Pod Insights The Personal Finance Podcast How Millions Retire With Nothing in Savings About this episode Join the community built to help you master your money, stay accountable, and reach financial freedom. 👉 Join Master Money Academy today!
In this episode of The Personal Finance Podcast, Andrew reveals how millions of Americans retire with far less than $1 million—the median retiree age 65-74 has only $200,000 saved and 40% live solely on Social Security. He breaks down how people make it work by relying on Social Security, paid-off homes, modest spending, and part-time work, exposes the hidden costs of "barely getting by" retirement, and shares a practical gameplan if you're behind so you can aim higher than just survival.
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Andrew Giancola? When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI Website Builder. I told it what kind of website I wanted, and I built the first version in minutes. No coding, no designer, or developer needed. And Hostinger doesn't stop at launch.
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1:29 Andrew Giancola? or piece of content that we record. And that's one of the things that I love about Wayfair. You can shop thousands of products across different styles and budgets, use customer photos and reviews to see how things actually look in real homes, and find something that fits your space. They also have Wayfair Verified Products that are hand-vetted by product specialists using a 10-point quality inspection. And with more than 20 million verified 5-star reviews, you can feel a lot more confident about what you're ordering. I've used Wayfair for this studio and our home, and I absolutely recommend them for your space. So transform your space with pieces that hold up to real life. Join Wayfair Rewards today and get 5% back on every single purchase.
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2:28 Andrew Giancola? On this episode of the Personal Finance Podcast, we investigate how millions retire with zero in savings.
2:42 Andrew Giancola? What's up everybody and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of MasterMoney.co. And today on the Personal Finance Podcast, we're going to be diving into how millions retire with zero savings. If you guys have any questions, make sure you join the Master Money Newsletter by going to mastermoney.co/newsletter and don't forget to follow us on Spotify, Apple Podcasts, YouTube, or whatever podcast player you love listening to this podcast on. And if you want to help out the show, consider leaving a five-star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. And again, if you want direct help from me, make sure you join Master Money Academy. It'll be linked up down below in the show notes.
3:24 Andrew Giancola? Now today, we're going to be diving into how millions of Americans are retiring with zero in savings. See, here's what the internet tells you is that you need a million dollars in order to be able to retire. That is something that we say a lot on this podcast. We talk about you need to figure out what your retirement number is and chase after that number to ensure you have enough money on hand to retire. But there are millions of Americans in this country who are retiring with minimal savings. Now you may be thinking of someone right away who you know who retired, but doesn't have a lot of money in savings. Maybe it is someone out there like a grandmother who just never had a lot of money and they lived on a fixed income. Maybe it's an uncle, an aunt, maybe it's a family friend.
4:04 Andrew Giancola? But you may be thinking of a number of different people who retired in a way where they did not have much saved. Well, I want to answer the question today, how do they do that? And what can you do to make sure that you actually have money saved so that you can thrive in retirement? See, my entire goal for this podcast is to make sure that you can master your money. And in order for you to master your money, you need to make sure that you are going to be able to enjoy your retirement. I want you to spend lavishly on things that you love in retirement because you are working so incredibly hard right now. And the last thing I want to see from you. Is for you to have a dreadful retirement where you don't have much cash on hand. But what are your options if you don't have a lot of cash on hand? And what can you do in retirement if you didn't save much early on?
4:49 Andrew Giancola? We're going to talk about all of those today in this episode. Now, here's the crazy number that a lot of people don't realize is the median American between age 65 to 74 has $200,000 in savings. And about 1 in 5 Americans over the age of 50 have no retirement savings at all. Now, you as wealth builders who are listening to this podcast or watching this podcast, I want you to make sure that that never happens to you. You're here, you're listening, so that should not happen to you. And roughly 40% of Americans are only living on social security. And yet, we don't have 40% of Americans living under a bridge. So what is going on and how is this happening? So today, we're going to peel back the curtain. What does the typical retiree's savings actually look like?
5:32 Andrew Giancola? How much income are they actually living on? Because most of us wonder, well, really, how much do they live on? And how do they actually get by? The formula that lets people make it work and the trade offs and risks that I don't want you taking on a lot of these risks because it is very risky to get into retirement and not have enough money saved. And then we're going to talk about the simple game plan to get behind so that you can ensure this does not happen to you. Now, this is an action packed episode. I am really, really excited for it. So if you're ready, let's get into it.
6:04 Andrew Giancola? So how common is retiring with little to no savings? Well, this is something that I want you to picture. You're at a retirement party with 10 different people over the age of 65. Two of them have no retirement savings whatsoever. Two of them literally don't even have retirement savings. This is something I think most people need to note and they need to understand is that there is a larger portion of the country that don't have retirement savings than we actually think. Four of them are completely relying on social security. So we're looking at 60% already that have minimal to no retirement savings. And most of them do not have anything close to a million dollars saved up. And a big chunk of these people may feel okay day to day, week to week, month to month. But what is happening here is
6:48 Andrew Giancola? That if one big thing pops up, maybe they need to replace their roof, or maybe they have a big medical bill, this could cause them to spiral financially and put them in a really difficult situation. So let's look at the real numbers because for ages 65 to 74, the median retirement balance, as we talked about at the top of the show, is $200,000. That means half of the people in that age group have less than $200,000 in retirement currently. And about 1 in 5 people over the age of 50 have no retirement savings whatsoever. And around 40% of older Americans rely solely on social security for their retirement income. And so we see all these headlines where you need a million dollars, you need $2 million, you need $5 million, but the typical retiree right now does not have this.
7:31 Andrew Giancola? And on average, they really do not have enough cash on hand. This is why social security is so incredibly important for a lot of people out there. So let's look at the numbers and I'm going to give you a couple of different examples of what it could look like as a retiree to see where they land. So first, let's look at a single retiree. We're going to call this single retiree Linda. And her situation is she has about $200,000 in retirement savings currently. And she gets a social security check of about $2,000 every single month. So obviously that's $24,000 per year. Now, most of us out there, if you lived on $24,000 per year, that'd be a very difficult living situation. Now she follows a simple 5% withdrawal rate on that $200,000, which means she gets an additional $10,000 every single year.
8:15 Andrew Giancola? So in total, she's looking at $34,000 per year is what she is living on currently. Now here's the wild thing, okay? So Linda has $34,000 per year that she can work with. This is her fixed income that she has to figure out how to get by on. But here's what's wild. The median retiree spends $34,000 in a single year. This is how a lot of retirees get by. It's because they're spending a lot less than we actually think they are. That means Linda is basically the perfect picture of the average retiree. She gets $2,000 a month at social security. She's living on $10,000 every single year within her portfolio at that 5% withdrawal rate, which is a dangerous withdrawal rate, in my opinion. We need to get closer to that 4% rate, but you can get
8:58 Andrew Giancola? Up to 5% and now Bill Bangin, who is the founder of the 4% rule is arguing that you can actually increase the amount that you are saving every single month. But let's look at a second example because I want to look at a married couple. If the median retiree who is single is spending $34,000 per year. Let's look at a married couple and see where they land. So Bill and Maria are a married couple and they are retirees. So each of them are going to get a $2,000 social security check. So that's $4,000 every single month. And they also have the same $200,000 in retirement. And so because of this, they do a 5% withdrawal at $10,000 every single year. So their total annual income right now is going to be 48,000 between the two of them from social security.
9:40 Andrew Giancola? And in addition, another $10,000 from their $200,000 saved in retirement. That means they're going to have 58,000 every single year. Now, when you compare that to the median household income for 65 plus, which is right around 50,000, they are right smack in the middle of that. This is how retirees get by. You have two social security checks coming in. That's going to cover a lot of the bills. You have an additional $10,000 from your portfolio and that is how they are getting by. And so a lot of people will ask, well, how do people live off $200,000? They're not living on $200,000. Instead, they're living off social security and they are withdrawing a small portion of that $200,000 every single year, especially if he has invested. They are trying to preserve that money over this timeframe and they're keeping their lifestyle very modest.
10:23 Andrew Giancola? See, if you don't save for retirement, you're going to have a very modest retirement. You're going to have a retirement where you can't do a lot of things because you have a very specific fixed income. So we need to figure out how this is actually going to work.
10:36 Andrew Giancola? So then that begs the question, well, when do people actually start to claim social security? Because there's a range at which you can start to claim social security. And a lot of people out there may have a big decision to make. You'll see a lot of the headlines out there say, oh, wait to claim social security until you're age 67. Or if you're really smart, you'll even wait till 70 to maximize the amount that you can get within social security. And I love the math on that advice, but guess what? It's not perfect for every single person. In fact, there's a lot of folks out there who need to claim social security a lot earlier. And in fact, The median age for folks in retirement is age 62. A lot of surveys show that 60% of people who retire, they're actually retiring way earlier than they thought. And this is for a number of different reasons. One is for health issues. Two is for job loss.
11:21 Andrew Giancola? And three is for caregiving responsibilities. Maybe they have an aging parent. They need to spend all of their time for caregiving. Or their spouse has a number of different health issues. And so they need to make sure they are caregiving for their spouse. And then fourth is burnout. They just can't do it anymore. They can't go on. And so while the ideal model out there for social security is to claim it a little bit later on, a lot of retirees are claiming it earlier than they thought they would. And so for most folks out there, the backbone to their retirement, the backbone to what they are doing and how they are retiring with no money is social security. This is how they are getting by. This is their lifeline. This is what they absolutely need in order to be able to do that. And so this is, everything else that they have saved up is just the side dish.
12:06 Andrew Giancola? Social security is what they are living on and how they are doing this. Here's some key stats on this. Roughly half of older adults, at least 50% of their income comes from social security. And roughly a quarter of retirees rely on it for 90% or more of their income. Now, let's think about this for a second. A quarter of retirees need social security for 90% of their income. You are depending on something that is completely outside of your control. You have zero control whatsoever on how much of this you are getting. For every single person listening right now, if you are not retired yet and you are working towards retirement, I don't care how old you are, how young you are, you absolutely must make sure that you are saving money for retirement. Otherwise, you are going to be living on a fixed income
12:51 Andrew Giancola? for the rest of your life that you have zero control over. And the number one thing we want to have with our money is we want to have control over our decisions and we want to have flexibility to do what we want, when we want. And that's what retirement is all about. Being able to do what we want, when we want. If you rely on social security, you will really never have freedom in your life. So you're going to be working for 30, 40, 50 years, and you're not going to have freedom. You got to ask your boss to take a day off. You're going to have to go and put in Your PTO in order just to be able to go get a doctor's appointment. And then you get to retirement age, you're not going to be able to spend any money whatsoever because you are living on this fixed income. I do not want that for anybody listening or watching this podcast. I want you to be able to have a thriving retirement. That is what this is all about.
13:36 Andrew Giancola? Now, there's been some research that has come out that said around 40% of older Americans have literally no savings whatsoever. In fact, social security is the entire thing. That is their entire plan, and that is how they retire. Remember, the average retired worker benefit right now is about $2,000 per month from social security. So the average person is getting $2,000 per month. That's $24,000 per year for each individual person and $48,000 per year for a married couple. So when we ask, how do they make it work? They're making it work with social security. That is exactly what they're doing and how they're getting by. But now I want to talk about something even bigger. I want to talk about the difference between income and expenses because this is where we're going to see how they are actually taking care of some of these expenses.
14:18 Andrew Giancola? And I want to dive deeper into these so that you can ensure that you have all of these expenses covered before you even hit retirement age. We're going to jump into that next.
14:29 Andrew Giancola? Now, there are two things that I want you to note when it comes to getting to retirement age. And there are two things that we want you to make sure that you do here before you even reach retirement age. A big one is housing and debt. Okay, so we're going to talk about housing and debt here. And around 80% of Americans over the age of 65 currently own a home. And so for the baby boomer generation and beyond, a lot of those folks own a home currently. And home prices were much more affordable than they are right now. But that did save a lot of baby boomers butts when it came to retirement. Because if you had nothing else saved up, at least you had some equity in your home. And if you can get that home paid off, that is going to allow you to reduce your living costs over that timeframe. Whereas folks who do not own a home and they're renting for the rest of their life, they may need some assistance
15:11 Andrew Giancola? or they may need to figure out a unique living situation like living with their kids or other things that are going to allow them to be able to afford all of this. And so because 80% of Americans own a home after the age of 65, that is helping them tremendously. So here is something that I want you to take away from this is I want You as you approach retirement age to try to become completely debt free. Meaning I don't want you to have car payments. I don't want you to have debt on a HELOC. I don't want you to have debt in any other area. And we want you to have your home paid off if you can. The reason for this is because it's just going to reduce that liability. It's going to reduce that stress and it's going to give you more flexibility in retirement. Imagine a retirement completely debt free where then all you have to worry about is your property taxes,
15:55 Andrew Giancola? your insurance, maintenance on the home, but you're not going to have to worry about all the costs associated with a mortgage. So instead you can get rid of that mortgage, that $2,000, $3,000 per month monthly payment at current times. And then you can then focus your time, energy and money on things that you actually want to do in retirement. So that you don't have to worry so much. Now, this is why a lot of folks take things like a reverse mortgage, which is one of the worst things that you can do out there because they at least have equity in their home and they need the additional income. But that is not a great decision for most people. And so you need to make sure that you're completely debt free. Plus you have some retirement savings there. So I want all of your debt paid off as you approach retirement age. It's going to make your life so much easier over time. Unless you have a really big retirement account or you have a lot of income coming in.
16:39 Andrew Giancola? Let's say you have five or 10 million bucks saved up and you're drawing down four to 5% on that five or $10 million. Then you may be in a situation where you can look at having a mortgage. But for most of you out there, not carrying a mortgage and being completely debt free is the way to go when you reach retirement. You do not want to go into retirement with debt because it reduces your flexibility. Also, there are people now who have carried student loans for a long time. So making sure your credit cards are paid off, making sure student loans are paid off, making sure any other of that debt is going to be really, really important. The reality is one third of older households are cost burdened. And so because they are cost burdened, this is because maybe they have debt or they have mortgages and you don't want to have that when you are looking at it. Because if you combine high housing costs with low social security payments,
17:24 Andrew Giancola? that is not a combination that anybody wants to make sure that they are trying to figure out. Otherwise you're going to be living on beans and rice throughout your entire retirement. That is the last thing I want for anybody out there. I want you to thrive in retirement. I want you to enjoy. Enjoy your retirement. Future you needs to get paid. And so you need to make sure that you are saving some extra dollars and putting them towards future you. So if you want to retire with zero savings, let's say you are approaching retirement age right now. You're listening to this podcast episode and you're saying to yourself, well, I don't have a lot saved up. Well, if you want to retire with zero savings or minimal savings, you're going to at least have to become completely debt free to make it actually work. So that you don't go deeper into debt in retirement. That's one of the number one things that you need to make sure that you are doing.
18:05 Andrew Giancola? Now here's an interesting thing. The average retirement household aged 65 plus spends about $60,000 per year. But the median is $34,000 per year or $2,800 per month. But why is there a huge difference? This is because the averages are getting pulled higher by wealthier people within these equations. And so because of this, the average is going to be completely skewed. Whereas the median is a more accurate number when we are talking about retirement spending patterns. And that is why we really care about the median. We are looking at all this specific data. Now here's the interesting thing. The way that retirees spend their money is it typically drops with age. So early on, the highest years of spending for retirees are in their 60s. And then it drops significantly after 75 and 80.
18:50 Andrew Giancola? Why? Well, a lot of retirees are moving around less. They're traveling a lot less in their 70s and 80s than they were in their 60s. In their 60s, they are still able to move around. They are still able to get to a bunch of different places. Whereas a lot of retirees currently in their 70s and 80s will travel a lot less. Now I think with the fitness revolution that is happening right now, where most people who are younger are getting fit a lot earlier. We're drinking less, we're exercising more, we're eating better. And so because of this, I think future retirees are going to be able to move around a lot better than current retirees can. Because they have a longer health span. So there's lifespan and there's health span. Your lifespan is how long you live, how old you are when you die.
19:31 Andrew Giancola? Your health span is how long can you still do pretty much everything you want to do and be healthy while doing it? And so there's a number of different things. Peter Attia has some great work on this where he talks about lifespan versus health span. And why it is so important to make sure that you're focusing your time and energy on your Health span because what does the last 10 years of your life look like? If you can't get up and move around, it is not really that great of a retirement. So focusing your time and energy on your health is really, really important. Now, one category that usually goes up later on in life is healthcare. A lot of retirees are spending a lot more on healthcare as time goes on. And so the older they get, the more you're going to spend on healthcare. You just have more health complications. It's just a natural way our bodies work.
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20:59 Andrew Giancola? where it's people who get together who are working on a common goal and they help support each other and they help learn from each other. So if you've been wanting a simple system, a clear plan, and support from a community that actually cares, join us inside Master Money Academy. Click the link below to get started at Master Money Academy and I can't wait to meet you inside.
21:20 Andrew Giancola? Now, there is another thing that could be happening with a lot of retirees that I want to talk about, and it is work in retirement. In fact, data suggests that one in five retirees over the age of 60 are still currently in the workforce. Whereas the headlines are going to say to you, oh, nobody else is working past the age of 65. No, there are a lot of retirees who still either have a part-time job or they are in the workforce. And among those working, there is a huge chunk of them who are working part-time. In fact, a large majority of them are working part-time and I think that is a good thing. Why? It keeps your mind sharp, it keeps you moving, it gives you a purpose each and every single day. Whereas a lot of retirees, if they go and sit on the recliner for the rest of their life, that is not the way. Instead, if you can earn a little extra income, make your retirement a little bit more enjoyable,
22:02 Andrew Giancola? have a purpose, keep your mind moving, you're going to live longer, your health span is going to be better, and it's going to be a way better situation. There are a lot of retirees out there who are doing this. They are working part-time, and maybe there's a number of different jobs out there that you can do. Maybe you're consulting for the industry that you worked in forever. Maybe you're working just a part-time job with something that you enjoy. Maybe you are a starter at a golf course. Maybe you're working as a yoga instructor. Maybe you're working as a spin class instructor. It doesn't matter what you're doing. There's a lot of cool things that you can do as a retiree with fun jobs that are going to help you bridge the gap as you get closer to retirement age. And so if you're someone who is approaching retirement age and you're like, I don't have a lot of savings left, or you're getting to that point in time where you're like, I gotta buckle up and do something, consider doing a part-time job.
22:45 Andrew Giancola? A part-time job is going to help you tremendously to bridge that gap so that we can have enough income on hand. The big expenses that you want to focus on, again, are healthcare. They are the big expenses you want to focus on is making sure you're debt-free. You've got your healthcare covered. You've got your housing expenses covered, and then we can move on to some of the smaller things. Now, as you get closer, let's look at the formula that actually allows people to make this work, where they have no savings on hand. Number one is they are leaning heavily on social security as we talked about at the top of the show. Social security is the biggest thing, and this is going to be the backbone for what most people are doing when they retire with no money. This is why the social security crisis that is happening right now in this country could be a massive, massive deal, where social security could get cut back.
23:28 Andrew Giancola? And if that happens, there are a lot of Americans relying on this money. There's a lot of Americans that that is their plan. If you know someone in your life who is relying on that money, you gotta figure out how to have conversations with them about this, especially if they're your parents, maybe your in-laws, maybe your grandparents. Starting to have these conversations is really, really important. Number two is most retirees are lowering their fixed costs as much as possible. They are either paying off their mortgage, or they have a minimal mortgage payment. They don't have any car payments, and they're just driving a car for longer. They are living in a cheaper area or a smaller home. Maybe they downgrade their home, and that's how they get some cash on hand. And sometimes they're even renting out a room, or their living situation is they are living with their kids or their siblings. Or whoever else. There's a lot of different things that are happening there and how people can actually do this.
24:12 Andrew Giancola? Number three is they're living a very modest lifestyle, meaning they're not spending a lot of money on lavish things. They don't have the fancy car. They don't have the big fancy house. They don't have the manicured lawn that's perfect. Instead, they're living a very modest lifestyle with home-cooked meals, minimal travel, entertainment that's low or no cost. And they have old cars, old phones, low consumption rates. All of those are ways that they are actually doing this. And then they're also, number four, supplementing with part-time work where most people think they are sitting in the recliner all day. But instead, a lot of folks are utilizing part-time work as a supplementation, and that is how they were retiring with little to no money. Now, five, and this is one we haven't covered a ton yet, but they are using Medicare and Medicaid,
24:53 Andrew Giancola? and they're using other government programs that are allowing them to supplement some of these costs and making sure that they can get some of those costs covered, including SNAP discounts, senior discounts, other facilities are out there. And then when there is a big shock, when there is a big deal that happens, they are relying on family. And a lot of family members out there, maybe their kids, are helping support aging parents as time goes on. This is just the reality of people who don't have a lot of retirement savings. They have to rely on other people. And in some cultures, this is what your duty is to your parents, is you're supposed to help them out as they age because they took care of you when you were younger. So it depends on where you are, where you live, and all these other areas. But there are some big, big trade-offs to living this way, and this is what I want most of you listening to understand. These huge trade-offs can have a massive impact on your happiness long-term.
25:38 Andrew Giancola? Number one is financial fragility, meaning that when you get older, if you are living on the edge like this, if you're living paycheck to paycheck, when you hit retirement age, that is not a good position to be in. And I don't want that for any of us. Nobody wakes up and says, hey, when I get to retirement, I want to live to paycheck to paycheck. I want to make sure that I do as little as I possibly can. I don't want to even be able to read a menu from left to right. I have to read the menu from right to left if I even can go out to eat. Because they are living on the line, this is no place to live. And that is why this podcast exists, because I want you to have an amazing life and use money as a tool that gets you what you want in life. And the last thing you want to do is live life on the edge like this when you get to retirement age,
26:20 Andrew Giancola? where your earning potential goes down dramatically after the age of 60, dramatically. And so because of this, you've got to make sure that you are buckling up right now and saving some money for future you. Future you deserves this, and you are working way too hard. See? You're fragile if you are living on the edge. You can't handle a 5,000 emergency if it comes up. If the toilet breaks, it is a huge deal for you. If you have an issue with your water heater, it's going to be a huge deal for you. And the last thing you want is for small emergencies to become a huge deal in your life. Instead, you want to make sure you have enough in retirement so that you could take care of those emergencies so you don't have to worry about it anymore. Number two is housing stress. So a lot of folks who are living on the edge like this
27:04 Andrew Giancola? are really stressed out about their housing situation. Their income is fixed. They may have health issues. They may have other things going on. And so about a third are spending 30% or more of their income on housing. What does that mean when it comes to spending 30% or more on your housing? That means you are completely house poor, meaning most of your money is going to housing. You need to control that expense as much as possible. So even if you're not retired, you need to spend 30% or less total on housing costs. That means all the costs associated with housing. If you've never run the numbers on your house or figured out what total cost of ownership of your house is, we have a free calculator that'll help you calculate that. Just go to mastermoney.co/resources and we have a total cost of ownership housing calculator. It is one of my favorite tools that we have and I highly recommend that you go through
27:48 Andrew Giancola? and look at that if you have not already. Three is your health and longevity are going to suffer if you don't have enough money on hand. What if you don't have enough money to cover doctor costs? Or what if you don't have enough money to, maybe you need specialized treatment and you don't have enough money to cover that specialized treatment? That is no way, place, shape, or form to live. One of the reasons why I love building wealth is because I want to have the medical attention that I need later on down the line. It has to be the worst feeling in the world to get to a point in time where you don't have enough money on hand to even cover specific medical costs that you need to take care of something. Let's say, for example, that you fall and you break your leg. Well, if you break your leg, there's a number of different things that you may need to get that leg back to normal, especially as you begin to age. Maybe you need physical therapy.
28:32 Andrew Giancola? Maybe there are other things that you need to take care of. And if you don't have the coverage or if Medicare doesn't cover specific treatments and you need those treatments, that is not a place to live. That is not a thriving life. And we want you to thrive in this life and use money as a tool to get what you want. Out of life. And lastly, number four, it is impossible to have impact on the next generation. If you are always living paycheck to paycheck, you need to make sure that you build wealth so that you can help the next generation. A wise person leaves an inheritance to their children. A wise person is someone who is here giving an impact to the next generation. If you can't do that, you are going to regret it for the rest of your life. And so making sure that you actually think about this is really, really important. So what does this mean for you? What does this mean for you if you are getting started here?
29:17 Andrew Giancola? Or if you're just learning about money or you're getting your finances together? Number one is you're not doomed if you're behind. See, you found the personal finance podcast. You found master money. You are here. We're going to get you going here. And I want you to continue to make sure you're subscribed to this podcast and make sure you keep listening because we're going to get the ball rolling. We're starting, we're going to build a snowball for you. And over time, you're going to be able to roll that snowball downhill and compound interest is going to take over. And you're going to be so happy you started today. Obviously, the best time to plant a tree was yesterday, but the second best time is today. And so millions of people are making it work with modest incomes in retirement. It's not over if you did not save enough, but social security, a paid off home, debt free. That is a great starting point when you are looking to get started.
29:59 Andrew Giancola? Now, what does this also tell you though, is that you don't need to be a multimillionaire to retire. You can get by and retire earlier if you absolutely need to, or you absolutely want to. And then in addition, you can find some additional income sources, maybe a part-time job, maybe a side hustle. Maybe you resell things on eBay. There's so many different things out there that you can do, especially if you have extra time on hand. So that is something that is going to be really, really good. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before. And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company.
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35:29 Andrew Giancola? Now, if you're behind, I'm going to give you the playbook right now on what you need to be doing. Number one is you need to get brutally honest with the numbers. Where do you currently stand? And how much money do you think you actually need to cover your costs? So if one, you want to figure out what your annual spending is. And you want to track this number every single year. So at the beginning of the year or the end of the year, you want to figure out what your annual spending is. And then you want to multiply that number by 25. That is going to give you the number that you need to have invested in retirement to cover all of your costs. Now, we can do the math and figure out, okay, well, social security is going to cover a portion of this. And then I need to make sure I fill in the retirement gap. So if you have a pension or anything else, that could help to fill in the retirement gap. And then the rest needs to come from your investments.
36:10 Andrew Giancola? And so investing your money is the only way to live a retirement life that is going to be something that is worth living. Again, I'm going to say this again. Investing your money is the only way to live a retirement life that is worth living. Because if you're living paycheck to paycheck, you're going to be watching reruns of Matlock for the rest of your life. I don't want that for any person listening to this podcast. And so making sure that we do this right is really, really important. So don't panic when you look at the number. Just multiply how much you spend every single year by 25. Then we figure out what social security is. So number two, so we look at social security and we say to ourselves, okay, I want to make, I want to, I spend $100,000 per year right now. What do I got to do? Well, social security is going to cover 24,000 for me, 24,000 for my spouse.
36:52 Andrew Giancola? So I need to come up with $52,000 every single year to cover the rest of this. Okay, that's your retirement gap number. And so when you have that number in place, then we're going to think about, well, how do we cover that $52,000 per year? Maybe you have a pension and that pension is going to be another $12,000 or $1,000 per month. Okay, now we need to cover the rest, which is another 40,000. We have 40,000 left of our 100,000 that we need to get covered. And so when we do this, we think about a number of different things. Well, how much do we need invested? We need at most a million dollars invested to cover that. Why? Because you can withdraw 4% a year modestly and still preserve your money throughout retirement. But you can get a little more aggressive and do four and a half, maybe even five, as a lot of the research has been showing over the course of the last couple of years.
37:36 Andrew Giancola? And so at the most, you need a million dollars invested in order to cover that difference of 40,000. Otherwise, you're going to have to reduce the amount that you're spending every single year in retirement if you can't get there. And so if you are someone out there who feels behind, increasing your savings rate right now is the number one thing that I want you to do. And try to accelerate your path to getting to wealth. But then also, if you can't save enough fast enough, then you can build in flexibility. How do we do that? We take a part-time job to cover some of our costs because we know as we age, we're going to be spending less than we do currently right now. And so maybe in your 60s, you take a part-time job that allows you to, one, cover the rest of the costs and two, maybe even invest a little bit more so that in your 70s, you don't have to worry anymore. In your 80s, you don't have to worry anymore.
38:21 Andrew Giancola? So you have this part-time job where you get your time back, you get your life back, you get your flexibility back. But then in addition, you are able to bridge the gap all the way into your 70s, 80s, 90s. Hey, we want you to live past 100. And so that's where we want you to get to. And if you could take that part-time job, that's going to help you a lot if you don't have enough on hand to cover the rest. And so that's just an example of how someone can look at this and take it step by step. Now, those of you who are younger, if you are not approaching retirement age right now, and you are younger, what should you be doing? One, you should be investing your money often, every single month. And you need to make sure that you're investing your dollars for your future. Now, how do you do this? You can do this in retirement account. The way that we look at this in Master Money Academy is we give you the exact order
39:04 Andrew Giancola? in the Wealth Builder's Journey of exactly what to do next with your money. And so when we look at the Wealth Builder's Journey, there's a number of different things that we need to do is we need to look at retirement accounts, things like your HSA, things like your Roth IRA, your 401K. All of these retirement accounts are fantastic to help you bridge the gap to getting to retirement. In addition, looking at a taxable brokerage account, for those of you who want to retire early, a taxable brokerage account is amazing because it builds in flexibility into your life. And I love that for each and every single one of us to try to build in this flexibility so that we have this powerful way to get ourselves to retirement and bridge the gap to retirement. So investing your money is number one. Two, is saving up cash on hand. So building up your emergency fund using the 136 method.
39:47 Andrew Giancola? And if you've never heard our episode on the 136 method, I highly, highly encourage you to check out that episode. It is one of my favorite episodes that we do, but it is our framework surrounding how to build up your emergency fund. And so you save up one month, then you save up three months of expenses, then six months of expenses. And then as you start to approach retirement age, I want you to have an even bigger emergency fund. Because if the market takes a dip, or if there's volatility in the market, you don't want to pull from your portfolio, you have some additional cash on hand during those crazy market times, where we don't really want to always be pulling from our portfolio. So that gives you an extra cushion. Is it required? No, but do I think it's for most people, they need to be doing it? Yes, I think you need to have a couple of years of cash on hand. And so building that emergency fund slowly throughout your life can be something that you do. Now, you can also utilize a taxable brokerage account to do this
40:32 Andrew Giancola? if you have a really long time horizon, because you can keep those dollars invested. And then you have that extra couple of years saved up and invested, and you could start to withdraw them from that portfolio earlier as you get closer to retirement age. So there's a lot of different options there. Okay, three is you need to track your retirement number every single year. Meaning, how much do I need in retirement? Because this is going to change year over year. This is not something that you track every 10 years or every five years. You're like, oh, I'll get to it as I get closer to retirement age. No, it's going to change every year. And so we need to make sure we are tracking it so that we ensure that our goals are on track. Because if there's a big shift in your retirement number and you waited 10 years to start tracking it, what's going to happen here is that you're going to have to play catch up. And you're going to have to play really aggressive catch up. So instead, tracking it every single year
41:17 Andrew Giancola? means that we can make small tweaks within our plan. And it's not a big deal. It's not going to be a big deal as it would be if you waited too long. And so I want you to make sure that you're tracking your retirement number every single year. Four is we need to increase our savings rate, depending on when we want to retire. And so there's numbers that we want to look at to ensure that our savings rate is at least 20% of our income. And then trying to tick it up more as time goes on and as our income increases. So as your income rises, take a portion of that income and put it towards your savings rate so that you can increase the percentage that you're saving year in and year out. So those are some of the big things that you can do to make sure that you're on track in retirement. Again, for most of you out there, I do not want you to live in paycheck to paycheck in retirement. The time is now for you to be able to make the change,
42:02 Andrew Giancola? to make the shift. And I want to see that from every single one of you. Because once we get this ball rolling and you get your plan in place, then all you have to do is start rolling the snowball downhill. Compound interest will take over, and you don't have to worry about it as much. And so Making your money and doing all these different things that we talk about all the time in Master Money Academy is gonna be the way to go. Again, if you want to join Master Money Academy, there will be a link down below in the show notes. We do weekly calls with me every single week and myself and the team would be so excited to see you inside of Master Money Academy. So I would love to have each and every single one of you there inside Master Money Academy. So I would love to meet every single one of you. So I appreciate you being here. Thank you so much for listening to Personal Finance Podcast. Please make sure you subscribe. Give us a thumbs up on YouTube. Wherever you're listening,
42:46 Andrew Giancola? I appreciate every single one of you and we'll see you on the next episode.
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