt. Bo, you alluded to. This earlier, when you come out of school, you have all this temptation that the bridge to cover your lack of income is usually debt because it seems like the perfect solution. But it actually that consumer debt is a trap.

• 4:33Speaker 04

  So, once you can figure these things out, once you get out of the debt, once you live on less than you make, once you have that budget, you're going to have some margin. And then the question becomes, okay, well, what do I do with that margin? Well, we want you to get that money working for you. Get whatever dollars you can get working for you, even if it's only $20 a month, $30 a month. A little bit can go a long way, especially early on in your financial journey.

• 4:58Brian Preston?

  Here's something to help get you motivated, the wealth multiplier. If you go to our website, moneyguy.com/resources, you can download and actually see what's your actual wealth multiplier. But here's the cold, hard facts that you need to understand. For a 20 year old, every dollar has the potential to become $88. But this is the cruel part of it. Remember, this is why I say when you're a billionaire of time, make something happen. For a 30 year old, that same dollar now is $23 or 23 times by retirement. But you see that that's a fourfold reduction from where it was at 20. For a 40 year old, it's only seven times multiplier. It means it is 10 times harder for a person who starts at 40 versus the person who starts at 20.

• 5:42Brian Preston?

  Guys, get motivated and understand the power of your time with the wealth multiplier.

• 5:47Speaker 04

  And so a lot of 20 year olds, okay, guys, I get it. I want to invest, I want to do this, but where I just, I just need to know the first, the next first step I should take. If you're at this decade, if you're at this stage, consider just doing something as simple as opening up a Roth IRA. Roth IRAs are great savings vehicles because it allows you, you don't get any tax benefit today for putting money into it. But if you put money in, it will grow. And when you go to pull it out in retirement, it will be completely tax free. So if all you can do is open up a Roth IRA and start putting in $20 a month, $50 a month, $100 a month, you will be amazed at how quickly those dollars can build up. But you have to do something, the absolute.

• 6:30Speaker 04

  Best time to start saving was yesterday. So that means the second best time would be today.

• 6:34Brian Preston?

  And we love Roth because they're tax free. If you want to stick it to the man legally, Roth is the account structure that's going to allow that to happen.

• 6:43Speaker 04

  All right, Brian. Now let's talk about folks in their 30s. We call this affectionately the messy middle. This is a stage where that is the challenge that you are facing. You feel like you're being pulled in a thousand different directions by a thousand different things and you just can't seem to keep it all together.

• 7:00Brian Preston?

  Well, yeah, think about it. You have your expenses are growing, yet your time is shrinking because of all the commitments. This is a period of time where it good discipline, good financial management might just go out the window because you're like, man, all this life stuff is happening. I can get distracted very easily.

• 7:17Speaker 04

  So in your 30s, what should your goals be? What should the things that you're focusing your attention on? This one may seem silly, but keeping it simple. We think about a lot of times in our 20s, we want to be more complicated. We want to be more complex. We want all of these things to enter into our life. And yet, when we get in our 30s, we recognize, man, life has a way of getting complicated naturally. Again, we're being pulled in a thousand different directions. Our dollars are supposed to pay for a thousand different things. If you can consolidate and you can keep it simple and keep your main focus on the main thing, there's really good chance that you're going to set yourself up for success relative to your peers.

• 7:57Brian Preston?

  Well, I also think part of simple is build a firm foundation. If you can make things automatic, meaning your savings habits, you know, these things will set you out, set you up for your future. If you can just make it simple, but also make it automatic. So you don't even have to waste any more mental calories on this exercise whatsoever.

• 8:15Speaker 04

  And for most people in their 20s, they're only focused on taking care of themselves. By the time you get to the 30s, there are probably other people that are now depending on you. It may be a significant other, it may be children. So you want to make sure that not only are you protecting yourself and your well being, but you're also making sure you have appropriate protection for your loved ones in place. So as you think about your financial Plan and what it should look like in your 30s, there are really two areas we think that you should focus on. The first being risk management and then the second being again, how you're saving and how you're investing your dollars.

• 8:51Brian Preston?

  Well, risk management, look, this was, this is the unsexy part of financial planning, but it's so important because messy metals, you do have people counting on you is this is where you're going to look at, you think about, you know, do you have life insurance? Do you have disability? Cause in your twenties, it's so easy. You just have, do you have a renter's policy?

• 9:08Speaker 04

  Sure.

• 9:09Brian Preston?

  But now that we're in our 30s, let's make sure we're not leaving behind people who are counting on our income and counting on us to provide for them. Risk management is a bigger deal, Bo.

• 9:20Speaker 04

  Brent, I think about, you know, we have here at abound wealth, we have a couple of different health insurance. We are health insurance options that we offer. One of them is just sort of like catastrophic coverage. Hey, I want to make sure that I have coverage in place that if like the worst of the worst thing happens, I'm protected. And that catastrophic coverage comes at the lowest cost. Well, it's not uncommon for someone in their twenties just starting out to say, hey, you know what? It's just me. I just have to worry about myself. I'm going to focus on that catastrophic plan because I want the premium to be as cheap as possible. Well, when you get to your 30s, that strategy that you had, that lowest cost, biggest risk exposure, might not make sense anymore. So you want to even reevaluate decisions that you've made in the past.

• 10:01Speaker 04

  Oh, I used to have the catastrophic health insurance, man. Maybe now I need the more, the, the better plan. Or I used to only have collision insurance on my car, but maybe now I want to have comprehensive. You want to make sure you're thinking through these. Again, just so you can make sure that you're not only protecting yourself and your loved ones, but also all the hard work you've done up to this point.

• 10:23Brian Preston?

  And then I mentioned earlier, life insurance. I think a lot of people run away from life insurance because they're worried it's complicated. It's super expensive. We like term life insurance.

• 10:33Speaker 04

  Love it.

• 10:34Brian Preston?

  I mean, where you basically choose how long you want to protect. And I would encourage you, like if you're thinking of how long it's going to take you to build up the assets to replace what you're counting on from your current income. That might be 20 years in the future. It might be 30 years in the future. But use that as the guidance. Or how long are your loved ones going to need this? There's nothing wrong with term insurance. Typically, it's pennies on the dollar compared to what's permanent insurance and other things. And that might be all you need at this stage. And then don't skip out on, Bo, emergency reserves. A lot of people don't realize, just from a risk management standpoint, emergency reserves are going to keep you from making those desperate decisions when life just happens.

• 11:15Speaker 04

  Yeah, I think we get so excited early on in our career. We see how powerful our dollars can be. And we feel like if we have money sitting in a savings account, sitting on the sidelines, we're wasting opportunity. We may know that the wealth multiplier, $1 turning into $88 or $1 turning into $23 is so exciting. So why on earth would I leave money sitting in cash? Well, the reason you do it is you don't know what unknown unknown is going to come your way. And so making sure that you have that fully formed, fully funded and fully built out is going to protect you from those life circumstances that you might not know are coming. So that's how you protect your risks in your 30s. But now there's also another risk that you have in your 30s. And that comes to what you're doing with your dollars.

• 11:58Speaker 04

  We want to make sure that in your 20s, we give you this goal of saving 25%. That's what we want you to aspire to in your 20s. But in your 30s, it becomes much less of an aspirational goal and now becomes sort of a necessity. We want you to make sure that you are saving appropriately so that your future self can actually live the life that you want to live.

• 12:19Brian Preston?

  Yeah, a lot of people, I think, you know, and I love that you highlight the fact it's aspirational for the 20 something. We know that your time and your resources are limited. So if you can just do a little bit, it goes a long way. But I really encourage you, if you're in your 30s and you just now have discovered our content. Don't sleep on the 25%. There's a reason when you go to moneyguy.com/resources, we have all kinds of content or resources that will show you the intersection point of the date you start saving and investing and the percentages and how it will go. And you will quickly see you've got to be doing the 25% so you don't get behind. And I'm just happy for you because between the age of 30 to 40 years of age,

• 13:03Brian Preston?

  the wealth multiplier at 30 is 23 times. For a 40-year-old, it's seven. So there's still lots of opportunity for growth. Just don't sleep on that savings rate.

• 13:13Speaker 04

  Now, the next part of your plan, a lot of people are thinking, okay, guys, I get it. I get it. I'm going to save 25%, but what do I invest in? What should I go buy? We would argue that even at this stage, don't make it more complicated than it has to be because most people in your 30s, your savings rate is still going to be way more important than your rate of return. So don't go try to figure out, okay, what stock should I buy? What strategy should I employ? There are fantastic resources out there like Target Retirement Index Funds, where all you have to do is answer two things. How much can I save? And when do I think I need these dollars? And if you can answer those two questions, you can set it and forget it and be on your wealth building journey. So don't major in the minors. Focus on the things that actually have a big impact at this stage.

• 13:57Brian Preston?

  And for all the trolls out there, we're talking about index Target Retirement Funds. If you talk about internal expenses, you're not talking about the index version. Go look at what Vanguard, Schwab, Fidelity, all these guys offer index versions of these funds and they're dirt cheap. So don't sleep on that opportunity. And then here's the next thing that I worry about for my 30-somethings. I want you to aim to hit that $100,000 in other markets. Because here's the other markers of success is because here's the risk. When you start saving and investing, more than likely in the first decade that you save and invest, you're going to hit your first bear market. You're going to hit volatility and you're also going to start, you're going to see potentially

• 14:40Brian Preston?

  that the amount of money you put in, the market value might temporarily go below even what you put in and you're like, oh my God, this is for the birds. I'm not doing this anymore. And there's a lot of people that will quit in that first decade. Don't let that volatility rob you of the long-term compounding growth opportunity that there is. That's why we have so many resources on the money milestones for your 30s, but consistency is a big part of your success.

• 15:07Speaker 04

  Yeah, you may be asking, okay, what are those milestones? What are the things I need to make sure that I do in my 30s? We actually have an entire highlight, an entire episode that you can go out that says, hey, before you hit 40, make sure you are doing these things. If you want to know what those milestones are, if you want to know what those mile markers are, go check out that episode. And then the last thing, and I think this is so hard because it's so contrary to what we think as parents, but when you think about your financial plan in your 30s, you have to make sure that you put your oxygen mask on before you try to help someone else. So often we'll see someone who maybe has credit card debt, or maybe they're not saving 25% or maybe they don't even have a fully funded emergency fund, but man, they started

• 15:52Speaker 04

  that 529. They're putting money in that custodial Roth. They're putting money in the kids' savings accounts. It does not benefit your kids for you to start building wealth for them before you have even established your own financial foundation. So make sure you're taking care of yourself first before you try to start helping your young children take care of their financial foundation.

• 16:12Brian Preston?

  Yeah, that's a big one and I hope people don't sleep on that. Bo, this is probably a good time to transition to our 40-somethings.

• 16:19Speaker 05

  I'll admit it, I'm one of those people who gets excited for football season way before the first kickoff. That's why a trip to Total Wine & More has become part of my game day routine. I can get the cooler ready with my favorite beers and ready to drink cocktails. I'm usually picking up enough for everybody, so it's nice knowing I'm scoring the lowest prices. This season, make Total Wine & More part of your game day tradition. Spirits are not sold in Virginia and North Carolina. Drink responsibly. B21.

• 16:49Speaker 06

  Welcome to the 50th Hunter Day.

• 16:51Speaker 01

  Witness the beginning of the revolution.

• 16:54Speaker 02

  You've been trying to take down these games from the start.

• 16:57Speaker 01

  Film for IMAX.

• 16:58Speaker 02

  Make them remember you.

• 17:01Speaker 01

  The Hunger Games Sunrise on the Leaping, November 20th, rated PG 13.

• 17:04Brian Preston?

  This is one where there are definitely challenges, but I consider it a fork in the road moment. And you need to make sure you work through, if you started early, you probably get to celebrate a little bit. If you're a little behind, this is when you probably need to lean in on that discipline and make more even happen. But Bo, what are the challenges for a 40 something?

• 17:23Speaker 04

  Well, I think the first one is complexity continues to find you. You wake up one day and say, holy cow, how did I get 40? How did I have all these people depending on me? How did my tax return get so complicated? How did I have all these different entrances? And you just recognize that a lot of life is coming at you very, very quickly. While you mentally might still feel like that 20 year old and you might still be thinking, oh, I'm not old yet. I haven't reached that spot. There's a really good chance that there are complexities in your life that were not there 10 years ago that you need to be thinking about.

• 17:54Brian Preston?

  Well, this is the one probably where, as I told you, it was a fork in the road. I think a lot of people will realize retirement is right around the corner. And now, yes, it's over a decade away, but it's still something now that you just can't sleep on or think about. I don't have to worry about that. I'm young and invincible. You're going to quickly start realizing, hey, I need to actually take action to make this happen. So it just doesn't clobber me over the head when I reach, you know, 50s, 60s or beyond. This is the time to take action.

• 18:21Speaker 04

  And then the other challenge is there's a really good chance in your 40s, you're starting to hit some of your peak earning years. Maybe you've been saving and so you have assets built up, but you recognize, man, I had, I'd had very little time in the messy middle. And even though now I'm in the 40s and it's not quite as messy, I still have less time. I've got to go from this thing to that thing, to this thing, to that thing. And I wake up and I go to bed and man, it just seems like that valuable resource that I had tons of in my twenties, I just don't have that much anymore. How do I maximize this? What should my goal be?

• 18:53Brian Preston?

  And that's a great segue into the goals is that I want to encourage you, make the most of those higher earning years. We've statistically shown that it is people in their 40s that are popping off on that earning. Potential, you want to make sure that it's actually working for you. Use some discipline to actually put the money into your army of dollar bills.

• 19:12Speaker 04

  And then in your 40s, another thing that you can do is you can begin to like hone in your plan for efficiency. When you were in your twenties, if you just did something, if you just started saving 20 bucks a month in any type of account, there was a good chance it was going to work out really, really well for you. But now that you get into your 40s, small tweaks and efficiencies around the way you look at managing your finances can have a significant impact into what your retired life looks like. So make sure you're recognizing where those opportunities are.

• 19:41Brian Preston?

  Well, and I love that we've set this up because we're about to go over what you should be doing from a financial planning perspective in your 40s. But the big thing is you're setting yourself up for that smooth transition from your working years to where now instead of saving all those resources, how do we actually spend those resources? How are they available when I need them the most? That's a great segue right into how do you do a financial plan as a 40 something?

• 20:06Speaker 04

  Yeah. So when you're in your 40s and you're thinking about your financial plan, there's a really good chance that the two areas are going to take the greatest focus are tax planning, and you might be thinking, oh, well, guys, I do my tax planning on April 14th of every year. That's what I do. That's not what we mean. We mean total lifetime tax planning. What are the things that you should be thinking of and what are the things you should be focusing on? And then again, in your 40s, how am I investing my dollars and what am I doing with my army of dollar bills that I've built?

• 20:34Brian Preston?

  Well, let's, let's jump right into the tax planning because we were just talking about, I think so much in your twenties and thirties, you're trying to maximize all the tax favored investing where you're doing the Roth IRAs and you're loading up your employer plan. I think in the 40s is probably that point where you're finally taking into account the three bucket strategy. You're in step seven of the financial order of operations. I'll hold it up for you. If you don't go to moneyguy.com/resources, you can download your own free copy. But seven is where you actually start thinking in step seven, how I use these resources in retirement. And that's where the three bucket strategy is going to be your friend. This is where you actually take into account, how much of my money is like in those? Pre-tax, this is where all my employer contributions and so forth, traditional IRAs.

• 21:19Brian Preston?

  How much of that money is in complete tax-free, where I'm sticking it to the man legally in those Roth accounts? This is the held savings accounts, the Roth 401ks, and then of course, the after-tax brokerage accounts. This is your, if you're trying to think about your part of the FIRE movement or FINE movement, where you're moving on to the next endeavor, but you'll need access to cash, because maybe you're not earning as much in this new place that you're going to. That after-tax brokerage account is going to be the bridge, because you're just too young to get access to the traditional IRA or even the 401k. This is going to be your account, so think about how you're going to use these resources, not just saving in the most tax-favored way possible, and probably in your 40s is when that's going to start settling in.

• 22:03Speaker 04

  And if you're doing this well, what you may recognize is, man, I've got my buckets a little bit out of whack. I didn't pay a ton of attention to it in my 20s and 30s. How do I consider writing that? How do I consider levelizing that? So one of the things you may begin thinking about in your 40s is Roth conversion planning. Is there a way that maybe I could structure my assets? Maybe I can move some assets around to open up opportunities like backdoor Roth IRA contributions? Or through my employer-sponsored plan, might I be able to do mega backdoor? Or am I in a tax situation where even now, or maybe at some point in the future, I could begin converting some of those pre-tax dollars to Roth? And if you don't think it has a significant impact, I would encourage you, go check out our Making a Million episode that was titled,

• 22:46Speaker 04

  "Van Life Millionaires Are Leaving Millions on the Table", because we actually walk through a Roth conversion analysis showing that if you can begin to convert pre-tax assets to Roth, and you can do that over a certain amount of time, it can literally lead to millions of more dollars in retirement if you understand what you're doing and you do it in an efficient manner.

• 23:07Brian Preston?

  So that's tax planning. When we move on to investing, I want to remind everybody, we're talking about 40-somethings. When you enter your 40s, every dollar has the potential to become seven times over. When you're 50, it's three times. Do you see how that drop-off is still significant? Guys, if you don't know your numbers, so you can figure out you ahead of the curve, behind the curve, or right where you're supposed to, because this is probably the decade where we're going to say, man, if you're behind, you need to save even more than that 25% that we also often talk about. But if you don't know where you are, you won't even be able to make that decision with your army of dollars to know what the best course of action is.

• 23:46Speaker 04

  And then the other thing you can think about is in your 40s, you've likely gotten a solid financial foundation under you. You're not at financial independence yet, but you have that foundation in place. So this may be the time that you want to begin thinking about alternative investments. Maybe this is the decade when I want to go look at doing a rental property, or I want to figure out some way to diversify my portfolio, not change my strategy, not alter what I have been doing, but add on to and bolster it at this season now that I have a financial foundation.

• 24:17Brian Preston?

  And by the way, that's only after you build your financial foundation of the first seven steps of the financial order of operations. I don't want you just because you're behind in your 40s, and you say, man, I never did an index fund. I never funded a Roth IRA, but I just heard the guy say I can consider alternative investments. No, this is only after you've done the first seven steps of the financial order of operations. This is a step eight, where you're hopefully now getting to do some of those alternative investments like real estate, because you're rewarded by having a financial foundation.

• 24:49Speaker 04

  All right, Brian, now let's talk about, okay, once you get past this decade, then you get into your 50s and beyond. And for some people, this may be retirement. For some people, this may be putting down the landing gear, heading towards retirement. But there are still challenges that you face. And one of the most common challenges that we see amongst the clients that we work with at Abound Wealth is there is some difficulty in wrapping your head around this idea of, man, I've been a saver for my entire life. I've been taught to accumulate, accumulate, accumulate, accumulate, accumulate. And now, all of a sudden, magically, I'm supposed to hit financial independence. I put in my two weeks' notice, and then I flip the switch, and I turn into spender. It's a difficult and unique and hard transition to make. So the

• 25:34Speaker 04

  Can start thinking about it, preparing for it, the more likely you're going to set yourself up for success.

• 25:38Brian Preston?

  Well, talking about transitions also, I think so many things you do in your twenties, thirties and even forties is back in the napkin math. You can, you can do the 4% rule, you can do a savings rate of 25%. I think when you get in your 50s, you're actually going to want to fine tune this down to know exactly what your number is. You want to stress test because this is not one of those things where you're just trying to get close like you're playing horseshoes. You've actually, you're going to be living off these resources. And when you put your notice in, you might not be able to make the same amount of money ever again. So you better measure twice, cut once. So you need to know exactly where your number is. And that's why this is an important thing that you need to face as a challenge in your 50s.

• 26:19Speaker 04

  And then as you think through this, one of the realities is, is in this stage, you begin to recognize your mortality. You begin to recognize that, man, there will be an end to this journey one day. And even though that is a reality, and we all know that it's true, 67% of folks over the age of 50 do not have a will in place. And 52% of folks in their 50s suggests that they have no idea where their parents keep their estate documents. So if you're not having these conversations, both for yourself as well as the generation ahead of you, you're not going to set yourself up for a smooth transition. So you want to begin having, even though they may be uncomfortable, having those conversations now, while everyone can have them in a very healthy manner.

• 27:03Brian Preston?

  Well, and that sets up the goals because if you do this right, it's back to that statement is we want you to be able to focus your precious resource of time on what really matters to you. So security in your financial planning, having things where they're just working for you is going to be so important as you get in your 50s and beyond.

• 27:22Speaker 04

  And if you can put this plan in place, one of the things it's going to allow you to do is have some comfort with what your plan is. Okay, I've had the hard conversations, we've done the difficult analysis. I now know that if something happens to me, if something happens to my spouse, I know what's going to happen. My kids know what's going to happen. The plan is in place. It's not going to be a bunch of unknown and when you can fill in those. Those variables and have less unknown unknowns. It's going to lead to a higher level of confidence going into this next.

• 27:50Brian Preston?

  And how about using money as a tool to build the legacy that you want? Look, and that's not a legacy of that. I'm just going to leave behind a gazillion dollars to my kids. So they can, I can live like a tightwad my entire life and then they can live this big life. No, this means what is as money, what do I want it to do? What do I actually want to be represented for me while I'm in retirement? But also even beyond my retirement, don't sleep on that because I think so many financial mutants just build, build, build. And don't think about the legacy part of what their money why is so they can get that reflected in the plan.

• 28:25Speaker 04

  So if those are the challenges and goals, what areas of your financial plan should you focus on? How should you think about it? Well, in your 50s and from your 50s and beyond. It's really a combination of both risk management. How do I protect all the things that I've done up to this stage? And then estate planning, what do I ultimately want to happen with the resources that I've built up?

• 28:47Brian Preston?

  Yeah, I think a lot of, you know, financial mutants will realize you'll, you'll hit this stage in life where you realize you're not leaving this planet with nothing. So how do we make the most of this? And a lot of you are probably working off of the 4% withdrawal rule. As I've already talked about earlier, a lot of back, back of the napkin. Now it's time to actually create a budget off of what your actual expenses are. Put it into an investment plan and actually risk test that. I mean, run it through Monte Carlo simulations and other things. So you actually go into it with a real understanding of what you're facing. Versus just what you've kind of spot checked over the years.

• 29:23Speaker 04

  Another thing that you need to be doing at this stage is making sure you understand your portfolio allocation. And you may be saying, whoa, whoa, guys, guys, guys, guys. That's investing. You're talking about risk management here. But one of the biggest risks that we see with folks who get later on in their working life and early into retirement is they never actually adjust their glide path in their portfolio. They think the same portfolio that they had when they were 20, 30 or 40 years old. Should be the same portfolio they have when they're 50, 60, 70. And that's likely not the case. You want to make sure that the. Portfolio that you have right now reflects not only your risk tolerance, how much can you handle, but also your risk capacity. How much risk should you have in your portfolio? So at this stage, part of your financial plan needs to be making sure you have an allocation

• 30:08Speaker 04

  that is appropriate for the stage of life that you're in.

• 30:11Brian Preston?

  Well, and your older self will thank you because when you hit that, when you leave the workforce and you actually hit that first down turn, Bo, tell me how many people we talked to who they think that they are, their risk, they can handle the risk tolerance of anything until all of a sudden now they're living off this money and then the market goes down 20%, 25% and they all of a sudden have that puckered up moment. You're gonna realize you want some of your money. It's back to that risk capacity point for short term, for midterm, and even long terms, diversification will become your friend.

• 30:43Speaker 04

  I think it's Mike Tyson who says, "Everyone's got a plan to get punched in the face." And that's what a bear market does to retirees. It's the first time you experience that. Well, one of the ways that you can even protect yourself from that, in addition to the allocation, is reviewing your cash reserves. Do I have an appropriate emergency reserve? Not necessarily just three months of living expenses or six months of living expenses, but do I have the 12 months, the 18 months, so that no matter what happens in the market, no matter how wonky the economy gets, I know I have my living expenses covered and I give my portfolio time to recover. This is a conversation you need to be having and a thought that you need to be thinking through as you enter into this stage of life.

• 31:26Brian Preston?

  So on the financial planning for 50s and beyond, we talked about estate planning, but I'll be honest with you. We saw in a previous stat for the 40s, nobody does wills. It's hard to do content on estate planning because you guys don't want to show up to watch that either. Nobody really wants to cover and talk about estate planning, but that's okay. We know that this is such a valuable need that we've done the hard work for you. We want to encourage you to go to moneyguy.com, go to our resources, and when you tab over it, you'll see we have ultimate guides. And one of the first ultimate guides we have is the Estate Planning Ultimate Guide. Go through the difficult exercise because, believe me- Guys, you have built something amazing. If you're a financial mutant, you've built up these

• 32:09Brian Preston?

  resources. Don't let just life happen. Take an active role in making sure you're going through this exercise. So it doesn't just wake up and you're one day you have created a big mess, not only for yourself, but for your legacy and your loved ones.

• 32:24Speaker 04

  So how do you do it? What are the things that you ought to be thinking about? Well, the very first one is, do you actually have your documents in place? And remember the will that you got in place when your first child was born, might not be the same will that you need 30 years later. When your financial situation has changed, when your family financial situation has changed, make sure that you update these documents and you have them in place. You have the wills, you have the powers of attorney, you have the healthcare directives, and you have communicated to the people in those documents, what their responsibilities are. Hey, son, daughter, I want you to be my executor. And this is the way our estate plan is going to work. And this is what your part of that process is going to be. If you don't want to have those conversations now,

• 33:07Speaker 04

  you need to recognize how difficult it's going to be when you're not actually here to speak for yourself.

• 33:12Brian Preston?

  Well, and I think a lot of people, when they think of legacy, think of the assets they're going to leave behind to their loved ones. But I think it's even bigger than that. What if you could actually start thinking about now and in the coming years of how much you even want to share while you're still here to watch your children and your loved ones benefit from this? If it's education goals, if it's charitable goals, why not take that active role now versus just leaving beyond a pot of money that will hopefully have all these positive things? I think if you take an active role and start the planning, you actually get to experience some of that goodness while you're still here.

• 33:48Speaker 04

  I think what you can see is that developing a financial plan is not incredibly difficult, but it can be complex. And one of the things that's really interesting is that it changes over time. What you were doing early on in your career, what you were doing in your 2020s, maybe different than what you ought to be doing in your 30s and what you should be doing in your 40s and 50s. And if you're not adjusting your plan, you're not thinking about ...them in different segments and different parts and pieces. There's a really good chance you're not doing it the way that you ought to be doing it. So make sure you are indeed reviewing your plan and adjusting it accordingly.

• 34:27Brian Preston?

  Well, look, I'll take it a step further. I think a lot of you guys, the reason we can give you so much free advice is we know if you do this right, your simple life, as much as you design it to be as simple, as streamlined as possible, will get complicated. Just it naturally happens with success. And that's what I'm going to encourage you to fulfill the abundance cycle. We'll give you all the free advice in the world to create the best version of success for you. But when you reach that level of complication, you only have done this once. We've done this hundreds, thousands of times for different people. Let us be your tour guide, the person that can help you navigate this and live your best life.

• 35:09Brian Preston?

  And also, back to the value of time, how about focusing on what you want to focus on, but still know that your money is doing everything that you wanted. I would encourage you to go to moneyguy.com, look at the become a client section. We've, watch our video. If you want to see me and Bo, we kind of talk you through what that experience looks like. We have some questions we'd ask. We'll leave the porch light on for you, and I want you to fulfill the abundance cycle. I'm your host, Brian Preston, Mr. Bo Hanson, Money Guy team.

• 35:38Speaker 04

  Out. 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.

• 36:11Speaker 06

  Welcome to the 50th Hunger Games.

• 36:13Speaker 01

  Witness the beginning of the revolution.

• 36:15Speaker 02

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

• 36:18Speaker 01

  Filmed for IMAX.

• 36:19Speaker 02

  Make them remember you.

• 36:21Speaker 01

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

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  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.

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

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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.