How To Build Wealth If You’re Already Behind

If you're in your twenties, you've got plenty of time to build wealth. But what if you're a little bit older and you're just now getting started? Brian, I am so excited because we get a lot of questions about how to catch up. If you're behind today, we're going to show you exactly what you can do and what to avoid if you're getting a late start on your retirement savings. So I'm Brian, he's Bo, and this is the money guy show where two financial advisors help you build your great big, beautiful tomorrow. Even if you're just now laying the foundation with that, let's dive right in. Yeah, Brian, the stats here are kind of remarkable. There was a CNBC poll that found that 53% of U.S. adults said they're behind schedule in retirement planning and savings. Another 69% of American workers are unsure that they will ever be able to retire comfortably. And frankly, those numbers make me sad. Yeah, and look, I think that probably Americans are catching on. Yeah, they probably are behind, because if you're trying to figure out, how am I going to let my money do the work for me so I don't have to work so much in the day job? I think we probably ought to get some context and just know exactly where Americans really are. So if you look at retirement savings by age, oh, it's a little scary. Yeah. The question is, do you feel behind or are you actually behind? So if you just look at the median retirement savings, we're going to use average because obviously averages can be skewed. But the median retirement savings for folks under 35 is actually less than $20,000. For folks 35 to 44, it's about $45,000. 45 to 54 is $115,000. 55 to 64, $185,000. And for those 65 to 74, the median retirement savings is $200,000. So if you just took someone who is 64 years old about to head into retirement and they have $185,000 saved up and we just assume a 4% withdrawal rate, that's only going to generate about $7,400 of income a year. That's not a very robust retirement. Yeah. So that's what that's the part, though, I say, I think the typical American is behind. But we've fortunately put together a mythology. It's not mythology, Brian. These are real numbers. We've fortunately put together a methodology. Methodology. Methodology on kind of backing into to try to give people milestones or where they should aspire to be by different age groups. So if we were breaking this down and we took the 4% withdrawal rate and you think about that, that's basically if you back door into it, that's 25 times your retirement income. That's right. But we know you don't need 100% because more than likely you got taxes. You've also got your savings and investment rate. If we just did 80% of the 25 times rule, you quickly come to a number of we want to reach retirement with about 20 times our gross income or even better, our gross retirement expenses. Yeah, I was going to say that's one of the things. Obviously, it's difficult to project what our retirement expenses are going to be. And we know that when you get to retirement, a good rule of thumb is we want you to have 25 times your annual retirement expenses saved up for a time. But most of us, while we're working, we have a much better idea of what our income is right now than what our expenses are. That's why when we come up with these targets, we're using income instead of expenses. We want 20 times our gross income, which would represent, hopefully we're assuming an 80% income, income replacement ratio, 25 times our annual retirement expenses. So that sets up that once you understand how the math works here, you can then set up these milestones for by the time you're age 30 years of age, you want to aspire to have one times your gross income by 43 times 56.4, 60, 13.7. And then by the time you reach retirement, voila, you're at 20 times. Now, we actually want to put real numbers to this. Now, this is not going to be your number. You need to use your income to do this calculation. But we thought what would be helpful was to put in the median household income by each of these ages. I think you're quickly going to see, remember we shared where the median numbers actually are, you're going to hear what the calculated median numbers. And I want you to do this own exercise for yourself. You're going to see we're woefully behind. So you're in good company if you feel behind and we're going to spend the rest of the show getting you out of that hole. Yeah. So if we think about a 30 year old who has a median household income of about $97,000 to have one time their income invested by 30, they should have liquid retirement savings of about $97,000. For 40 year olds that on the median make $107,000, they should have a retirement portfolio of about $321,000. For 50 year olds, median household income is $115,000. At 6.4 times their annual income, they should have about $737,000 invested. For 60 year olds, median household income is about $84,000. They should have 13.7 times their annual income invested. So a little over $1.1 million. And then for 65 year olds, if you earn the median income right now, which is just under $70,000 a year, and your goal is to have 20 times that gross income saved up, you should have a retirement portfolio of around $1.4 million saved up. That is a far cry from $185,000. Okay. So full stop. Look, I get it. This is one of those shows where you're telling me I've got to have close to $1.4. A few slides earlier, I just showed you a slide where the typical 65 year old has a median retirement savings of $200,000. Okay. We're behind. Woe is me. No, we want to give solutions. That's right. So what I wanted us to do is we're going to walk through. First of all, we're going to give you the ways out. But first, we've got to talk about things to avoid. A lot of this is mindset because if you are feeling behind, I don't want you to fall into traps looking to cut the corner or letting somebody sell you something that's inappropriate. So, or even letting your heart lead you to make a decision for a struggle you had that you're going to pay it forward. So your generation, your next generation, or your kids don't struggle with it. So where do we start? Yeah, I think before we even go to this, it's worth noting, these things are likely going to require discipline because you've already acknowledged you're behind. So some of the stuff we're going to lay out for things to avoid might not be easy and they might feel difficult. But if you want to be somewhere you've never been, you have to be willing to do something you've never done. And the very first thing, and this is a trap we see a lot of folks who are behind fall into, they decide, you know what, okay, I may have screwed up my retirement savings, but boy, am I going to start saving for my kids. I'm going to build up their college fund. I'm going to do to 529. It's too late for me. I'm going to go ahead and start doing something for them so they have a better situation than I have. I don't think that's the right mindset to have if you're trying to play catch. By the way, you'd be in good company because look at this stat right here. 56% of Americans say they would choose to save for their kid's college instead of their own retirement. This might sound good on the face of it. It sounds noble to make sure your kids have it better than you do. But you do realize that your kids can get scholarships, they can get grants. They can even do, look, I don't like them, but they at least have it as an option, a student loan. Whereas when you reach retirement, you don't have any options. What are you going to do? This is back to, and I know we've used this example, put your oxygen mask on before you help the kids. There's a reason when you fly commercial. They literally walk down the aisle saying, make sure you do this. It's the exact same way for your own financial retirement. Now look, I know a lot of you say, if you ask them, what are you going to do? You're like, well, I'll move in with my kids. There is something, I think it's great when you have extended families where they all live together. But it's great when it's a choice, not an obligation. Don't be that obligation to your kids. Yeah, there's tons of headlines with this happening. And I think exactly what you said, Brian. It's not happening because people want to move in. It's not happening because people want to consolidate the families. But they're doing it out of necessity because they did not make the hard decisions earlier on in life. And so what can you use as a metric to make sure you're making the right decision in the right timeline? It's the reason why we have the financial order of operations. Brian, hold the thing up. It's a nine-step process to help you figure out, okay, when should I save for my kids? Not till I'm in step eight of the financial order. If I haven't maxed out my Roth IRA, if I'm not putting money in my 401k, if I'm not saving at least 25% for my future self, then saving for college may not be the priority in my financial life right now. And that's okay. You have to come to that realization if you want to catch up. So another thing to avoid. Look, we just talked about the kids. That's a trap that a lot of people, even if you're behind, fall into. The next one, midlife crisis. Look, you get older. The world comes at you just a little bit differently. When we see this manifest in one of two ways is a lot of people, when they hit a midlife crisis, they're kind of worried about underachievement. They wake up one day and go, man, yeah. I mean, they feel like, man, what did I miss? I mean, did I choose the right career path? I just don't feel like I'm where I'm supposed to be in life right now. A lot of regret. Or the other one is the ego side of it. Maybe you've done well and you start having these false impressions. I deserve more or things will be better if I did this. And this is the type of decision making that can lead to big dumb purchases. It can lead to you making horrible decisions that blow up your entire life. You've got to avoid the midlife crisis because it does lead to that next thing is avoiding divorce. Yeah, a lot of folks, they have this thing and they have either that ego in or in or that underachievement. And then it begins to permeate into their relationships. And one of the most devastating things we see happen to people's financial lives is divorce. Now, obviously, there are a number of issues that divorce caused even outside of the financial impact. But if you just look specifically at some of the financial ramifications of divorce, loss of health care coverage, increase in child care costs, home ownership issues between having to either sell a home or have multiple homes, negative impact on credit scores. All of your housing costs go up. Retirement plan contributions go down. Income tax circumstances change in their legal fees, court fees. On average, the amount of wealth lost through a divorce from the beginning conversation to finalized divorce is somewhere around 77 percent of total wealth lost through the process. It is a costly thing to happen. So if you want to figure out how you don't get behind, figure out how you can shore up the relationships that exist in your life right now. You know, from the common sense standpoint, I get how we have shared expenses, and now we're going into two separate households. I see how that could be really expensive. The thing that shows up in the stats that is wild about marriage, though, is it's not just a cost-savings measure. There's a lot of research that shows households that are married households have four times the assets of single households. So there's already one more reason to just say, if you're considering divorce, measure twice, cut once, because it's just not only is it more expensive, but it's also, it might be one of those things that takes away, in a lot of cases, statistically shows it's a wealth multiplier. So we're talking about these things to avoid if you're behind. I think the last one, and this is because people allow panic to set in. And what they do is they make these very rash decisions, or they start looking for shortcuts. Oh, I'm behind, so now I got to throw the Hail Mary. Now I got to do the thing. I got to roll the dice to make up for lost time. Just because you're behind does not mean that you need to really ratchet up the risk, because oftentimes, when you do that, you put yourself in a position to be even worse off than you already are. You know, I've seen this manifest several different ways in my career is that I'll never forget, you know, I was doing some 401k presentations for these large corporations, and I was, you know, doing personal sit-downs with a lot of the participants. And I had this gentleman who came to me who was in his mid-50s, and I looked at his portfolio, and it was 100% in the science and tech fund. And I was like, your diversification's horrible for your age group. And he's like, I'm so far behind. I've got to choose the most aggressive option to help me even have a chance at this. And then another case I've seen in my studies and actually helping people navigate their finances are the people who fall into the latest and greatest thing you see on social media, where they think they're, you know, cutting the corner off with these private placements or super aggressive deals. Be very careful when you feel behind and you start making desperate decisions. That's when you can really get yourself in one heck of a pickle. All right, so we've talked through what are the things to not do or what are the things to avoid. Now let's talk about the stuff that you can do, the affirmative actions that you can take. And the first one, it seems so obvious, but it's worth saying, what are the most impactful decisions that you can make as it relates to your future financial well-being is increasing your savings and investment rate? Yeah, when we were doing the show draft, I was like, people are going to be like, thank you, Captain Obvious. Of course, I'm in this pickle of a situation. Saving more is going to help me more. We get it. You've heard this, but I want this to kind of sink in. This is the one where we're actually going to show you the data on why we choose 25%. Look, when everybody's 20 years of age or in their 20s, you can save 10%, 15%. And it does wonderful things. And a lot of people, when they hear that our savings rate and recommendation is around 25, like, why is it 25%? And the reality is, is we've done the math of we've looked at when people actually start saving and investing. For the typical American, it's somewhere between the age of 30 and 33 years of age. So if you go and you look at how much you should save at moneyguy.com slash resources, you'll see it lines up quite nicely with 25% of your gross income will get you to retirement at normal retirement age. A lot of you guys might be in your 40s, and when you hear that stat, you're like, well, what does that mean for me in my 40s? I'm just going to shoot you straight. It means you're going to have to actually increase your savings rate beyond 25%. We're beyond the easy button at this point. It's going to require more and more from you so you can actually reach your goals. So let's look at an actual case study and see how impactful savings rate can be. Let's assume that we have late start Larry, who is 45 years old with nothing saved, and his goal is to retire at age 65. Well, if he follows the traditional guidance of saving 15%, let's just assume that he earns the median household income for a 45-year-old, which is about $120,000, and he's going to save 15% every month for 20 years, which is a little under $1,500 per month, and let's say he can earn an average rate of return of somewhere around 8%. Over the course of his savings at 15%, he's going to have about $880,000 by the time that he gets to age 65. Now, that's not a small sum of money, but that's likely not going to be enough to replace the lifestyle that Larry has become accustomed to. But what would it look like if instead of saving 15% of his gross income, he was able to bump up his savings rate to 25%? Well, now, at the same rate of return, same behavior, just better savings rate, instead of only having a portfolio of $880,000, he has a portfolio of almost $1.5 million. That is 66% larger than what he would have had at only saving 15%. Remember, he got a late start, so there's still even a chance that at $1.5 million, he's not going to be able to maintain the lifestyle that he's come accustomed to. So what would it look like if he was able to increase his savings rate to 35%? Well, now, instead of only having $1.5 million, in just a 20-year timeline, in just a 20-year horizon, starting at zero, he's able to build up a multimillion-dollar portfolio with over $2 million in it, simply by adjusting and affecting the amount that he saves for his remaining working years. But look, what's missing off this slide, and I just need to give you the numbers for context, saving the 15% was going to be right under $1,500 a month. It was $1,494. That's 15% for that 20-year period. If you're going to take it up to 25%, that increases it a little under $1,000 more. It's $2,490 a month. And then to go all the way up to 35%, it's $3,485 a month. A lot of you are like, that's Looney Tunes. But look, this is what's required. If you've got a late start, the good news is you're also usually in some of your better peak earning years. If you think about somebody who's discovered they're behind in their 40s, it's not like you're making the income you're making when you're 22. Now you're in some of those peak earning years. It's time to actually turn the focus to actually turning that into assets that are working for you. You've had the moments in the past that you kind of deferred and you procrastinated. This is the time to really get laser focused. And look, if this describes you, do it as soon as possible. Because the longer you wait, the more difficult it is and the harder it's going to be. The sooner you can figure it out, the sooner you can increase the savings rate, the sooner you can get your dollars working, the easier this already difficult path is going to be. All right, before we move on, I want to talk for a second about what Bo and I actually do for a living. Yeah, if you're new to our channel, you may not know that on top of doing The Money Guy show every week, Brian and I are actually financial advisors and we run a firm called Abound Wealth Management. And look, you might not need us yet, but if you're following the foo, you're building your army of dollar bills, you're doing exactly what you should be doing at this moment in time on your own. And at this stage, it's likely not the best use of those dollars to pay a financial advisor. But as Spider-Man's uncle once said, with great wealth comes great complexity. And when your financial life starts to get complicated, that's usually when people realize they need to take their relationship to the next level. You actually said that. And when that day comes, we'd love to be the ones you call. We've always been fee-only. We've always been fiduciary advisors. And that means we're legally required to work in your best interest. So if you've reached a point where you're ready for some help, go check us out at AboundWealth.com or just click on the link below. We would love to connect and see if we are a good fit for you. We've built this business the same way we've built The Money Guy show, with hearts of educators to help you build wealth and live your best life. It's all about saving more by going out there and just choosing it. If you can't do it by either making more money, you've got to find more margin in your lifestyle. Maybe you have to, and that probably lead to the next big thing we can talk about. Two levers you get to pull. Because look, you can either make more money or you can get more discipline and actually cut your expenses. And that's probably the next best thing we can talk about, is how do we reduce those fixed expenses so you can make it automatic for the people and actually show up on your net worth? Yeah, I think this is the thing that we most often have the most control over. How do we cut our expenses down? How do we cut our spending down? And in our opinion, you ought to focus on the big stuff first. If you're behind, you're in your 40s and you've not started saving, clipping coupons is not going to save the same amount of money that getting rid of a $1,000 car payment will do. So you ought to look at things like, okay, what am I spending on automobiles? What am I spending on insurance? How much do I have in subscriptions? What are all of my biggest spending categories? What is my housing spend? And are there ways I can reduce that? Are there ways I can get those fixed costs down as low as possible? Yeah, I mean, look, the biggest expense for most people is their housing. So you've heard us talk about this, but I want to bring up this concept again. We talk about the hedonic treadmill, is that the way this works for good things in life, like if you came into more money, spread out the purchases, like the nicer cars, spread out the upgrade of the house, because you want to extend the good stuff so you get as much good feeling from it as possible. But flip the script, when you have bad things going on in your life, you need to act without mercy and cut things quickly and make changes as fast as possible, because time is not your friend in these situations. It's actually working against you, and you will stabilize and return back to your happiness factor that much sooner if instead of prolonging the hard decisions, do it all at once. So look, a lot of you are going to watch this content and you're going to look at your life and go, you know what? It probably is my expenses. Is it the car I'm driving? Is it the house? Yeah, maybe you have to do an apple cart turnover, move into a more appropriate cost of living. You have to do the uncomfortable things or maybe drive a car that's more used, more miles. It's these type of actions that your future self will thank you for, because it's that discipline, it's that sacrifice in the moment that will get you through this. And so obviously making changes to the big decisions is going to have a very big impact, but there are also other ways you can triage your financial life. If you look on your annual net worth statement and you still have things like high interest debt, whether it be consumer debt or credit card debt sitting on your balance sheet and you're behind, you need to get rid of that stuff as quickly as possible. Right now, the average credit card balance for millennials, so this is not even people close to retirement. This is people kind of in the midway point of their career. On average, they are carrying about $7,000 of credit card debt month over month. And these credit cards usually have an interest rate of somewhere between 21 to 22% annually. So if you think about the monthly payment that would be required on that, it's like $200 a month. If you could instead flip the script and have that $200 working for you, going into your Roth IRA, going into your 401k, going into your taxable account, you would actually be building for your future self, not robbing from your future self. Never get ahead if you're paying banks 20 plus percent when you're hoping to make eight to 12% on your investments. So you've got to extinguish that stuff as fast as possible. And one of the best ways you can do this is, look, I'm not telling you to kill all your joy, not have enjoyment in your life. I'm just saying, instead of you doing it the expensive way, how about doing it by bedazzling your basic life? There's nothing wrong with doing cookouts with friends. Because if you look at all the research on happiness, it's not the stuff, it's the people, it's the relationships, it's the spiritual stuff, it's all those types of things. So if you can do those same experiences, but just in a cheaper way by doing grill outs, or maybe you're doing road trips instead of flying to places, you can do things in a more cost-effective way without running up a bunch of debt. Yeah, but most people don't do this. According to LendingTree, 45%, so almost half of parents with young children who've gone to Disney went into debt in order to fund the trip. If you're having to go into debt to take your family on vacation, I'm gonna argue you're likely doing the wrong types of vacations. Your future self would not be excited that you are taking from them to pay for your present day. So don't do that. Find how you can bedazzle your basic life, still create memories, still create the fun, awesome, amazing times, but don't sacrifice your financial future to do that. Yeah, sometimes, just like we talk about, it's time in the market is what creates the success. It's not the expense of the things. It's actually the time with your loved ones that's actually gonna create those blossoming memories. Don't let the consumption society we live in and the advanced marketing budgets that go into that lead you astray and fall into that trap. All right, so let's go back to our case study. Let's consider again, late start Larry, and let's assume that he had enough margin to get his savings rate to 25% of his gross income, but he really needs closer to 35%. So he starts doing all the things that we talked about, reducing expenses, cutting those down. And let's say that he reduced his fixed expenses first by bundling his insurance. And the average savings for bundling home and auto insurance is about $500 a year. So that's an extra $40 a month that he could save. He then has enough cash on hand to get rid of all of his credit card debts. That frees up that $200 per month payment that the average American is paying. And then let's say that he made another consumption decision. He cut back on dining out, which freed up another $95 a month. And then he said, I'm gonna scale back on my vacations and travel, saving another 160. If he were to able to take all of those savings and lump them into a savings rate, that's an extra $495 per month, which would now take his savings rate from 25% to 30%. So now he's well on his way to 35. He's not there yet, but just by reducing his expenses, he's now set himself up that if he can save at that 30% rate from now until the time he gets to retirement, he would have over a $1.75 million portfolio built up in just 20 years. You know, I alluded to this. This was the first, the first lever was we said, hey, look at your current life, see if you can cut your expenses. And I do think it's amazing to hear you had somebody at a late start saving 25%, but because of expenses, they were actually able to put those savings in that discipline and it turned it into 30. I'd already kind of given a prelude to this, but it's now time to explore what this means. What if besides just cutting your lifestyle, you also figured out if you could put, the second lever you have control over is if you could go make a little bit extra and increase your income. Because we live in the world where maybe it's making it your current job, but maybe it's side hustling. There's all kinds of different ways that you can try to squeeze just to get a little bit more. Because we're talking about this is a battle that's going to be won by small, incremental, marginal decisions. Yeah, and odds are, even if you're behind on building well, if you're likely further along into your career, there's a really good chance that you're in your peak earning years and you have an opportunity that if you can make more money, you have the ability to put a lot more of that towards your savings. So are there things that you can do? Are there ways that inside the vocation you're currently doing that you can work towards a promotion or a raise? Are there ways that you can come up with creative pay solutions or even negotiate your pay, start a side hustle? Or if the opportunities in your present job are not there, are there other jobs, other companies, other opportunities, other geographies that you could look to move into that might have a trajectory that gives you the ability to increase your income, thereby increasing your margin and thereby allowing you to put more of your hard-earned dollars to work. But Beau, let's bring it back because there's a lot of research out there. According to Bankrate, the average side hustle brings in around $885 a month. What would that, if we took that back to the case study of Late Start Larry, what would that look like if we actually used that data point and brought it into this case study? Yeah, let's be conservative and say that even after you factor in taxes and that sort of thing, Late Start Larry's side hustle allows him to invest an extra 500. So he's earning 885, but he's got to pay taxes. So he's got $500 a month going in. So he was able to cut his expenses to save an additional 500. And now he has a side hustle paying him another additional 500. That actually brings his savings rate right to 35%. So if he does that from age 45 all the way to 65, earning an 8% annual rate of return, he's now at that $2 million portfolio value. He has made the hard decisions. He has pulled the two levers that he's able to pull to adjust his margin. And then he put that margin to work and he went from zero to 2 million in 20 years. I think that that's, look, we took somebody who was on track to just end up at 880,000, right or not, which look is four times what the national amount is. But we just showed, but even with 20 years, incremental decisions can really kind of create a result that now I think the average person looks at $2 million, that is a healthy retirement. You strap on social security and other things. We turned a negative story into a positive. So that's what, now that we've given you the numbers, let's talk about some of the things you can, how we can maximize everything you have in your tool belt. The first thing is max out the retirement accounts. Look, when we designed the financial order of operations, we designed this to make it the most efficient version of maxing out the tax code system, but also allowing you the opportunity to build your life into it through steps five, six, and seven. So don't sleep on the fact that maxing out retirement accounts is going to be a powerful tool in this equation. And if you're someone who's later on in your financial journey, and you're above age 50, there are even additional opportunities for you to save more, whether that be through catch-up contributions, through IRA on the raw side or traditional IRA, or maybe even catch-up contributions through your employer-sponsored 401k, 403b, where not only can you do the salary deferral, but you could also save another $8,000 in salary deferrals as a catch-up. Yeah, and a lot of you, like I said, you're figuring this out in your 40s, 50s, and maybe you're reaching those higher income thresholds where you think you can't even do a Roth IRA anymore. You might be surprised to find out that you still can go out there and get the tax-free growth of Roth accounts. It's just you don't get to go direct to the contribution. You can do backdoor contributions to a Roth through traditional IRAs. And if you really want to, if your retirement plan at your employer 401k is structured in a special way, you actually qualify for mega backdoor Roth contributions, which can definitely turbocharge your retirement and your tax-free growth opportunities. All right, so we're talking about, Brian, things you can do if you're behind in your retirement savings. We've talked about reducing your expenses and increasing your savings rate and increasing your income and maxing out retirement. This next one, it's not super popular, but oftentimes it's necessary. And that is extending the years that you work. A lot of people just say, I'm going to retire at 60. I'm going to retire at 65. But if you've not done the work to make that possible, then it might not actually be possible. And that's okay, because if you can extend your timeline, extend the amount of time you have to build, it can have a huge impact on your financial sustainability. Yeah, I mean, this is one of those things I have to pull out of my retirement tool belt. When I see somebody they're basically saving as much as they can. They're earning as much as they can. And they realize there's no more that they can squeeze from their life without really disrupting things. I always say, look, I know the ideal is to retire at this age, but this is definitely something if you go look at this, this is pretty effective if you just work an extra one year, two years, three years. You might be shocked at how much this will change the mathematics of your entire equation. Also, it allows you, you extend it out long enough. Your safe withdrawal rate goes up as well. So you get more out of the assets that you do have. This is definitely not something you should sleep on. Okay, so let's think about late start Larry again. And let's assume that, okay, he did all the hard stuff to get his savings rate to 35%, but there was no way for him to make more money. There was no way for him to spend less money. So he says, what I'm going to do is I'm going to extend out my timeline. And rather than retiring at 65, I'm going to extend it five years. I'm going to plan for an age 70 retirement. Well, just by holding the same savings rate static, but doing it for five more years. Now at age 70, he would have a portfolio of $3.3 million. Just bumping his timeline back by five years, increase the size of his retirement portfolio by 61%. Now look, we're using this as a teaching exercise. I would be the financial advisor in the background, whispering to Larry, hey, remember we can adjust your safe withdrawal rate. We're probably going to retire before we reach 70, because we're going to find out. But I think for an education purpose, it is powerful to show just letting compounding growth have an extra five years can be a really powerful element. But when it comes to the real world, we do have that delicate balance of trying to get you out of the workforce to live your best life as soon as possible. But we want to make sure we don't cross that threshold unless we've definitely measured twice, cut once, to do the right decision for the client. But delaying your retirement date is not the only thing that you can delay to potentially have a positive impact on your financial life. Another thing you can do if you're behind, you need to figure out how to have more income in retirement, is you can look at delaying your social security benefits. The size of the benefit you receive depends on when you choose to start receiving payments. Most of us, our normal retirement age is going to be around age 67. That's where you'd receive 100% of your full social security benefit. What you may not realize is you can actually draw it as early as age 62. But if you do that, you're not going to receive the full benefit. You're only going to get about 70% of the full benefit amount. But if you wait till after 67, you would delay your benefit all the way till age 70. Instead of receiving 100% of your projected social security benefit amount, you would receive 124%. So if you need a little bit extra income, a little bit more money coming in, a little bit more for this cost of living adjustments to be based off of, waiting till age 70 could be a great strategy for those folks who are a little behind. Yeah, I mean, this is one of those things where I tell people, don't start taking, if you're, especially if you're working up until full retirement age of 67, do not take your social security. Because realize there's going to be earning limits on what you're supposed to make before they start clawing back the benefits. So you already might be working against yourself. But it's back to the point, if we look at the average social security benefit, it's around $24,204 a year. If you just look at what that means at 62, that means you're not getting the full 24,000 that would come at 67. You're only getting 16,943 at age 62. But maybe you're a person that needs a little bit more, or you're working later like we just showed in that previous example. If you deferred your social security all the way out to age 70, you get $30,013. So you actually got a pretty good bump from that 24,000 by just deferring this out a few more years. That's double the amount that you would have received at age 62. So you want to make sure that when you make the social security decision, especially if you're married, you want to make sure that you put some thought into it because it can have a big impact on how your financial plan looks. And that's actually the very last point when it comes to retiring and financial independence. And even if you're behind and you're not exactly where you want to be, one of the very best things you can do to start moving in the right direction is to actually have a plan. Yeah, and a lot of you, you're probably watching this and your head's spinning a little bit and you're like, I don't know if I'm ahead of the curve, behind the curve, right where I'm supposed to be, or I know I'm a little behind, but how far behind am I? Because these guys are taking it. Look, we want to help you out. Not only are we trying to educate you, but we're trying to give you the tools to kind of, where you can do your own triage to know exactly where you are. And that's why I would strongly encourage you to go to moneyguy.com slash resources. We have a resources. You're going to believe, you can't believe it's free. Matter of fact, it wasn't free in the past. We used to charge $100 for a course called Know Your Number. Now we make it completely free because that's what we believe we should do as part of the abundance cycle to allow this entry that much easier for more Americans to get this right. So please go check this out. You put in all of your variables and it's going to show you exactly where you are in your path towards retirement. And maybe even give you a little bit of a coaching session of if you do a little bit more, this is what's going to happen for you. But please use this for motivation as well as education on exactly where you are on that curve. And part of having a plan though is being realistic. If you're not where you are today, it means you haven't done the things that you likely should have been doing. So if you want to be somewhere different in the future, you might need to change your behavior. And even in changing behavior, you might need to change your goals. If you thought you were always going to retire at 60, but the math just doesn't work out, be realistic about that. Don't do something like assume a 15% annualized rate of return to make the math work. That's not going to set you up for success. Be realistic about where you are, what steps you need to take to where you want to be, and how realistic is it for you to get there on that timeline. Look, a lot of you are going to watch this content and you're actually going to see yourself inside of it. I have so many people in our comments when we do live streams that say, guys, I got a late start. I didn't start until my 40s. I'm now in my mid 50s and I've done the hard work. I've caught myself up. And you're probably, you're seeing this, all the things we just shared. You're seeing your journey in here and you're like, man, there was a lot that I had to figure out in real time because it feels like people just don't good, do a good job of showing you what you're supposed to know about money, how to navigate it well. And that's because look, I get it guys, this whole thing about building financial independence for a lot of you, it's a novel experience. You're on your first journey. You're the first person in your family that's ever had this type of success. It doesn't have to be novel. It doesn't have to be new to you. You can literally hire somebody who's done this thousands of times so that you can know where the blind spots are, where the traps are, and how to live your best life and even save you more time so you can enjoy the time you have in the best possible way. And that's why we'd love for you to consider taking the relationship to the next level. We work with clients all across the country. The Abundance Cycle is real. We've literally been creating this type of content since 2006. We're not going anywhere and we'd love to help you live your great, big, beautiful tomorrow. I'm your host, Brian, joined by Mr. Bo, Money Guy team, out.