Retirement at $1M, $2M, $3M, and $5M

How much money do you really need to retire, and what does a $1 million, $2 million, $3 million, or $5 million retirement actually look like? Brian and Bo break down retirement income, the 4% rule, Social Security benefits, monthly retirement spending, and the lifestyle each portfolio could support. Plus, see how much you may need to invest each month to reach these retirement savings milestones by age 65. From sequence-of-returns risk and healthcare costs to inflation, RMDs, tax planning, and estate planning, this is a practical look at building wealth, finding your retirement number, and planning for financial independence. ⁠⁠⁠⁠ 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.

• 0:02Speaker 00

  The action's on the court and as the official beer sponsor of the NBA, Michelob Ultra is getting fans closer to the game with a chance to win courtside seats, merch and more. Visit michelobultra.com/courtside to enter. Michelob Ultra Courtside, 26 to 27. No purchase necessary. Open to US residents 21+ Begins on October 1st, 2026 and ends on June 30th, 2027. Multiple entry periods. See official rules at michelobultra.com/courtside for free entry, entry deadlines, prizes and details.

• 0:30Speaker 01

  Blowing ad budget on metrics that look great till the CFO sees them? That's bull spend and marketers are calling it out in Dashboard Confessions.

• 0:39Speaker 02

  I remember telling my boss, "It'll be good for the brand" when leads were slow. Yeah, it, it wasn't.

• 0:47Speaker 01

  Cut the bull spend. LinkedIn lets you target by company, job title and more. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.

• 1:00Brian Preston?

  Have you ever wondered what it would look like to retire with $1 million? How about $5 million?

• 1:07Speaker 04

  Brian, I am so excited because today we get to talk about what kind of lifestyle that you can realistically afford with $1 million, $2 million, $3 million and $5 million in your investment portfolio. And not only that, we're also going to show you the path to reach each one of those milestones.

• 1:24Brian Preston?

  I'm Brian, he's Bo and we're the Money Guy Show where two financial advisors walk you through wealth building. Let's get right into it.

• 1:38Speaker 04

  All right, Brian, so let's level set on where we are presently as a country, the current state of retirement, because according to the US Census Bureau, the median retirement savings balance for Americans that are 65 and older, so these are folks that are retired or at retirement age, is only about $198,000.

• 1:58Brian Preston?

  Yeah, and look, six figures is a decent sum of money, but it's, it's a completely different context when we're facing retirement at 65 years of age. Take it a little deeper with 21% of Americans feel very confident that they have enough. I would actually refocus this to say, what this means to me is four out of five Americans don't feel comfortable with what's going on in their retirement lives.

• 2:21Speaker 04

  Yeah, and when they're asked, workers are saying that debt is a problem and because debt's a problem, they are less confident and obviously they have smaller retirement balances. So they're not going into this phase of life where you should have an extreme level of confidence because now you're going to count on your hard-earned dollars, your savings to work for you instead of you having to work. It creates a real precarious position. And when we look at the actual data, when we ask retirees, okay, well, how are you paying for your living expenses? What are the sources that are providing for you at this age and stage of life? It's really interesting that social security, the, what we often

• 3:00Speaker 04

  call social safety net, still remains one of the top sources of incomes for nine out of 10 retirees. It's not a, not a tangential tertiary source. It's one of the main sources for how they're paying their living expenses.

• 3:15Brian Preston?

  And then you could say, and look, a lot of these are going to be a combination of multiple, but it is interesting to see that close to seven out of 10 people are using personal retirement savings. Where I think this number will probably continue to go down is 56 or, you know, close to somewhere between five to six out of 10 are using pensions. And then retirement work savings, you know, 45%. I would just assume everybody had 401Ks at this point, but this stat shows that for retirees specifically, and maybe this goes up over time as people get older, currently it's somewhere around 45%.

• 3:46Speaker 04

  And so what we want to do on today's show is show you, okay, what if you don't want that to be the reality? What if you want the major source of your retirement income to actually be the portfolio that you've built up and what might that retirement lifestyle look at different sizes of portfolio? What's a million dollar retirement look like? What's a three million? What's a $5 million retirement look like? So we're going to walk you through behaviorally what those might look like, what you can expect from a standard of living. And then we're also going to talk about the things you ought to pay attention to, the stuff that you ought to be aware of. But before we do that, I want to walk you through the math that we're going to use to sort of permeate throughout this episode.

• 4:27Speaker 04

  So for each retirement benchmark, we're going to take the retirement savings balance and we're just going to assume a flat 4% withdrawal rate. And we're going to assume that's going to be sustainable over the long term. And then we're going to add social security to that. Brian, when we say a 4% withdrawal, why are we doing that?

• 4:46Brian Preston?

  Well, this is, because this is a good guideline, you know, a lot of the 4% rule is especially if you're decades from retirement, we think that this is probably a very conservative thing you can do. And just to give you kind of the rule defined, it's a retirement guideline that suggests withdrawing 4% of your portfolio in your first year of retirement and then adjusting that amount every year for inflation can kind of give you a good baseline. Now look, the 4% is not a good replacement for a financial plan.

• 5:14Speaker 04

  That's right.

• 5:15Brian Preston?

  And as we're going to show you on the next slide here is that the 4% rule is not even the 4% rule. If you adjust it for, if you're part of the FIRE movement, you're going to retire early, or maybe you're one of these people who decides, hey, I love work, or maybe I'm behind in what I should be saving, so I'm going to retire much later. The 4% actually adjusts up or down depending upon where you are.

• 5:35Speaker 04

  Yeah, the 4% rule was for a standard retirement timeline, but some people retire much later. If you're someone who's retiring at age 75 or older, perhaps you can have a higher withdrawal rate, like 5.5%. But if you're someone who's going to retire really early, like between ages 45 and 55, rather than having a sustainable 4% withdrawal rate, you might need to have a 3.5% withdrawal rate because it's a longer retirement timeline. So as we're walking through our illustrations today, we're just going to assume that every one of these individuals retires at age 65. So we're going to use a 4% withdrawal rate, but just know when it comes to your retirement and what a sustainable withdrawal rate for you might look like, it's going to vary based on your unique situation. And another thing

• 6:19Speaker 04

  that's going to vary is what your true social security benefit's going to look like. As of July 2026, the average monthly social security benefit for retired workers is just over $2,000 a month or right at $24,000 a year. Now, obviously, the more that you earn during your working career, the higher your social security benefit, or the less, less long you work, the lower your benefit. But again, for illustrative purposes today, we're just going to assume a flat $25,000 individual social security benefit, or if it's a couple, a $50,000 household social security benefit at age 65.

• 6:58Brian Preston?

  Yeah, I mean, social security, look, we could have done an entire show on just 62 versus 70, but we want to keep this simple. I think you can sense, we wanted to put some base assumptions in here. 4% safe withdrawal rate, 25 or 50,000 for a couple on social security. Now let's, now we've set the table, let's actually start going through the data. What does a $1 million retirement look like?

• 7:22Speaker 04

  Yeah, for a long time, a million dollars was sort of like the gold standard. It was the benchmark for most Americans. But the question becomes, is a million dollars today still really enough to be able to retire on?

• 7:36Brian Preston?

  Well, I think a lot of people are shocked, especially with such a conservative assumption. If you take a million dollars and did it by the 4% safe withdrawal rate, we're only talking about $40,000 a year consistently. Now look, we are going to adjust this for inflation. That's one of the benefits of using a safe withdrawal rate. But this is where it gets a little bit better. You stack on there the social security we're talking about for a couple, $25,000 times two, now we're talking about $50,000. $50,000 plus the $40,000 safe withdrawal rate, we're talking about annual retirement income of around $90,000 a year or a monthly retirement budget of $7,500. Bo, if you gross that up, we are talking about somebody that, this is a decent sum of money. This is somebody who's

• 8:20Brian Preston?

  making around $112,500 a year, assuming this is 80%.

• 8:25Speaker 04

  Yeah, this size portfolio would give you an 80% income replacement of $112,000 income. So that's not too shabby. So then the question becomes, okay, if I'm 65 and I'm retiring today with a million dollars, what might that lifestyle look like? And we thought it'd be helpful to look across the areas that most people spend money on that tend to be the places where people feel the most anxiety. So let's start with housing. If you have a million dollar portfolio and that's what you're retiring with, odds are you've been in your home for a while and you're likely going to have a paid for home or be near being completely debt-free in a relatively low cost of living area.

• 9:07Brian Preston?

  See, I don't look, I don't want to, because I think it's great. I mean, this is, that's why you see a lot of people, this is aspirational still because most Americans don't reach a million dollars by retirement. But still, even at this threshold, there is going to be a high sensitivity to property taxes, maintenance costs. I mean, you have to put a roof on the house, you're going to know that. You have to replace the HVAC. This is going to cause some stress in your financial life. That is going to have an impact on your lifestyle.

• 9:32Speaker 04

  And then when we think about what you actually do with the money, a million dollars is a lot of money, but it's not so much money that you can do anything you want. So when it comes to the things and the experiences that you have in retirement, you will likely still be able to travel, but it's going to be more budget conscious travel and perhaps it's going to be more domestic and less international travel. It's not going to be flying in the business class. It's going to be flying economy, but that's okay. You're still going to be able to have the experiences. You're still going to be able to create those memories with your loved ones.

• 10:05Brian Preston?

  I feel like, because I watch a lot of travel content. I feel like a lot of the, the, the channels I watch where they love the cruising lifestyle, because I'm a big, we love going on cruises, a lot of the family cruises. I feel like this is, because you can still get a lot of bang for your buck with the cruising, you know, take a whole, take a, you know, especially for a retired couple, I think $4,000, $5,000, you get a just jam up cruise on like the Royal Caribbean's. So that's what we're, when I think of $1 million, it's a great life, but it's not as bougie or it doesn't have as much flex in the system as somebody who has more money with like two or three, even five million.

• 10:43Speaker 04

  Sure. But again, it is a comfortable retirement. Even when we think about like daily expenses.

• 10:49Speaker 04

  You probably still have to live on some sort of budget. You have to make sure that you recognize, okay, I have a plan for the unknown unknowns. And have I done as good as I can? But if there are substantial unknowns, it could cause some need to tighten down, some need to restrict the budget. There's a good chance you're making decisions like, hey, we're going to eat at home. We're not going to eat out every single meal. We're not going to have every single subscription. We're not going to take on the most expensive hobbies. We can do a number of those things. We're probably not in the position, we're going to be able to do all of those things and not have to worry about where the dollars are coming from.

• 11:22Brian Preston?

  I think the big thing is, let's talk about what the focus areas are. I'm always looking for the teachable moments. For somebody who is aspiring, or maybe even is in the $1 million retirement, here's what you ought to focus on. Managing that market risk. Guys, this is the definition of sequence of return risk is really those first few years of retirement can blow up everything if you're not careful. So if somebody is running right close to the edge of, hey, maybe my retirement works or doesn't work, you need to pay attention to where a downturn can be. And that's why asset allocation and other things to mitigate that is going to be so important.

• 11:58Speaker 04

  Yeah, Charles Schwab had a great example. And they said, hey, if you have a million dollar portfolio and you had a poor sequence of returns in your first year of retirement, you experienced a 15% decline during the first two years, there's a chance that you could, because of that bad sequencing, deplete your funds just 18 years into retirement. Well, if you had a 30 or 40 year retirement window, that's obviously going to be problematic. But when you switch around the sequence of the returns, and if it doesn't happen in the first two years, but perhaps you have a downturn that happens in the 10th and 11 years of the same gravity and same scope, that portfolio is still going to have a meaningful sum of dollars left 18 years in the future.

• 12:42Speaker 04

  So if you are someone with a million dollar portfolio and you're close to that 4%, 5% safe withdrawal rate, there's a chance that if you do have unfortunate or unlucky or bad timings, timing around your sequence of returns, you are going to have to make some concessions. Maybe you choose not to do the home renovation you thought you were, or maybe not to go on that trip you thought you were, or maybe to not replace the car on the timeline. At this level of assets and this level of retirement, you need to be willing and able to make those adjustments.

• 13:13Brian Preston?

  The next thing I think is important, and measure twice, cut once, timing of social security. Guys, this plays into it because, look, I know, y'all know, I have an issue with social security. My father passed away in his 50s. My mom and dad made about the same amount of money. And the death benefit on social security for all the six figures you pay into it is just horrible. But just because I share that information in that context, I have learned, don't be the guy or the girl who as soon as you cross into 62, you assume, hey, I gotta go get that money out because the government's been taking for all these decades. There's actually a delicate balance of, you have to do the dance of doing the math to figure out when's the appropriate time to take social security.

• 13:58Speaker 04

  Yeah, a lot of people don't realize that all of us have a full retirement age benefit where we can receive 100% of our social security if we wait till our full retirement age. For most folks today, that's around age 67. But if you decide to claim early, if you decide to begin drawing at 62, while it is true, you will draw for a longer period of time, you're not going to receive the same benefit. You're actually only going to receive 70% of what your full retirement benefit would be. And then every year that increases, whether you draw at 63, 64, 65, all the way up until age 67, when you would draw 100% of your benefit. But if you're someone who has the ability to wait and you can push your social security

• 14:39Speaker 04

  benefit all the way out until age 70, if you wait until 70, you can actually maximize your benefit and receive 124% of your normal retirement age benefit. So you can imagine for two individuals, one who begins claiming $1,400 at 62 versus one who begins claiming at 70 at $2,500, those are very different income streams. So you want to make sure you make that decision wisely as you begin approaching this threshold.

• 15:07Brian Preston?

  I think all this details is that personal finance, once again, is very personal. You know, you have to take into account not only your medical health and how likely are you going to get this benefit, but also what type of working history does your spouse have? There's so many things coming. This is one of those elements where maybe your simple life gets a little more complex with retirement, but that's okay. We even have a resource for you, a completely free resource. If you go out to moneyguy.com/resources, when should I claim social security? Now, look, it's not going to be one-on-one advice, but at least might give you a little more context that helps you figure out what you should do in your financial journey.

• 15:45Speaker 04

  And third thing that you ought to be thinking of, if you're retiring today and you have roughly a $1 million portfolio, is that the viability of your plan is likely going to be very location and cost of living dependent. If you can live in a lower cost of living state, city or area, and you can be in a lower tax situation, there's a good chance that you might have less stress in retirement. For folks who retired a million dollars, but you live in a very high cost of living or a very tax cumbersome state, it's going to add stress that someone else in your situation in a different part of the country might not feel. This is why a lot of people say, okay, when I retire, I want to move somewhere else. I want to downsize. I want to move to a different geography.

• 16:29Speaker 04

  It's because it can relieve some of the anxiety associated with having to make ends meet month over month.

• 16:35Brian Preston?

  Yeah, location, cost of living, where family members live, because you definitely want to be hanging out with those grandkids when you're in this stage, all that goes into it. Now I get to talk about the fun part. What does this actually look like from a path standpoint? Look, it all depends on when your starting age is, because if you're a 25 year old, this could be as easy as just saving and investing $184 a month. However, if you're a little behind and you don't start this until you're 40 years of age, you're going to have to save, invest $1,052 a month. You get to choose where are you on in your journey. This is what's going to set you up for a million dollars.

• 17:10Speaker 04

  It is worth noting, it's almost five times harder to save at 40 than at 25, if your goal is to get to a million. So the earlier you can figure this out, the more successful you can be. Now, you may have listened to that and said, okay, well, you know, a million was great, but it's just not enough. We want to remind you that you can't get to 2 million unless you get to 1 million first. And you can't get to 5 million unless you get to 1 million first. So the first million dollars in your investment portfolio is nothing to scoff at, nothing to sneeze at, but for you, it may just be a stop on your path. So now let's talk about, okay, what's it look like if we are going to retire today at age 65, and instead of having a $1 million nest egg, now we've been able to save up

• 17:55Speaker 04

  a $2 million nest egg?

• 17:56Brian Preston?

  Yeah, and I'm hoping that this is motivating for a lot of you, because we know that our key listening group is somewhere between that 25 to 45 years of age. Guys, you guys are young enough, you ought to watch this content, get really excited, because there is a huge difference between a million dollar retirement versus a $2 million retirement. And if you want to look at this, what does this look like if you take into account the same 4% safe withdrawal rate? It's $80,000 a year. Stack on top, that same assumption we're making with social security, $50,000. Guys, we are now getting into that, just, it almost feels really cool. Because think about if you're debt free in retirement, especially, an annual retirement income of $130,000 a year, that works out to be just under $11,000 a month.

• 18:41Brian Preston?

  But that's starting to sound pretty good.

• 18:43Speaker 04

  Yeah, if you think about income replacement, if you add social security to it, a $2 million portfolio would replace about 80% of $163,000 annual income. That's roughly double the median household income in this country right now. So at $2 million, you're beginning to have a very, very comfortable retirement. So what does that look like across the practical areas where we spend our dollars? Well, when it comes to housing, there's a really good chance that you're going to be in a nicer home. You're likely not in the starter home. You've likely upgraded at some place along the line. There's a chance that you're not having to focus on living in the lowest cost of living area. You get to choose the area that you want to live, based on the amenities, based on

• 19:27Speaker 04

  the community, based on the surrounding things that you can do and hobbies you can pick up. You have a little bit more control over where you choose to live.

• 19:37Brian Preston?

  I like the fact that when you talk about housing, like we have a dear client that lives in that Seattle area. And one of the things I love is they send us pictures about every year when they've gone and they've rented condos or houses in other parts of the country where they live for a month or two. It's just, it's great. And this is one of the things I like when you add additional resources, you get to a little more flexibility. Remember though, this is not, if you're somebody who's in retirement right now, this is not to kind of throw cold water. This is hopefully motivation for, like I said, those 30 somethings, the 40 somethings. Think about where you begin with the end in mind, where are you trying to take your retirement so you can plan accordingly? Because in a minute, we're going to show you what you need to save and invest to reach

• 20:20Brian Preston?

  these goals so you can hopefully reach this and live your best life in retirement.

• 20:25Speaker 04

  And when it comes to how our retirees spend their time and what it looks like for our folks that have retired with $2 million, well, now even like they have more control of their housing, they also get to have more control over their travel. This is where, again, depending on lifestyle, depending on the individual decisions that you make, perhaps now you can do multi-week international vacations. You're not having to just travel domestically or just doing weekend trips. You can also likely afford, if you're going on a longer flight, if you're taking a longer trip, you can now fly premium economy. You don't have to get the lowest ticketed fare to be able to make sure that it fits inside your retirement budget. And this now, at this level, does make you more mobile.

• 21:07Speaker 04

  If you have different family members spread across different parts of the country, it's probably not incredibly arduous to go visit them on a fairly regular cadence without having to worry about the dollar and cents of that decision.

• 21:19Brian Preston?

  Well, also, I like to think about the daily lifestyle and the fact that you're probably going out to eat without too much stress. You might even have some social membership clubs, you know, a country club or.

• 21:32Speaker 00

  The action's on the court. And as the official beer sponsor of the NBA, Michelob Ultra is getting fans closer to the game with a chance to win courtside seats, merch and more. Visit michelobultra.com/courtside to enter. Michelob Ultra Courtside, 26 to 27. No purchase necessary. Open to U.S. residents 21 plus. Begins on October 1st, 2026 and ends on June 30th, 2027. Multiple entry periods. See official rules at michelobultra.com/courtside for free entry, entry deadlines, prizes and details.

• 21:59Speaker 01

  Blowing ad budget on metrics that look great, till the CFO sees them? That's bull spend. And marketers are calling it out in Dashboard Confessions.

• 22:09Speaker 02

  I remember telling my boss, it'll be good for the brand. When leads were.

• 22:13Speaker 01

  Yeah, it wasn't. Cut the bullspend. LinkedIn lets you target by company, job title, and more. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.

• 22:29Brian Preston?

  Personal trainer. These are the things you get a little more flex in the system. It lets you live a little better so that you can actually feel like those sacrifices and that discipline that went into those early years, you're now seeing the fruit from that.

• 22:43Speaker 04

  I think when we think about focus areas for folks that are retiring with $2 million, so often in our financial journey, it starts out, we're willing to trade our time for money, trade our time for money, trade our time for money. When you've amassed a portfolio of $2 million now, you really do get to trade your money for time. I'm willing to spend money to be able to do things the way that I want to do them on the cadence and schedule that I want to do them. So at this level of assets, you really need to spend time, not just thinking, okay, what am I retiring from? What am I moving away from? What are the things that I don't want to do? And what are the things I actually want to do? If I have financial resources, if I have extra capacity, how am I actually going to spend my time? I do

• 23:27Speaker 04

  think at this asset level, you're beginning to think and focus more attention there.

• 23:31Brian Preston?

  Well, you know, it's the whole thing is having resources is now you get to buy the time. So money is time. And that's really important when you think about health expenses. Because, look, we don't live forever. So that's why you have to understand, we got to work on building, how do we make memories? Because these things blossom. How do we make sure we spend time with loved ones? But a really cold water moment is when you realize that for a 65-year-old retiree, they can expect to expend about $185,000 later in life for medical expenses. That's daunting. So you just need to plan accordingly and just make sure that you have enough resources to where you not only get to build the memories, but you also can cover your expenses on the medical side.

• 24:15Speaker 04

  Yeah. And I don't want this to be funny, but we start off the show by saying, the median amount of retirement savings for folks 65 and older is $198,000. If you have $198,000 saved up, and you can expect on average to spend $185,000 in medical expense, those two numbers don't add up. So it's something you certainly want to consider. And obviously, if you're someone who's young, if you're someone who's not 65, investing in your health now, before you get to financial independence, before you get to retirement, likely makes a lot of sense. It doesn't seem like it's a financial metric, but if you can do things now and make decisions today to drive down those future medical costs, you're likely going to set yourself up for success. Because another thing that's

• 24:57Speaker 04

  going to happen that is a little bit outside of your control is inflation. We don't know exactly what's going to happen with inflation, but we can feel pretty confident that whatever a basket of goods costs us today, the loaf of bread, the gallon of milk, the gallon of gas, it's likely going to cost us more in the future. And at $2 million, we want to make sure we understand how much that purchasing power is today. Are we making decisions and considering, how do we maintain that purchasing power for the next 10, 20, 30, maybe even 40 years of retirement?

• 25:31Brian Preston?

  Well, the good news is the safe withdrawal rate kind of builds that in. And also, a lot of you, when you cross that threshold of retirement, you're going to be working to do a annual stress test to make sure this all works. But it is important to understand that just inflation as a whole, even at a reasonable rate like 3%, the cost of goods are going to almost double over a 20-year retirement.

• 25:51Speaker 04

  So that $400 grocery bill is going to be an $800 grocery bill.

• 25:53Brian Preston?

  So Bo is spot on that you need to plan accordingly. But I like to, when I get excited, and like I said, this is supposed to be motivation for especially those that are decades from retirement. Let's look at what the path to $2 million looks like. Bo has already shared with you, the earlier you start, the easier this is. So set it early and do it often. And if you, early and often for a 30-year-old means you need to save about $680 a month. Compare and contrast that to a 45-year-old who just now realizes, aha, I need to be saving for the future. You have to save and invest $3,612 a month. That's somewhere between five to six times what the 30-year-old had. It's almost 10 times more than the 25-year-old who's just having to do 368. I want you to plan accordingly.

• 26:37Brian Preston?

  You can control what your future life looks like. Don't be like the typical American, actually use discipline, live on less than you make so you have margin, and then give it enough time so you have success.

• 26:48Speaker 04

  And now, keep in mind, these dollars, these numbers, are assuming you start at zero. If you're someone who's 30, 35, 40 years old, and maybe you're not starting at zero, but you want to know, hey, am I on the path? Am I on track? We have a great calculator available for you. Go out to moneyguy.com/resources and check out our Know Your Number calculator. You can put in how much you have, how much you're saving, what age you want to retire, what your current age is, and it will let you know, okay, am I on the path to $2 million? Am I going to be able to hit this metric? And if not, what do I need to change in my situation to be able to get there?

• 27:23Brian Preston?

  All right, Bo, before we move on, let's do a shameless plug for Abound Wealth.

• 27:28Speaker 04

  I have no shame, because I'm mighty proud of the work that we get to do for our clients every single day.

• 27:34Brian Preston?

  Here at Abound Wealth, we're fee-only. We're fiduciary advisors. That means we're legally required to work in your best interest. And we love helping our clients optimize their army of dollar bills so they can live their best life.

• 27:47Speaker 04

  And before you leave a mean comment about us self-promoting, keep in mind, Abound Wealth helps us keep this entire thing going, creating free content, growing the team, and changing the financial landscape.

• 27:59Brian Preston?

  We're honored you're watching and listening. And we hope you use this content to help you learn, apply, and grow your army of dollar bills. And when your financial life gets complicated, it'll happen. We'd love for you to come back to where it all started. That's The Money Guy Show and Abound Wealth.

• 28:14Speaker 04

  If you're ready to take the relationship to the next level, check us out at aboundwealth.com or click the link below. Now, Brian, I already said this in the first part, you know, you can't get to 2 million unless you get to 1 million. Well, you can't get to 3 million unless you get to $2 million first. So 2 million, again, is not anything we're scoffing at. But there's been a lot of studies, Brian. I know one of the most formative books in your financial life was A Millionaire Next Door. You said that, man, in the late 90s, it was this wonderful thing, that if you hit the two comma club, it was this beautifully significant thing. Well, there's been a lot of research and analytics done since The Millionaire Next Door, and they have determined that over the last roughly 25 to 30 years, the new million-dollar threshold, or the equivalent of what a million dollars was

• 28:59Speaker 04

  in 1996, is probably closer to $3 million today. So we're going to talk about what is a $3 million portfolio.

• 29:08Brian Preston?

  Well, yeah, I mean, I think that this is what, and then, look, you see it all over the comments. So he's like, do you guys talk about inflation? Yeah, inflation has caused this to what used to be aspirational in a million is now 3 millions, where you're starting to feel like, you know, Robin Leach or Cribs, whatever your generation's version of what wealthy people have, this is probably starting to feel a little, little plush. I mean, there's no other way to put it. Because look at what happens when you just compare this to a safe withdrawal rate. $3 million, 4%, that's 120 grand a year. That's $10,000 a month, without even taking into account social security. You stack in social security, they're 50 grand. Likely, if you have this much, your earning potential through the years is going to put it even higher than this. But just go with our conservative assumption

• 29:53Brian Preston?

  here. That's an annual retirement income of 170 grand or just under $15,000 a month. That's $14,166 a month. That's feeling really plush in retirement in my eyes.

• 30:06Speaker 04

  It's really interesting. If you have $3 million of liquid assets in your investment portfolio right now, today, that puts you in the top 3% to 5% of American wealth. It is, it is, as Brian said, it's fairly elite company. But what it allows you to do is it allows you to now begin to have much more control over what your day-to-day, month-to-month, year-to-year lifestyle looks like. And it allows you to be much less afraid of the unknown, unknown events that could come your way. So when we think about housing and where you live, a really good chance at this level of assets, that you have a paid-for home, and you likely have a nicer home. This is probably not the home that you started your

• 30:49Speaker 04

  life in. It's not a starter home. And there's a good chance at this level of assets, you've been able to choose where you want to live. Perhaps you're in a medium, or maybe even a high cost of living area, because you have a portfolio that can sustain that.

• 31:02Brian Preston?

  I think if you go beyond housing to actually the travel, you know, what's interesting is that, you know, I said that once you get to 2 million, you don't have to really worry about eating out. You know, you can just cover that. I think when you start crossing to 3 million territory, the same type of thing happens for you with travel. Now you can go on more luxurious vacations. You can take the entire family. Maybe your dream is, hey, I want to take my kids and grandkids to like the Grand Canyon, or to the Disney World. Maybe that's a little bridge too far. There are limits to what 3 million can do. But still, this is an exciting time where you can really kind of unleash your retirement to enjoy vacation and making those blossoming memories.

• 31:43Speaker 04

  And again, the thing that's happening here is it's about control. When we think about your daily expenses, you're rarely worried about making sure the bills get paid. You're not worried about the grocery bills. You're not worried about running out of money. If you get invited to a high-end dinner, you're likely not thinking about, okay, how do I fit this in the budget? How do I make this work? And you can even pick up hobbies that aren't just one-time hobbies, but even hobbies that might have ongoing costs. Maybe this is a club membership, or an expensive gym, or some other organization. That you want to be a part of at this level of assets, you're beginning to be able to make those decisions and not have to worry about, oh, can I afford this? Am I going to be okay?

• 32:23Brian Preston?

  So let's talk about what you got to focus on for, for a $3 million area. Look, you're wealthy. Tax management is going to be super important. For a lot of you, you, you literally could have a required minimum distribution bomb, sitting there waiting to blow up on you. When you get into your mid seventies, when you have those required minimum distributions, you need to plan accordingly.

• 32:44Speaker 04

  Yeah. Think about this. If you had $3 million in a traditional IRA or in a 401k, and you were age 73 this year, right now, your required minimum distribution would be $113,000 that you would need to pull out of that portfolio. Well, maybe you've done a good job of building and you've built up your three tax buckets and you have resources or you have social security, you have other means that are coming in and you don't want to pull out $113,000. The government says, too bad. You have to. We're going to make you pull out that money. We're going to make you pay tax on that. You begin to lose some control. So if you're someone who has a multimillion dollar,

• 33:25Speaker 04

  multiple seven figure portfolio, and you're in retirement, thinking about how you're going to navigate required minimum distributions and those tax bombs that could hit is going to be important to make sure you don't lose control of your tax situation.

• 33:39Brian Preston?

  Another area to focus is, man, find your purpose. Look, one of the saddest things for me is financial mutants that go into financial miser territory where they think, hey, you know what I need to just create happiness is if I had $3 million in the bank without a why attached to it. You know, a lot of when I was writing Millionaire Mission, if you go read the last two or three chapters where I get into my why I do talk about what I did with my money, you'll see a lot of extra effort goes into thinking about, hey, what wakes me up in the morning where I feel like, hey, I'm part of something bigger than me. And that's why we say generosity is rewarding, but you also have to know what are the things you're going to do away from work? What are your hobbies? What are things? Find your purpose, know your why. So you can live

• 34:23Brian Preston?

  your best life, not only financially, but also in the memory making and waking up with every day feeling like you've got something really exciting going on.

• 34:31Speaker 04

  Now, another thing that we want you to think of, and this is, this is going to be unique and a lot of people are going to like scoff at this and poo poo, but we think it's really important, especially, especially at this asset level, to think about how you're building your community. Not just do you have enough money and can you spend money, but who are you actually spending your time with? Who are you surrounding yourself with? Do you have other people? Cause frankly, it can be isolating. Just because you can afford to go on a trip and just because you can afford to international travel, doesn't mean that your close friends can, doesn't mean that they've made the decision. So do you have people in your life that are in a similar position that can do those things? Or are you in the place where if you have family,

• 35:13Speaker 04

  you can create environments and opportunities for you to be able to create those memories? There is no value in leaving this earth with a giant bucket of money left behind, not having actually used that money to focus on the things in your life that truly matter to you.

• 35:30Brian Preston?

  Yeah. So let's get you, let's make the, let's create the excitement, the motivation, and actually create a path to $3 million. You know, this weekend, I was, my wife and I were shopping. We were at the local Nordstrom rack. Okay. Because if you want Nordstrom stuff, but you only want to pay it, you know,

• 35:45Speaker 04

  Now, the rack prices?

• 35:46Brian Preston?

  At the rack rates, you know, 40%, 60% of what you'd have to pay at Nordstrom. Um, I had as, after we had paid and we were walking out, and by the way, the alarm went off because I bought this new sports coat for going on this trip to Scotland that we're going on. And this young, this guy couldn't have been older than 22, 23 years of age, came running up. He said, I just, hey, we're freshly minted, just came from California, moved from LA. We moved here last night. You are the reason that I've started saving and investing. And I told him, my, just dead out of my mouth, it was like, dude, if you are already saving and investing because you watch our show, you are literally going to be loaded based upon your age. And I see that when

• 36:26Brian Preston?

  you say the path to wealth. Look, for a 25 year old, you only need to save $552 a month. For a lot of you, especially when we say, we want you to save, you know, 20, 25% of your gross income in your twenties, that's aspirational. But for those of you who discover this content early enough, you might only need to do your employer to the match, plus your Roth IRA.

• 36:49Speaker 04

  Oh, that's less than max out of Roth.

• 36:51Brian Preston?

  In this, yeah, that's less than the Roth with 552. Act accordingly. Typical American, $1,000 a month will get it done at 30 years of age. Guys, this is exciting stuff. You do not have to be the statistic like the typical American where you have a, you know, a little under $200,000. You can be a multimillionaire if you set it and forget it early and often will get it done.

• 37:13Speaker 04

  I have to ask a question and I'm sorry, but I got to ask this. What did setting off the store alarm have to do with the guy running up to you?

• 37:20Brian Preston?

  It was just embarrassing because, you know, because I didn't want to look like we had shoplifted.

• 37:24Speaker 04

  I thought he was a security guard.

• 37:25Brian Preston?

  We were talking to this, this chatty, chatty, you know, cashier.

• 37:31Speaker 04

  Okay.

• 37:31Brian Preston?

  Who for some reason was telling us he was, he was moving from Tennessee to Virginia to open up a new store.

• 37:36Speaker 04

  Okay.

• 37:37Brian Preston?

  And we got his whole life story, but he didn't take off the, the sensor. After you just bragged that he was really good at taking off the sensors, but it was just, just one of those, I was giving the context. A good storyteller gives you, you know, or I just give you random.

• 37:50Speaker 04

  No, no, that was great. That was, okay. So the alarm goes off, guy runs up to you and he tells you.

• 37:55Brian Preston?

  I was just trying to say, young, it makes me excited when I see young people saving and investing for the future because that is going to set you up for this next one. This is definitely aspirational because we're going to give you the demographic stats on this to the typical American, but what is it like to retire with $5 million? Ka chow.

• 38:14Speaker 04

  Like, here's the deal. No amount of money is completely worry free. There's not a sum where you're going to remove all your worries, but at $5 million, you start getting close, honestly, because at $5 million, you're pretty much in the position where there's not a whole lot of stuff that you can't do. There's not a whole lot of contingency that you don't have built in. Cause when you just run through the simple math, a $5 million portfolio with a 4% withdrawal rate is $200,000. If you then add a $50,000 household social security benefit, you're now pulling in a quarter of a million dollars a year, every single year in retirement. That's almost $21,000 a month. It is difficult and it is unusual and it is uncommon to be able

• 38:59Speaker 04

  to spend $21,000 a month. This is a robust retirement lifestyle.

• 39:04Brian Preston?

  Well, let's talk about how rare this is though, but it is definitely something. Be aspirational. Shoot for this. Definitely if you're young enough, you can make this happen. A lot of our audience, we see the demographics, we see your incomes, we see what your potential is because this is sad stat sets the context. 49 and a half percent of Americans have literally zero saved for retirement.

• 39:27Speaker 04

  One in two.

• 39:27Brian Preston?

  Um, if you want to know who has a dollar to a million dollars, man, is that a broad, broad swath there is, you know, because there's a big difference between a million, 999,000 versus a dollar, but that's 47.3% of America. And then if you look at who's a million dollars to $5 million, that's 3.1%. To say somebody has over $5 million, we are talking, this is not one percenters. This is one tenth of one percent. That's an amazing feat to have this. So this is, like I said, aspirational, but let's still go through the numbers and say, what is it like to live this type of lifestyle?

• 40:06Speaker 04

  Yeah. When you think about housing, this is the, this is the level of wealth where you likely own multiple properties. You may have your primary residence and you may have some sort of secondary residence or a vacation home. Uh, cost of living areas are not really a concern. If you want to live close to water, if you want to live close to mountains, if you want to live close to a major metropolitan city, you can choose that. And even the costs associated with that, whether it be renovation projects or maintenance costs or association dues, you are likely in the position where you can pay those expenses and not have a ton of anxiety around.

• 40:43Brian Preston?

  And let's face it, your travel, let's go ahead and get the pinky ready to start ordering the great poop on. I mean, you're doing this. This is where you actually get to ride business class. When you go across the pond, you're doing, you know, extended travel. I'm blah, blah, blah. Everybody knows this is living your best life at this level. It's definitely aspirational, but I'm excited. It's back to the my maro moment. I mean, if I can show somebody who's in their twenties or thirties, this, you don't have to be the stats like the typical American. You get to shoot for this type of goal.

• 41:14Speaker 04

  Yeah. What happens is, is that at this level, you feel like you're literally protected from almost all standard financial risks. I mean, there's certainly those cataclysmic things that could happen, but you're able to make your decisions and you don't have to worry about, is this going to be the thing that breaks me? If I have a medical thing, I can cover it. If I have an expensive hobby, I can cover it. If I have, want to help friends, want to help family, I can do that. So one of the things that really happens for folks that we see at this echelon is they actually have a really hard time spending money. They've been so good at accumulating. And so just because we tell you can live this lifestyle, live this lifestyle, live this lifestyle. A lot of our folks that actually attain this level of wealth have a very, very difficult time flipping the switch and actually learning how to spend those dollars.

• 41:58Brian Preston?

  Yeah. For these people, this is why you have to be careful of drifting into financial miser territory. If you're one of those people, this is when I think, yeah, reading something like a die with zero where you're going out there, making more memories. So, because also you're going to hit the realization, I'm in my 50s right now. And I saw an interview with Brad Pitt, who's in his 60s now. And he's like, man, I wish I could go tell my 50 something year old, go do more. Because he says, I just, I'm not that same person. And that's, we hear that from clients also, if you're going to go do all the travel where you have to go up a gazillion stairs in Europe or was it Montepicco, Pichu? I'm probably saying that all wrong.

• 42:34Speaker 04

  You got it.

• 42:35Brian Preston?

  You're going to have to go way up some, you know, you have to do all kinds of hiking for miles. Make sure you plan accordingly to do this. This is definitely aspirational, but you can live your best life, but you've got to learn to spend. Get out of the miser, but stay in mutant territory. So you can actually pay it forward. Cause that's where legacy mode, being generous, estate planning, all these things kind of go together.

• 42:57Speaker 04

  Yeah. You want to make sure at this level, you're not focused just on the dollars, but you're more focused on what can the dollars do. And maybe for you, it's not flying first class or buying the second home, but maybe it is leaving a legacy. What am I going to do with these dollars to positively impact the world around me, the people around me, the people that I care about? How can I use it? And how can I make sure that it's structured as effectively and efficiently as possible? And what I think is wild is $5 million is a lot of money. It's so much money. But it's not crazy if you think about, okay, a 25-year-old, if you could just save a thousand bucks a month, which is not easy, that's not a simple thing to do, but it's only a thousand bucks a month, $12,000 a year, that can get you to $5 million by the

• 43:39Speaker 04

  time that you retire. For a 35-year-old, it's saving $3,000 a month. That'd be someone who's maxing out their 401K and then maxing out two Roth IRAs. That would get you that $5 million level. It's a big number, and it's not going to be one that you get to by accident, but it doesn't have to feel impossible. It's very much inside the realm of attainability if you're willing to live on less than you make and save a little bit for tomorrow.

• 44:05Brian Preston?

  Think about this. I'm going to do this in public math you have to be careful of, but if you did 920 a month times 12, divided that by .25 to see what the income, that's for a 25-year-old, that's somebody who's saving 25% who's making $44,000. Now, look, I know cost of living, housing, that stuff, more than likely, that's not possible. It's more aspirational, but still, it's worth noting. 30 years of age, $1,700 a month times 12, divided by .25, that's somebody making a little under $82,000 a year could do that. 35-year-old, $3,030 times 12, $36,000, divided by .25, that's somebody making $145,000 a year. Guys, we see the demographics. We see you out there. Yes, I know that's above

• 44:50Brian Preston?

  what the typical American makes, but if you are in that situation, don't be average. Be extra. Be somebody who actually creates something that goes beyond your life. Yes, I know you can't take it with you, but man, oh man, what if you can pay it forward to your children? What if you can pay it forward to live your best life, to create memories so that your children and grandchildren don't have as much struggle? What about the charities that we want to support? All these things are understanding that money is nothing but a tool, but man, oh man, if you plan accordingly, there is a better way to do this. And that's why we work with clients all across the country. I invite you, if you get to, if you have a simple, you know, situation in your life, you're trying to figure out what the basics

• 45:32Brian Preston?

  are, go to moneyguy.com/resources. We will load you up, but when life starts getting complex from success, please remember who planted the seed. I'm your host, Brian, joined by Mr. Bo. Money Guy team, out.

• 45:44Speaker 05

  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. Does anyone know where the bass is?

• 46:25Speaker 06

  Hey, Bo's here. When your next track starts, listen for the decisions that the artist makes. The vocal pushed right up front, the bass that waits half a beat, that sample from a 70s underground gem, every choice deliberate. With Bo's, you'll hear it all. Your music deserves Bo's.

• 46:46Speaker 07

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