Pod Insights The Personal Finance Podcast How to Plan Your Retirement (By Age!) About this episode Retirement is not an age. It is a number. However, most people have no idea what their retirement number actually is. What if you could calculate it clearly and know exactly where you stand every year? Andrew will walk you through the complete process of finding that number, adjusting it every year, and taking the right steps at every stage of life to hit it in this episode.
👉 Free retirement calculator to find your retirement number! Here
What You'll Learn in This Episode
How to calculate your exact retirement number step-by-step
The biggest mistake people make when estimating retirement (and how to fix it)
How to account for healthcare, inflation, and future lifestyle changes
What to prioritize financially in your 20s, 30s, 40s, 50s, and 60s
Why your 30s are the decade that makes or breaks your financial future
How to use the gap formula to figure out exactly how much you need invested
How to close the gap between where you are and where you want to be
Start Here
Join the community built to help you master your money, stay accountable, and reach financial freedom.
👉 Try Master Money Academy FREE for 7 days today!
👉 Join Andrew’s FREE Investing for Beginners Masterclass.
👉 Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here!
Partner Deals
Indeed → Get a $75 sponsored job credit http://Indeed.com/personalfinance
Policygenius → Free life insurance quote http://policygenius.com
Acorns → Start investing + get $5 bonus http://acorns.com/pfp
Monarch → The all-in-one financial tool + Get 50% Off at http://www.monarch.com/PFP
Shopify → Sign up for your one-dollar-per-month trial today at http://shopify.com/pfp
Wayfair → Get 80% OFF on April 25th through the 27th http://wayfair.com
DeleteMe → 20% off with code PFP https://joindeleteme.com/PFP20/
Episode/s Mentioned
How to Access Your Retirement Funds Early!
How to Access Your Retirement Accounts EARLY (Roth IRA Conversion Ladder for the FIRE Movement)
Watch Next
10 Reasons Smart People Are Bad With Money
The Money Plan for Couples: How to Build Wealth as a Team (Step-by-Step)
How to Invest in Real Estate (In ANY MARKET!)
The Best Financial Strategies (BY INCOME!)
Why Health is Wealth with Justin David Carl
Connect with Andrew
Instagram
Website
TikTok
X
LinkedIn
YouTube
Question for you:
What decade are you in right now, and what is the one money move you are most focused on? Drop it in the comments below.
Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript 11,851 words · 2 speakers
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.
0:44 Andrew Giancola? Their AI can help with SEO, website copy, email marketing, and more. Plus, your domain, website, email, and marketing can all live in one account, with plans starting at just $3 every single month. Hostinger builds your vision step by step. Create your website today. Go to hostinger.com/pfp and use code PFP for 10% off now. Now, if you watch this podcast on Spotify, Apple Podcasts, or YouTube, you've probably noticed the wood slat walls behind us. We wanted this podcast set to look professional, but also not be a project that was overly complicated. And I found these slat walls on Wayfair, and it completely changed this space. And it's now basically the background that you see in every single podcast
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.
2:14 Andrew Giancola? Head to wayfair.com or shop the Wayfair app for all things home. That's W-A-Y-F-A-I-R.com. Wayfair: Every Style, Every Home.
2:28 Andrew Giancola? On this episode of the Personal Finance Podcast, how to plan out retirement by age.
2:41 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 talking through how to find your retirement number by age. 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 Apple Podcasts, Spotify, 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. Now, today, we're going to be talking through how to plan out your retirement number by age.
3:24 Andrew Giancola? And this is one of those things that every single person, I truthfully believe, needs to track their retirement number every single year. This is not something that you can wait every five years or every 10 years and track your retirement number. I think this is something you need to do on a yearly basis. And at the top of this show, what I'm going to do is I'm going to show you exactly how to track your retirement number step by step. Then we're going to dive into how to plan out your retirement number by age and some of the things that you need to focus on, some of the things you need to be thinking about by age. So the first thing we're going to do is step one is we are going to start with what we are spending today. This is one of the most important metrics that you need to know is figuring out where you stand right now. And I want you to pull out your bank statements and I want you to add up how much you're spending on a yearly basis. Now, you can figure this out a number of different ways.
4:09 Andrew Giancola? One, you can take the average of the last couple of months, figure out what that average is, multiply it by 12, and you can figure out how much you spend that way. Two is if you use an app like Monarch Money, you can go in there and look at your yearly spending over the course of the last year. This is one of the beautiful things about using Monarch Money is that you can go back and figure out these numbers very, very quickly. In fact, Monarch Money now has an AI assistant where you can chat with it and ask it a few questions. And it is still in beta mode, but it is something in a feature that you can use. Three is you can also pull Pull out your bank statements and you can take out all the personal information that's on your bank statements, throw them into some sort of AI tool and say, hey, how much do I spend every single month? But you want to make sure you are careful about privacy when it comes to this,
4:50 Andrew Giancola? because you do not want it to have too much information. So these are three things that you could do upfront, but I just highly recommend that you go through, figure out how much you spend every single month. That is number one. Now, we are looking at what we are spending right now. And you may be saying to yourself, well, why would I care about what I spend right now? I'm trying to figure out how much I'm going to be spending in retirement. This is a very hard number to figure out exactly what it is. So instead, I want you to go out and figure out what you're spending now. We're going to use this as a baseline and I'm going to show you how to think about this going forward. Now, step two is I want you to think about the expenses that are going to be gone over the course of the next couple of years. So maybe your plan is to pay off your mortgage before you retire. Well, are you on track to do this? Or are you going to own your home for 30 years by the time you hit retirement age and you know that mortgage
5:34 Andrew Giancola? is going to be paid off? Well, that is a great indicator that you may not need, you know, the amount that you're paying towards your mortgage. Or are your kids going to be out of the house and those expenses are going to be gone? Then you may not need to think about those. Or maybe you have a car payment and you're not planning on having a car payment. You're going to have additional debt payments right now that you do not plan on having in the future. Maybe you're paying for your kid's school or extracurricular activities. Those types of things can get removed from your overall budget when you're thinking about your retirement number, because the likelihood of you having those extra expenses is not going to be there. And so we want to take out all the expenses that we do not anticipate being part of our budget in retirement. Now, if you're saying to yourself, now I want some extra cushion, you can absolutely leave those in if you are okay with
6:18 Andrew Giancola? the risk of having to work longer. But if you are someone who really wants to retire as fast as you possibly can, I would remove some of those if you know they're not going to be there by the time you hit your retirement age. Now, if you are totally unsure, and you're like, I don't know what expenses are going to be there. I don't know which ones are not going to be there. Then you want to make sure that you just leave them in and you can use the number of how much you're spending right now. Now, the next thing we want to do is we want to factor back in healthcare. Now, healthcare is one of the biggest variables when it comes to retirement. In fact, Healthcare spending rises dramatically once you reach retirement age and folks after the age of 70, spend a lot more on healthcare, studies show than folks before the age of 70. And so we want to make sure that we are factoring in healthcare costs.
7:01 Andrew Giancola? In fact, the average couple is going to spend over $300,000 in retirement when it comes to healthcare. So how do we plan for this and how do we think about this? So we can look at the average inflation rate of healthcare over the course of the last decade, and we are seeing a rapid rise in the cost of healthcare. In fact, inflation for healthcare is very different than inflation for other areas. And we are seeing a 6% increase in healthcare costs in comparison to some of these other areas. So you want to add healthcare back in, and this is where your HSA comes in in a lot of scenarios as well. Your HSA could be the forced savings retirement account if you're not using it for your yearly expenses that could help you with this problem, where a lot of people are like, well, what if I overfund my HSA?
7:42 Andrew Giancola? In my opinion, that is an okay problem to have is to overfund your HSA because healthcare costs are continuing to rise. And I think a lot of people in the future are going to be living a lot longer with AI taking over a lot of different healthcare opportunities. They are stating now that there is going to be robots that are going to be able to perform surgery on you. And if that's the case, I would anticipate there's going to be a lot more cures for diseases going forward. And so we need to plan that we're going to live a little longer than currently people are right now, especially if you're in your 20s or 30s. That is something I definitely want you to plan for. So making sure you have enough on hand for healthcare, I think, is a very important metric and a very important number that we need to note. And so adding healthcare back in can be very, very powerful. Now, if you're saying to yourself, well, I don't know how much I'm going to have saved for healthcare,
8:27 Andrew Giancola? just factor in some of the averages here and you can come up with a number that makes sense for you. Maybe it's having $300,000 as a household or as a family saved up in addition for some of those healthcare expenses. But again, remember you're going to have Medicare and you're going to have some other options available to you once you reach retirement age. Now, the other thing you need to do is step four. Step four is to inflate the number that you have going forward. So I want you to adjust your contributions moving forward by the inflation rate. But then in addition, we also want to know what the cost of living is going to be over the course of the next 20 to 30 years. There are inflation calculators out there that are great to help you with this, that you can go through and figure out exactly how much your dollar is going to be worth and how much your dollar can stretch over this timeframe. Now, let me tell you all right now,
9:10 Andrew Giancola? this is why we invest our dollars for retirement and we don't keep it in cash. We invest our dollars because going forward, we want to make sure that we have enough cash on hand in order to outpace inflation. This is why we put these portfolios in place. This is why we invest our money for our financial future because typically, our investments are going to outpace inflation. But we want to know what our buying power is. And so you can look 20 to 30 years ahead and see what your buying power is going to be based on the amount that you're spending right now. And inflation calculators can help with that as you go through this. Next, step five is I want you to add up all your different income sources. So you could have income sources coming in from a number of different ways. It all depends on your personal finance situation. This is why I don't like when people say, oh,
9:52 Andrew Giancola? you need 5X of your salary saved by the time you're 30 or 40 or 50. I don't like those generic things because everybody has different income sources coming in. Everybody has different financial situations coming in. And so I don't think there's a blanket statement for anyone. It's going to depend on the math and it's going to depend on what you need. Now, I want you to remember this right now. Retirement is not an age. Retirement is a number. And once you hit the specific number, you will be able to retire. And so that's why we are going through this exercise to figure out what your number is. So then going forward, you have your North Star. You know what you're going to be doing going forward. This is where you need to be when it comes to building wealth. All right. So we need to look and first, you can go to ssa.gov. You can sign up for an account there and you could try to figure out exactly where your
10:36 Andrew Giancola? social security will be by the time you reach retirement age. Now, if you're getting closer to retirement age, this is going to be a much more accurate number than maybe someone who's in their twenties or thirties trying to figure out what this number is. You can do an underestimate. I like to underestimate everything when it comes to retirement. That way, as I get closer to retirement age, I know I'm either on track or way ahead and I can actually retire sooner, which is a beautiful thing to look at. Next is I want you to, so you're going to factor in these different income sources. So first, social security. What do you think you're going to have on hand in social security? Another thing would be any Pension income that you have available to you. I want it to be your net pension income, not your gross pension income, but after taxes, how much you think you have available to you. We want to have some of these net numbers because this is the real money we're dealing with.
11:21 Andrew Giancola? This is the money that's actually hitting your checking account. And we want to make sure that we have that on hand. Then adding in any rental income, if you have rental properties or you have anything else that you think is going to be cash flowing, then we want to add in that rental income after operating expenses. So your net operating expenses are going to be something that you want to factor in. And then you want to look at the cash flow after all of your operating expenses. So your cash flow is not what you're renting the property for. No, you need to run the numbers and understand exactly what your cash flow is going to be. For most people out there, maybe it's a couple hundred bucks per property. Maybe you have a couple of properties and you're going to be making a few thousand bucks. Or maybe you have a lot of rental properties and it's going to cover your entire lifestyle expenses. Well, that's a great number to have and we need to factor that in.
12:03 Andrew Giancola? And then add any other passive income sources that you think that you have. Maybe you have a passive income source out there where you're investing in a business and that business is going to be paying you over time. Or maybe you think you're going to have another passive income source where you invest in notes or something else. Add all of those different things in so that you know exactly how much you're going to need. The reason why we're doing this is we're going to find the gap so we know how much we have to have invested in our portfolio. And so you can think about all of your income sources and add those up. Now, you may not have a pension. You may not have real estate income or income from property. You may not have passive income. And so maybe the only thing you have is social security. That's okay because we're going to figure out exactly what that number is. But I want you to start to add those items up. And then I want you to think about that total number.
12:46 Andrew Giancola? Because next, we're going to subtract our total income from some of our inflation adjusted spending. So we figured out, hey, here's how much money we need in order to going forward, spend in retirement. Here's how much income we are going to have coming in. What's the difference here? What is the gap between those two things? The gap is how much we're going to need to have invested. And so longtime listeners have heard me talk about the 25X rule on this show. This is something I think most people need to make sure they are factoring in and figuring out is exactly where they stand. And when it comes to that number, because let's say, for example, that you want to spend a hundred thousand dollars per year in retirement.
13:26 Andrew Giancola? And let's say, for example, 40,000 of that is going to be covered just by the income coming in. Maybe it's your social security, maybe you have a rental property or two. And so 40,000 per year is going to be covered based on the income you already are going to have available to you. Well, now we just need to come up with the extra 60,000 and invest those dollars in our portfolio. And so this is where the gap is going to be. And this is exactly how we figure out how much we are going to need to have invested. And so you can reverse engineer this a couple of different ways. Number one is you can think about, and I'm actually going to do this in a little more advanced way than 25x rule. So you can do the simple math, the 25x rule if you want to. We're going to actually think through this in a way where you can decide how much you think you're going to withdraw in your portfolio. If you don't know where to start with that, look at the 4% rule. You can look deeper into that, and that is going to be a great place to start.
14:11 Andrew Giancola? Meaning if you have $2 million invested, you could draw down 4%, which is $80,000 per year. That is going to be the safe withdrawal rate that a lot of people start with. And then you can adjust based on that. If you're retiring early, you may want to only withdraw 3%. If you are retiring in your 60s, maybe you want to withdraw 5%. But this calculation I'm about to give you is going to help you figure out exactly what that number is. So once you have your income sources, you subtract that from how much you need, and all of a sudden you have a number. So again, let's do this with the simple math of $40,000 per year is your income sources, and you still need another $60,000 per year because you want to spend a hundred thousand dollars per year in retirement. And so you have this $60,000 per year. Where are we going to get this from? Well, we need to get our dollars invested, and we need to start growing our wealth over time.
14:53 Andrew Giancola? But we need to decide how much we need to have invested before we are financially free. And so you can take your annual gap number, and you can take that number, and you can divide it by your withdrawal rate. So if you're going to withdraw 3% or 4% or 5%, you can do the math to figure out exactly how much you need in your portfolio. So it's going to be your annual gap number divided by your withdrawal rate, and that is going to equal your retirement number. So here's the quick math on this.
15:23 Andrew Giancola? And I'm going to pull out my old trusty calculator on my phone here. So let's use our $60,000 per year. Let's use that number as the amount that we need. All right, so we're going to put $60,000 into a calculator here. And we are going to divide that by the annual withdrawal rate. So let's say, for example, that you want to withdraw 3%. Well, I'm going to put .03 in there and I'm going to hit equals. And that's going to tell me right there that if I want $60,000 and I'm going to only withdraw 3% every year, I need $2 million in that portfolio. Let's do this again. Let's say $60,000 per year, but this time we're going to do the 4% rule. Well, if you do the quick math on the 4% rule or the 25X rule, you know that that is going to be where you're going to need $1.5 million. But let's do the math here.
16:08 Andrew Giancola? We're going to divide that by .04 and booyakasha. We have $1.5 million inside that account. This is the simple math that you can do is divide it by the amount that you are withdrawing. All right, let's say we want to do 5% and we're going to withdraw 5%. Maybe we're retiring a little later or we want to get aggressive with our portfolio and we are okay with that. Well, let's say $60,000 divided by .05. That is going to equal $1.2 million is how much we need invested in our portfolio. And so this is a great way to figure out a very accurate number of what your retirement number is going to be based on your withdrawal rate. Now, we are going to have an episode coming up, talking through the different ways to think about withdrawal rates, the sequence of returns risk.
16:53 Andrew Giancola? In addition, we're going to talk about guardrails and how it could be very important to have guardrails in place based on what the market is going to do. And this can give you a flexible retirement where in some years you're going to be spending a lot more than in other years. And so we have that episode coming up for you. So get ready for that. But these are the steps you need to take to find your retirement number and get a really accurate retirement number. These are the steps we teach inside Master Money Academy and we dive even deeper than this in that. So I really, really want each and every single one of you to make sure that you understand and know how this works before we dive into how to prioritize things based on your age. And so this is how you find your retirement number. So now let's dive into how to plan out your retirement number by age. So if that's something you're into, let's get into it.
17:40 Andrew Giancola? All right, so let's start with our twenties first. And in your twenties, I want you still tracking your retirement number on a yearly basis. Now, guess what? The reason why we do this is because the goalpost is going to move. And the reason why I started to do this was because in my twenties, so many different things changed in my financial life that I had to start doing this to actually get an accurate picture. Where every single year, usually I did it towards the end of the year. And if I missed it, I would do it towards the beginning of the year. I would set up a time to start to track my retirement number. Now, I would do the exact steps that we did at the top of this show. And if you're in your twenties, you're going to realize very quickly that over the course of the next couple of years, your life's going to change dramatically. Maybe you get married. Maybe you have your first kids. Maybe you get a lot of different wage increases because you are working hard at your day job.
18:25 Andrew Giancola? All of this stuff is going to be shifting. And into your thirties is going to shift even faster. And so you want to make sure that you're tracking this on a yearly basis. Because if you don't, and you think it's just magically going to happen, and you're going to save enough cash on hand, then you're going to feel like you're too far behind or way too far ahead, and you weren't spending enough on things that you actually love. So instead, we want to make sure that we are tracking this on a yearly basis. Because that goalpost is going to move. My goalpost continues to move even at the age of 37 right now. And so I really, really want to make sure that each and every single one of you is on track and on target to make this work well. So number one is I want you to get that free money first. Obviously, you're going to get that 401k match. This is going to help you dramatically, especially if you start in your twenties.
19:07 Andrew Giancola? This is going to help your retirement account be much larger than most other people. In fact, we have done studies in the past where we have shown that people who get their 401k match have high six-figure differences in their portfolio from people who don't. In fact, if it's a long enough time horizon, if you're going to work for 45 years, it'll be a seven-figure difference by getting that employer match than from not getting that employer match. So if you want to make sure things like healthcare is covered in your portfolio, or you want to make sure that you have that extra money to go out and travel, getting that 401k match is going to boost your retirement by hundreds of thousands, if not millions of dollars, depending on what your time horizon is as to when you are going to retire. So every single person in their twenties, you got to make sure that you are getting your employer
19:49 Andrew Giancola? Match and make sure you're taking advantage of that 100% rate of return. Step two is get that Roth IRA going as early as you possibly can. When you're in your twenties, this is a great time to open a Roth IRA because future you is probably going to be making more money. And so you don't usually need the tax break right now when you're in a lower tax bracket. Instead, you're going to need it later on down the line. So the Roth IRA means that money goes in, that's already been taxed. It grows tax-free and you could pull the money out tax-free at any given time. So you're deferring having to take on a tax bill later on, and instead you're paying taxes right now. And getting that tax-free growth and getting to pull that money out. Well, the tax-free growth when you're young is the majority of your money. And so I really want you to realize this because it is very, very powerful. You can get $7,500 per year into a Roth IRA right now.
20:33 Andrew Giancola? Now, step three is your overall goal should be to save 20% of your income. Meaning 20% of your income needs to go towards emergency fund or investing. And it needs to go towards those wealth building activities. Why? Because if you'd save less than 20% of your income, you're going to be working for a very long period of time. And that is going to be something where we don't want you working over 30 years. So saving 20% of your income allows you to reduce the time that you're going to be working. And is going to help you dramatically in the long run. So a lot of people out there hear people say, oh, just save 10% of your income. Well, if you save 10% of your income, you're going to be working for around 40 years of your lifetime by saving that 10% of your income. So instead, we want you to reduce the amount of time that you're saving.
21:15 Andrew Giancola? And your savings rate by far is one of the most important things that you can do. We have an episode coming up just talking through savings rate and how powerful it is. But it is one of the most important things that you can focus on, especially early and often. And then increasing that savings rate over time can be very, very important. Now, if you can only save 10% of your income right now, and you're just trying to get by, you're living paycheck to paycheck. You don't make a lot of money yet. Then we want you to do the 1% increase every single month or every couple of months. So that you can slowly turn up that dial and increase the amount that you're saving and investing. Just do it by small amounts over time. Increase it by 50 bucks, 100 bucks, 150 bucks every couple of months. And try to increase your income slowly over that timeframe as well. That is going to help you get this.
21:59 Andrew Giancola? Because if you start right now, you gotta start as early as you possibly can. And if you start as early as you possibly can, it'll change your life forever. Remember, every single dollar you spend today is going to be worth $10.06 in 30 years. If you got a 10% rate of return. And so making sure that some of those dollars that you make right now goes towards investments is going to help you so much in the long run. And then step four is I want you to focus on milestones. There are milestones. This is what motivated me in my twenties. When I was living paycheck to paycheck, I said, hey, I just want to get to my first $100,000. I just want to get to my first $10,000. I just want to get to those two numbers as fast as I possibly can. So there are some milestones that'll change your life in your twenties. Your first $10,000 saved and invested is very, very powerful. And I want you to get there as fast as you possibly can.
22:42 Andrew Giancola? If you're just getting started, then I want you to try to get to your first $100,000. Once you get to your first 10 and use some of the milestones along the way. Maybe it's $50,000 in between to keep you motivated. Because your savings rate is going to propel all of this when it comes to your first hundred grand. That is something you need to know is that your savings rate is going to do all the work. Compound interest takes over later on down the line. But your savings rate is going to do all the work and you gotta build up that base and you gotta build up that foundation. So get to your first 10, get to your first 50 and get to your first 100 in your twenties. So that you don't have to worry about this later on in your thirties. If you do those things and you get to your first 100 grand in your twenties, you are going to be so much better off than everybody else just sat on their hands or spent it all on going out or spent it on a brand new car
23:26 Andrew Giancola? or a really nice apartment downtown or whatever else they blow money on. You will be in a much better situation than anybody else that does that. So in your twenties, I want you to get the systems in place. I want you to get the automations in place and the behavior you build now will be worth its weight in gold in the future. Remember that and say that to yourself every single time you want to blow money on a big purchase. The behavior that you build right now will save you so much going forward. Now, I want you to also have the balance and the ability to be able to do what you want with your money. And so we'll talk more about that as time goes on. But these are the foundations that you need in order to plan out your retirement. Tracking your retirement number every single year, getting that habit going. So you know exactly where you think you're going to land is going to be important. Then in your twenties, you have the time to You tweak this, then you could say, I want to retire at 55.
24:11 Andrew Giancola? Now, I can, I actually want to retire at 50. If you get really good at this, you can retire in your 40s easily. And I've seen people do it in their 30s even because you have enough time and you have enough thought to do this. Your wherewithal when it comes to your retirement number is going to change your life forever. Now let's get to the 30s.
24:30 Andrew Giancola? Your 30s is where the paths cross, where people are in their 20s, who said, I'm going to start later, finally hit their 30s and it comes a lot faster than they ever thought it would. And all of a sudden they realize, oh shoot, I am behind. This is what the regret that I do not want anybody listening to this podcast to have. And if you do feel this regret right now, and the way that you found this podcast was because you wanted to get your money right. Well, boy, oh, boy, did you come to the right spot because your boy has got you. We're going to help you out through this process. The good news is your income is probably rising. And the good news is most likely you are advancing in your career. And the other good news is hopefully you have some sort of delta or gap in place in order to invest some of your money. If you don't, that's a okay, we're going to figure out a way to get you there.
25:13 Andrew Giancola? But for most of you out there, you want to make sure you find that delta. Now, what do most people do in their 30s when they're bad with money? This is what I call the dangerous decade. In fact, it is the most dangerous decade of your life. Because if you fall into those money traps, you fall into the trap of buying the fancy brand new car. Or you fall into the trap of getting a house that is way more than you can afford. Or you fall into the trap of just spending way too much money on designer or luxury items. And you get used to that lifestyle when you really and truthfully can't afford it. Now, if you can afford it, I love it for you. I love that for you if you can afford this stuff. But if you can't, guess what? You are going to get yourself in a whirlwind of problems. And especially if you are starting late and you did not start investing and you also do some of those things.
25:57 Andrew Giancola? You really are going to have to drastically change. It's a lot harder to go backwards when it comes to money than it is to make sure you just don't get yourself into hot water in the first place. And so we're going to go through some of the things that you need to do in order to make sure you're maximizing the dangerous decade, the messy middle, the decade where everything starts to happen, where overall you're making more money, but also your obligations are increasing. Especially if you're getting married or you're having kids, your expenses are rising. Let me tell you right now, as someone who is now in their late 30s, I understand how fast your expenses can rise in your 30s, especially when your family is growing. And a lot of you out there who listen to this podcast, your family is growing. It's a big motivator as to why you want to build generational wealth because you want to do it for your family. And so let's dive into some of the stuff you need to do.
26:42 Andrew Giancola? A maxing out that Roth every year, that should be a no brainer for every single one of you. If you're not doing so, make sure you do that. Also, get your 401k match, obviously, and start to increase the contributions to your 401k. Every single year, every time you get a raise, those contributions should be increasing. In fact, you should be putting at least 50% of your raise towards wealth building activities, if not more, and increasing the amount that you are putting towards some of these things. So if your employer offers a 401k, that is absolutely fantastic. The other thing is if you're planning on retiring early, opening up a taxable brokerage account is what you want to be doing because this is the bridge account and the easiest account to retire early with. In fact, I would argue that the taxable brokerage account is a fantastic place to put a large portion of your income
27:27 Andrew Giancola? if you are going to retire early. So once your Roth IRA is covered, your employer match is covered and you decide, actually, I'm going to retire early, then maybe you want to put the taxable brokerage account even in front of the 401k. There's nothing wrong with that because you're going to be paying long-term capital gains tax on that. And for a lot of folks out there, if you reach retirement age and you're not going to have a high income in retirement, this is going to be where you're not really going to be paying much tax at all, if any, depending on your financial situation. Also, when you're in your 30s, I want you to start thinking about real estate. If that is something you're interested in, it is not for everybody. But if you do want to start thinking about real estate, now is the time to maybe get your first property, start to feel as though you are making some progress here. And a lot of folks out there are just trying to get to be homeowners.
28:11 Andrew Giancola? If you want to be a homeowner, just make sure you buy right. Run total cost of ownership before you do that. A lot of people are making a lot of big mistakes in their 30s that they should not be making. And if they had the right education in place, they would not be making. Now, we have an episode coming up on creative ways to buy a home. We're going to talk about creative financing and creative ways to buy a home that maybe most people would not talk about. And we're going to have an expert coming on on creative financing when it comes to buying your own personal residence. So if you're interested in that, make sure you subscribe to this podcast because that is coming up soon. Now, the big thing that I want you to do. And this is the big, big thing for folks in their 30s is to fight lifestyle inflation. It is going to come at you like a thief in the night. And you're not going to notice that all of a sudden you're spending a little more on groceries
28:55 Andrew Giancola? and you're spending a little more on subscriptions and you're spending a little more on kids activities and you're spending a little more on dining out and you're spending a little more on convenience and you bought the nicer house and you bought the nicer car. And all of a sudden you're buying the nicer tools for your garage or you're buying the nicer handbags for your closet and all of a sudden, everything just starts increasing. And by the time you know it, you have doubled the amount that you're spending in the decade. I don't want that to happen to you. And so you gotta stay on top of where your money is going. If you feel as though your spending is getting out of hand, I recommend the five minute drill. The five minute drill means that you take out your budgeting software. And I really think that most people should have some sort of budgeting software. We use Monarch Money here. There's a bunch of great ones out there. Monarch Money is absolutely fantastic. We have a code down below.
29:40 Andrew Giancola? If you want 50% off, you can use code PFP. But with Monarch Money, this is a tool that's going to help you make sure that you're just on track and on top of your money. And the way the five minute drill works is that you log into your app and every day for five minutes, you just categorize your expenses. I like to do this at a trigger time, meaning my first five minutes at lunch, I like to categorize my expenses for the previous day and whatever happened that morning, if I spent money that morning. That's going to help me stay on top of this. News flash, and guess what? This only takes like 90 seconds. It doesn't take more than five minutes. And for most people, once you have this organized and set up, you really barely take any time at all. You can miss a day or two and still it's going to be less than five minutes. Because most people don't have 50 transactions a day.
30:24 Andrew Giancola? You have two, three, four, five, six, depending on how many people are in your household. And that's all you have each day. It's not going to take you long. And a lot of times with a lot of the budgeting apps now, they integrate AI. And so it all is naturally working for you where you can link them all up. So I want you to fight lifestyle inflation. This is the thief in the night that is going to come steal your wealth if you're not careful. Some lifestyle inflation is good. You should be improving your life. You should be spending more on the nicer house when you have a bigger family. You should get the bigger car, the safer car for your friends, for your kids as you start to grow your family. But. If you do this without intention, you're going to get yourself in trouble and retirement is going to get further and further away from you. Now during this decade, this is where it's very, very important to track your retirement number.
31:09 Andrew Giancola? This is also when it becomes murky or muddy on exactly what your expenses are going to be, because it feels like your expenses are getting thrown at you left and right. And you got a lot of kid stuff here, you got a lot of marriage stuff here that is getting commingled into something that may not be what you spend in the future. But that's okay, because what we want to do is at least figure out conservatively what we think we'll spend in retirement and we want to track it every single year. Now let's jump into the 40s.
31:35 Andrew Giancola? Your 40s are your financial prime. And this is when most people are making the most amount of money in their career. And your 40s can carry you into your 50s, but this is the decade where it is use it or lose it. This is the time where we really need to accelerate how much we are investing. And we need to figure out exactly where we want to be in retirement. Some of you, if you planned accordingly in your 20s or your 30s, you could be retiring in this decade. Some of you may feel as though I am just getting started in my 40s and I need to get started now. But this is the timeframe where you could transform your entire financial life by just getting started in your 40s. And let me tell you, for those of you who do not or underutilize this decade, this is where you're going to feel the pain if you do not get started now.
32:19 Andrew Giancola? And for those of you who are willing to get started now or have been investing from your 20s and your 30s, this is going to be the decade where you see an acceleration and you start to thrive. Why? Because you are making more money. Now, some of the hurdles that you are going to have to think about here is you may have a lot of expenses that are rising. A, your kids are most likely getting older or you're starting a family later on in life. Two, is you have aging parents most likely. And if you are supporting those aging parents, then that could be something that you have to worry about because long-term healthcare is going to be a very important thing. And these are some of the scenarios that people deal with. They're getting stretched in both different directions. Number three is if your kids are older, maybe you're also paying for their college, or you're paying a lot more than you were when they were younger kids.
33:04 Andrew Giancola? This could be something that is weighing on you. Or if you do have younger kids, we have daycare costs, those types of things, and your costs could just be dramatically rising. So your income is rising, but your costs could also be rising at a rapid rate. And we want to make sure that we get control of all of this stuff. But because your income is at its highest, we want to try to max out every retirement account we can across the board. If you have an HSA available to you and you have a high deductible health plan, a great thing to max out. If you have a Roth IRA, a great thing to match out. Your 401K, a fantastic or phenomenal thing to max out. All of these are going to matter so much over the course of the next couple of years. And as you start to approach your 40s, your mid 40s and late 40s, this is where you really want to get as many dollars invested as you possibly can. So the brokerage account is going to come in and it's going to help you bridge through
33:48 Andrew Giancola? the gap and get some planning going. Now, along this decade, we also want to diversify our tax buckets. So maybe we want some pre-tax, we want some post-tax, and we want some taxable in these three different buckets. This is going to allow you to have flexibility in retirement, and this is going to allow you to have flexibility in your financial plan, which is what we want. Money is best enjoyed when you have flexibility. And it is, your life is best enjoyed when you have flexibility. And so making sure we have some in each of these buckets can be really, really important. Now, the third thing I want you to note is do not, under any circumstance, sacrifice retirement so that you can save for your kids' college. You need to take care of your retirement first, then you can take care of your kids' college. I know it's counterintuitive as a parent,
34:33 Andrew Giancola? but there are no loans for someone who is in retirement, and there are loans for college. So do not put your kids' college savings, do not put your kids' retirement savings, I've seen people do this, before your own retirement savings. If you are not on track to saving for retirement, you should not be putting a dollar in a 529 plan. Let me say that again for the people in the back. If you are not saving for your retirement, you should not be putting a single dollar into a college savings bucket. It's the oxygen. In mass method, you take care of your own retirement first, then you can help out others when it comes to saving for retirement. So make sure you're doing that and do not sacrifice for college funding. Okay, too many people do this. I've seen people come into Master Money
35:16 Andrew Giancola? Academy. We've helped them through this, but I've seen people do this time and time again. Our students are the best and we've kind of put them on the right track, which is great, but do not, and I repeat, do not do this. Also, review your asset allocation because now as you approach 40s, you may want to shift what your asset allocation looks like. There's two phases to your asset allocation. There's the accumulation phase and there's the preservation phase. Some of you who understand how the market works may still be willing to stay in the accumulation phase and you are willing to keep a high percentage in stocks and you don't really want much bonds yet because you want this portfolio to keep growing for the next 10, 15, 20 years. But for those of you out there who want to be a little more conservative, you can start to review your asset allocation on a yearly basis and say to yourself, okay,
36:00 Andrew Giancola? maybe do I want to add some more bond exposure, especially as we get to my late 40s, maybe I want to retire at 55 and so I want to add some more bond exposure very slowly back into the portfolio. This is up to you on how you handle that, but you want to just review your asset allocation and review your risk tolerance on a yearly basis to see exactly where you are. See, the goal with the 40s is to make sure you are aggressively deploying as much capital as possible towards future you because future you is coming really quickly and you're going to really thank yourself by making sure that you take care of this in your 40s instead of waiting too long. So I highly encourage each and every single one of you to make sure you maximize this decade. This is the decade where really you have a lot of time left for money to
36:40 Andrew Giancola? compound. And so we want to ensure that we are continuously investing our dollars as time goes on because even if you're 40 and you're like, I'm getting started right now, you still could, you know, you retire at 65 and you have 25 years for your money to compound. That is a long, long time. So honestly, you may feel as though you're behind, but you can get these dollars working for you and you can still get the ball rolling. Now let's jump into the 50s.
37:06 Andrew Giancola? So your 50s is the decade where we really want to have our retirement plan dialed in. And we want to start making sure that we know exactly what we're going to do next when it comes to building wealth. And your 50s is the timeframe where a lot of you, if you are getting started, again, not too late, but you gotta get the ball rolling right now. We have a lot of listeners who started in their 50s who, over the course of the last six years of listening to this podcast, have made amazing strides. We had someone listen to this podcast who retired in eight years just by listening to the show. So this is never too late for anybody out there listening, but you gotta make sure that you make drastic changes going forward. So I am really excited to dive into folks in the 50s because they can use a couple of different things that will really, really help them going forward. Number one is catch-up contributions.
37:48 Andrew Giancola? So utilizing catch-up contributions is one of those things that can really just help you going forward. So if you have a Roth IRA, for example, you get an extra thousand bucks into your Roth IRA if you're over the age of 50. And if you're someone who is contributing to your 401K, you need an extra $8,000 into your 401K, meaning you could put $32,500 into your 401K. And so really, the extra $1,100 in your Roth and the extra $8,000 into your IRA is really, really important to note for the catch-up contribution. Secondly, is we want to have a plan in place when it comes to social security. And the closer you get to retirement age, especially when you're five years out, you want to have that plan solidified and you want to make sure that you are attacking that plan.
38:33 Andrew Giancola? Maybe you're deciding to retire in your 50s. If you are, you can use the rule of 55. You can use SEP payments. There's all kinds of things. We have an entire episode, if you are retiring in your 50s, on how to get access to your retirement accounts. We talk about all the different ways to do that. So make sure you check that out. We'll leave it down in the show notes that you can check it out. But if you have not heard that episode, make sure that you are thinking through your plan, because when you're five years out from retirement, this is where it's game time. You gotta know what your retirement number is. You gotta know what you're doing. And this is why it's so important to track every single year, because once you get to your 50s, it makes it so much easier. And so, once we start to do this, we want to have a social security strategy. Most people go into retirement thinking, I don't know when I'm going to claim social security. I don't know what to do. My parents are in their 60s and I talked to them, I talked to a lot of their friends,
39:18 Andrew Giancola? and a lot of them had no idea when they were actually going to take social security. And so we'll do an entire episode on this, but I want you to think through this. If you need money early in your retirement, and you're going to retire in your early 60s, well, that would be a time to take social security. If you don't need it, then you could delay year over year. And 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. They're an online marketplace that lets you compare life insurance quotes
40:00 Andrew Giancola? from some of America's top insurers, side by side, for free. And their licensed team helps you compare coverage, prices, and terms, answers your questions, and even handles the paperwork so you can get the right policy without the hassle. For me, having life insurance isn't about expecting something to happen. It's about knowing my family is protected so I can actually enjoy these moments together instead of worrying about what comes next. And with PolicyGenius, you can find 20-year life insurance policies, starting at just $276 a year for $1 million of coverage. Head to PolicyGenius.com to compare life insurance quotes from top companies and see how much you can save. That's PolicyGenius.com. If you've been listening to this show for a while,
40:44 Andrew Giancola? you know it's not just me anymore. It takes a great team behind the scenes to make everything happen. And if I had to hire someone tomorrow, I'd want someone who could jump right in and make an impact. That's why I'd use Indeed Sponsored Jobs. When workplace chaos hits, Indeed Sponsored Jobs helps you reach qualified candidates faster. Your job gets boosted in search results, so you're spending less time searching and more time interviewing the right people. Plus, you only pay for results, which I absolutely love. Sponsored jobs posted directly on Indeed are 95% more likely to report a hire than non-sponsored posts. That's a huge advantage when you're trying to grow your business. Spend less time searching and more time actually interviewing candidates who check
41:29 Andrew Giancola? all of your boxes. Less stress, less time, more results. When you need the right person to cut through the chaos, this is the job for Indeed Sponsored Jobs. And listeners of this show will get a $75 sponsored job credit to help get your job the premium status it deserves at indeed.com/podcast. Just go to indeed.com/podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com/podcast. Terms and conditions apply. Need to hire? This is a job for Indeed Sponsored Jobs. If you've heard any recent episode of Health Corner, you know that I have spent the last few years trying to optimize my sleep. I've tried sleep trackers, cooling my room, changing
42:12 Andrew Giancola? my nighttime routine, all the different things. But nothing really matters as much as having the right mattress. And that's one of the reasons I love Leesa. A great mattress is one of those things that you use every single night and you spend a third of your life sleeping. And it can make a huge difference on how you feel the next day. Leesa has mattresses designed for different sleep positions and comfort preferences. And their sleep quiz can help you get matched in less than two minutes. Plus, they're designed and they're assembled in the USA and they come with free shipping, easy returns, and a 120-night free sleep trial. So go to leesa.com for up to 30% off mattress plus and get an extra $50 off with promo code
42:56 Andrew Giancola? PFP. Exclusive for my listeners. That's L-E-E-S-A.com promo code PFP for 30% off mattresses plus an extra $50 off. Let them know we sent you in the survey after checkout. Leesa.com promo code PFP. One thing I've learned from running multiple businesses is there's usually a gap between how you think work is getting done and how it's actually getting done. And we've had times where we thought we knew the bottleneck, only to realize later, the real issue was somewhere completely different. That's exactly what today's sponsor, Scribe, helps solve.
43:35 Andrew Giancola? Scribe is a workflow AI platform trusted by 94% of the Fortune 500. And Scribe Optimize turns real workflow data into decisions your AI strategy actually needs, automatically capturing how work happens across approved apps, surfacing inefficiency and opportunities with no interviews and no manual discovery and no extra work from your team, which is the key. And the live dashboard shows where work is happening, how much time it's taking and where the biggest opportunities are right now. It automatically discovers workflows across multiple tools, then highlights your biggest inefficiencies and gives AI-powered recommendations with estimated time-saving. You know I love saving time. It's also built with privacy in mind.
44:17 Andrew Giancola? It only runs across approved business applications, user-level data is anonymous by default, and sensitive information is automatically redacted and never leaves your firewall. To see optimization action, head describe.how/pfp and mention PFP for a 30-day risk-free trial. That's S C R I B E dot H O W slash P F P. Side, okay, I am going to get the guaranteed 8% rate of return that happens every year. I don't take social security and I am going to take a bigger benefit later on in the line. Maybe you want to take it at 66 or 67. Well, that is going to give you a guaranteed rate of return, but there are two sides to the coin that I want us to dive deeper on in that episode where maybe you're like, hey, life is short, I want to get my money now.
45:01 Andrew Giancola? Or you're like, there's no other guaranteed return like this. I'm going to take that guaranteed return because I can live off my portfolio or I enjoy working part-time. Lot of different options that you will have early in your 60s and your 60s is a very interesting time to think about social security and how you're going to handle that. Also, in your 50s, you need to think seriously about healthcare and how you're handling this. If you do not have a plan for healthcare, you need to get one because this is going to be a huge portion of how much you are spending in retirement and I want to make sure that each and every single one of you has a plan in place. Medicare does not kick in until you're 65. And so because of this, we need to bridge the gap. If you are going to retire at 57, 58, 59, 60, any of those ages, we need to figure out what we're going to do about healthcare. Paying off your mortgage.
45:44 Andrew Giancola? Mortgage is also something I want you to do in your 50s if it makes sense because I don't really think that you should have much debt in retirement. Taking on unnecessary debt or having unnecessary debt and payments is just going to increase your stress in retirement and decrease your flexibility. And that's not a good combo for most people. That's not what they're looking for when it comes to retirement. And so instead, we want to make sure that we are taking care of our retirement and ensuring that all of this is getting done in the right order. And so paying off your car payments, making sure you have no car payments, that's a given. No credit card debt whatsoever, no personal loans, and then the mortgage is the one that is the up in the year option. But I really like when people have their mortgage paid off because
46:27 Andrew Giancola? it's just less of a liability. And then you're just paying the property taxes, you're paying the insurance, those types of things. Unfortunately, in this country, even when you have a house paid off, you still have payments to make to the government and to insurance companies because you need that home insurance. In case there's a disaster, you want to make sure that gets taken care of. So that's a whole different, that's a whole different podcast episode, but it is definitely something that you want to make sure that you budget for is figuring out, hey, what are my taxes going to be? That is something when your home is paid off, people actually don't factor in, well, my property taxes are going to increase over time because the value of my home over the course of the next 30 years or 40 years is going to be going up. And so making sure you factor in and understand where your property taxes are going to be is also a very important metric to note.
47:11 Andrew Giancola? And now let's do a bonus of the 60s because your 60s is going to be a time where I want you to think through a couple of different options. One is sequence of returns risk. So this is the risk that if the market downturn happens every couple of years, you want to make sure that you're considering this and when you retire, because if the market is down on the first year you retire, this could completely wreck your portfolio if you're not aware of this and you start to withdraw too much money from your portfolio. And so this is why I like the guardrails approach because it reduces overall sequence of return risks and allows you to adjust the amount that you're withdrawing in your portfolio every single year. Number two is thinking about Roth conversions. When is a good time to make Roth conversions so that you can move money from
47:54 Andrew Giancola? Your traditional IRA or your 401k over to the Roth IRA. So you don't have RMDs anymore. Well, it should be in low income years or years where it makes a lot of sense. I would highly recommend talking to a CPA or an advisor when you are thinking about Roth conversions because it's a much more complicated calculation than just moving it over. And if you do the wrong thing, you could absolutely trigger a taxable event that is not in your best interest whatsoever. So making sure that you do this in the right order is going to be important. Social Security timing, we just talked about this, but I want you to think through when you're in your 60s. You could start at 63, you could wait till 67 and kind of take it a little later. And it's an 8% rate of return every year that you wait. But also, life is short. So if you want to take it early, it could benefit you traditionally.
48:39 Andrew Giancola? And if you think you're not going to live a long time, maybe you have a pre-existing condition or you think you're not going to be living well beyond your given years, then maybe taking it early makes sense. Or if you are someone who thinks you're going to live it for a very long time, then maybe taking it later makes sense. But it just depends on your specific situation. It also depends on how much your spouse makes. We're going to cover that in an entire episode coming up. Also Medicare starts at 65 and so we want to make sure that when you're thinking about healthcare and then think about what the difference is within healthcare and how much we're going to be spending. Also, what about long-term care? Where are you going to live when you get older? Or you, somebody has to come and take care of you. Is someone going to come to the house to take care of you? Are you going to have enough money on hand? Are you going to go live in a facility? If you are, how are you going to pay for that or cover that so that you are living in a situation that makes sense for you?
49:24 Andrew Giancola? And then RMDs are coming up in your 70s. So at age 73 is when you will have required minimum distributions, meaning the government and Uncle Sam wants his money. So he's going to make you withdraw a certain amount of money every single year from your 401k or your IRA, those pre-tax that you've never paid tax on that money yet. You're going to have to pay tax at some point in time. And so RMDs could start at 73, which could impact every other phase of income that you have. And so traditionally, you want to make sure that you are planning out for those RMDs and talking to someone to help you through that process. That is the big thing that I really want you to do. And so if you plan this out properly in your 20s and your 30s and your 40s and your 50s, your 60s are going to be a breeze. They're gonna be so easy and you're gonna have the flexibility in place where you're not
50:07 Andrew Giancola? gonna have to worry about this stuff. But we gotta make sure that we are planning out our retirement and with our goals and realizing that you can retire early. And that is really what I want you to know is that you can retire early. And if you have a plan in place, this is a lot easier than it seems. And so for everybody out there, do not wait for the perfect moment to plan this out. Track your retirement number on a yearly basis. We showed you at the top of the show exactly how to do this. So that you can really get to the point in time where you are living your best life. That is our goal for each and every single one of you. Now, if you guys want to learn how to achieve financial freedom, how to have that plan in place. So you don't have to worry anymore. You are working step by step towards financial freedom, and you're planning
50:49 Andrew Giancola? out the exact life that you want, and you're using money as a tool to get what you want in life, then I want to invite you to join Master Money Academy. Master Money Academy is our community of people who is working towards building wealth together. We give you the exact framework of exactly what you need to do. We weekly coaching calls every single week, and everybody is there to help each other out. And so inside Master Money Academy, it's going to reduce your money stress, anxiety, and anything else that you have worries about when it comes to your money. We give you the exact framework on how to do this. So for podcast listeners, we are giving you a free trial, a seven day free trial. So you can see behind the curtain to see if it's for you. Would love to invite you to join Master Money Academy. Again, you have nothing to lose. It's a seven day free trial. Would love to invite you to join and see
51:33 Andrew Giancola? if Master Money Academy is for you. Thank you guys so much for being here. I truly appreciate each and every single one of you, and we will see you on the next episode.
51:42 Speaker 01 At Edward Jones, we believe rich is about taking care of what gives your life meaning. That's why your financial advisor personalizes your plan to help you preserve your progress and create something that lasts. Let's find your rich. Edward Jones. Member SIPC.
Previous 10 Reasons Smart People Are Bad With Money Next How to Fix Your Finances If You Make $100,000 (and Still Feel Broke) Page updated October 30, 2026 · transcript and summary are machine-generated