Tips for Those Under 40

Brian Akers and Paul Franco discuss financial tips for those under 40, emphasizing the importance of early planning. They highlight the role of compound interest, urging listeners to start saving early to achieve financial independence. They stress the need to prioritize savings, avoid consumer debt, and understand expenses. Paul shares a client success story where consistent contributions over 26 years grew to $1.6 million. They also discuss the importance of having insurance, legal documents, and diversified investments. The rule of 72 is explained to illustrate the power of compounding, and they advise on maximizing employer matches and considering Roth contributions for tax efficiency.

Transcript

Unknown: 0:00

The following is a pre recorded show, welcome to winning in retirement with your host, BRIAN AKERS, Certified Financial Planner, professional and founder of AKERS Financial Group. Now helping you win in your retirement. Here's BRIAN AKERS,

BRIAN AKERS: 0:16

welcome to winning in retirement. I'm BRIAN AKERS from AKERS Financial Group. I'm the president and founder of AKERS Financial Group, and here today with me is Paul Franco. Paul Franco is a financial advisor with AKERS Financial Group. Over the last eight years, been with AKERS Financial Group. He has his MBA. He's a financial advisor. And good morning, Paul, good morning, Brian. It's good to be with you. I'm glad to have you here today because we got a very special show, and I know this is one of your many passions when it comes to financial planning, sure is, and that topic is going to be today. It's called financial tips for those under 40. Yep,

Paul Franco: 0:49

yep. So under 40, you're dating me a little bit there, giving my age away, but I am under 40. I never

BRIAN AKERS: 0:54

said your age. Did I say? I don't

Unknown: 0:56

think we said it was special to me. So that it's special to you, it doesn't mean

BRIAN AKERS: 0:59

that. I mean, being 20 and 30 was special to me too. It was just a couple of decades ago. All right, so we don't say that. Sometimes you have to. So what happens is this is we've put together shows, and sometimes the other advisor, this time, Paul helps to write the show. Now, the reason Paul writes the show is because recently, he's been meeting with a number of clients who really want to do financial planning and do it well, and they're starting early. And so that became a topic for a show that we wanted to do, where, for if people can actually listen to financial tips when they're under 40, they're going to be successful when they're over 60. If you don't start early, you're not going to be able to retire early. If you start late, you probably retire late. It's just one of those things where if you fail to plan, you plan to fail. So the show today is going to be about 40. Now if you are over 40, you should also listen in, because these are things that we all need to know and need to do properly. Also you might know someone that needs this, and you can always refer our show to them. They go to our website, at AKERS Financial group.com, under the radio podcast tab, and right there they can get the information. And then, of course, we want to make sure everybody gets their finances right, because you don't want to get your 30s wrong. Is that right?

Paul Franco: 2:15

Paul, I agree. Yeah. That's, uh, the the reality is that our wealthiest clients, Brian, are ones who started early, absolutely. And that's a that's a real like, that's that's very important to understand, is that the through the beauty of compound interest, which we'll talk about, this idea that the wealthier that you get you, that's work that you put in, you add money, you put money in every month, and it compounds and grows for you over time.

BRIAN AKERS: 2:42

Now some people would say that, well, my family's never saved money, so I can't. Some people would say is that some people that have too much money, their kids don't need to worry about money, so they can't. There's all these reasons on why people cannot save money. What's your response to things like that?

Paul Franco: 2:59

Well, I think the reality is that we have to, in some ways, reorganize our priorities, and we really do have to set our financial goals. Look at our goals in life. Say, Yes, retirement is a big goal of ours. But do we have any other goals that we have, short to medium term goals? And by organizing those, there are absolutely ways that we can save. There's always going to be an excuse not to save there's always something you could spend money on. Brian, that's the reality of it. But usually showing clients, showing individuals that the actual growth what can happen by just setting aside even small increments of money, $100 a month, $500 a month, whatever it is that we can do, it really does grow for you over time. Yeah,

BRIAN AKERS: 3:40

I always call that concept, pay yourself first, because what happens in budgeting is, if you try to save after you've paid all your bills, there's not anything left normally. Yeah, no matter what you make, no matter what your salary or bonus, or whatever the structure is, there's never enough left over to save. You got to save first. Make it a priority in life. Yeah, and it's

Paul Franco: 4:00

saving first. That's key is that's, key is that's, that's the reality is almost you have to hide the money from yourself. Sometimes, I know I even have to do that for myself. Sometimes it's early in the month, hide the money from me so I can't spend it.

BRIAN AKERS: 4:10

Yeah, all right. So hide the money the way I the way I've done that is I don't like getting cash in my pocket because it likes to disappear real fast. I don't know if I drop it or I just like to spend it too fast. I also there's a hole in the bottom of the wallet. Brian, yeah, the plastic credit cards can be a lot of fun, but the earlier ages, you have to understand that it's not free money. It's just as painful as letting cash go out, and the fact that you build up credit balances, it takes a long time to pay them off. Yeah,

Paul Franco: 4:38

that's that's a big mistake that I do see a lot of individuals make in their 20s, 30s, even 40s, is racking up significant levels of consumer debt, of credit card debt, some debt that they it's very hard to get out of because of the interest rates that are associated with those

BRIAN AKERS: 4:55

Yeah. What's the almost like the American mindset that second you get married and. Start on your own, you know, you have your house, and all sudden, you want to have everything that your parents have already. You want to have everything like everybody else, and no matter what it costs. And of course, with marketing and everything in front of us, everything's available, and then with the use of credit, they'll give it to you, and you just make small payments for a lifetime, yeah, and for a lifetime, exactly, and you dig this hole which takes years and decades to get out of, and that's sort of why people are in are in trouble, correct?

Paul Franco: 5:27

And that's another big reason, though, if you're listening to this, and you do and you have found yourself in that situation, we can help work through that. I have a client who's a radio listener who basically, in the span of probably three years, and she's single, she ended up racking up about $35,000 of credit card debt. Now we've built out a plan for her that to help her get out of the situation without having to file bankruptcy, through making extra payments, through consolidating loans, working through a strategy that way that I could get her out of the situation if she sacrifices in the next two to three years, and that's the key, though, Brian, she's going to have to make significant sacrifices, but it's possible, but you set yourself up better by not even having to go through that situation, because all that money that you have to put towards those debts, all of that compounds against you as well, when you could have that money working harder for You. Yeah,

BRIAN AKERS: 6:20

there's fundamental things like the car you buy. Just take this as an example. Might not like this, but imagine that you go out to buy a really, really nice car after you get your first job, that really nice car now costs you 1000 bucks a month, $1,500 a month. Is that really what you should be driving around in? Possibly, if you start out a car based on whatever cash you have, and then you have a small payment, and you sort of save the rest. This will start to build a great foundation. What you got to do is think about your budget, your money. Where is it all going to and where do you want it to go to? Many of us want to enjoy every day of life, and you want to have some fun, but you can't be deep in debt if you want to also have fun, because minimum payments and all these things take away your cash flow before you know it, there's very little discretionary money after the bills, because you've, you spent money two years ago and you're stuck paying for a while.

Paul Franco: 7:15

Yeah, now it's, it's unfortunately, that's something that, especially as Americans, we're consumers. I mean, we have over a trillion dollars of consumer debt now as Americans, so we do love to spend. The problem is that that's going to be a big dampener on what our other goals are, especially our financial goals.

BRIAN AKERS: 7:32

Yeah, the hard part is that when people start out working, typically, they make the least amount of their career, and then they have to build from there. The hardest part is to understand they have to be patient for those other things in life. They can't all come at once, and so they can't get ahead of their money. And so living within our means becomes a habit that very few Americans actually get to but this is really the key to financial independence. The key to retirement is knowing what your expenses are and living within your means so that there is enough means to take care of you.

Paul Franco: 8:04

Yeah, well, living within your means is critical. I mean, in reality, the problem is that most people don't live within their means, especially for a lot of folks who are under the age of 40, you are at a lower generally, your your income escalates over time. As you get into your 30s, as you hit your 40s and 50s, you start to hit your peak earnings The reality is that, especially in your 30s, the problem is that a lot of those individuals want to spend money on things they can't afford. And it's really Brian The problem is a lot of this world now in social media, is that we're seeing basically everyone's highlight reel. That's a big problem. And so you think you have to have the prettiest, the shiniest new thing, just to, you know, look good alongside your peers. The problem is, though, that, and I know you've seen this, I see this as well. It's that our, again, our wealthiest clients are not the ones who show that want to show all the money that they have. They don't have the shiniest new car. They don't have the biggest house. They it's, so ironic and interesting how that works, isn't it?

BRIAN AKERS: 9:03

It is. It's the balance of money. It's almost like this book from years ago called Millionaire Next Door, and how simple it took to be a millionaire, because they were savers, savers versus debtors, and that's a key thing when it comes to the ingredients of being financially successful, and that has become a saver. Saver is where is your you have priority, where money is being saved first, and you live off the rest, rather than all of it already being spoken for, spoken for with your debt payments before you even bring the check home. You know, yeah,

Paul Franco: 9:34

no, that's exactly right. And that's that's the beauty of growing wealth, setting aside money that's working for you, not setting aside money that's compounding against you. That's how you can grow your money. That's how you grow your money, and that's how you can vary. And we'll talk about this a little later in the show. It's how quickly you can become a millionaire without even knowing it. It's really interesting, absolutely

BRIAN AKERS: 9:54

now people in their early 20s, one of the things that I really want them to understand is this is the. Time, probably to take risk in your life. You want to take risk with going to school more to get the schooling you need to do that the exact job you want, if you don't need to go to school for your career, that's that's also wonderful. There's amazing jobs out there in trades. There's a great need and great pay for those that are skilled. Then there's the concept of starting your own business. A lot of our people that are able to grow their wealth are small business owners. They've actually taken the risk a lot of times in their 20s and took their ideas and their skill and then created that into this dream financial life, which takes some time to be able to develop the business, and ultimately to develop the wealth by setting up a small business. That really means a lot to them. Isn't that interesting?

Paul Franco: 10:43

When you when you say that story, I think, as somebody who's standing right across from me who started a business when he was in his 20s, I

BRIAN AKERS: 10:50

did. I risked a lot. I got my wife at jobs, and then basically I could work for free for a while, because I believe in business, you really got to put everything into it, every every penny, and you really don't have a lot of things for a long time, while you're reinvesting your money into what you believe most. And that's really what I tried to do with my first company a few years ago, a

Paul Franco: 11:12

few years ago. Yeah, that that idea, though, especially, and this is, I know we say we don't want to get our 30s wrong. And if anybody's in their 20s listening to this, this this is not an excuse to get your 20s wrong, but the reality is that you probably can, like, that's the time to make the mistakes. That's the time to do that. Because that the reality is that in those 30s 40s, that significantly sets you up for your future. Now, if you can do it in your 20s, you're even putting yourself further ahead than those in their 30s and 40s as well.

BRIAN AKERS: 11:40

Yeah, when you when you're in your 20s, and you hit a home run, and it just can go even better. It sure can, all right, so the idea is this, at AKERS Financial Group, we're financial advisors, we're local, we're independent. We don't report to a big company on Wall Street. We report to you. We do have offices in Lutherville, far still clients all around the mid Atlantic region, around the country and even a few around the world. It's so easy to begin winning in retirement. Just give us a call and schedule a meeting with one of our team of advisors. Call 830 3w, I n, r, e, t, I R, E, that's 833 win retire and give us. We'll give you a call on Monday to schedule a free in person meeting. Go to AKERS Financial group.com, or call us at 833-946-7384 to start planning for your retirement now you need to know the rule of 72 your retirement depends on it. We will explain when we return.

Unknown: 12:36

You're listening to a pre recorded Show. Welcome back to winning in retirement. Call 833, win retire now to schedule a visit with Brian and his team and begin winning in retirement once again. Here's BRIAN AKERS, welcome

BRIAN AKERS: 12:51

back to winning in retirement. This is BRIAN AKERS from AKERS Financial Group. Here with me today. From AKERS Financial Group is Paul Franco, good morning. Paul, morning, Brian. Welcome to the second quarter. The first quarter was a good the good work. Good startup. Good stretch out. You ready to roll on this one? Tony, up from here, it should be right. Oh, this one's gonna be the tough one you're gonna do be doing math. Oh, boy, do you love math, Paul, I do love math. Now. What's your favorite formula that you've ever seen in your life, in my

Paul Franco: 13:16

in my world of investing world, it is the rule of 72 all

BRIAN AKERS: 13:20

right, the rule of 72 that doesn't mean you retire at 72 the rule of 72 let's get into unless you want to, unless you want you can retire anytime you like. You could retire at 32 if you want to. But 72 the rule is 72 what is it? How does it work? How do we do the math? Yeah. Well,

Paul Franco: 13:35

the beauty of the rule of 72 is that you can take any return and divide it by 72 and that's how long it takes to double your money. And it's this concept that uses the S, p5, 100, the 8% annualized return that's now a little bit higher since those original stats years years ago. But basically you can take 72 you divide it by by 888, percent annualized return. And now it took takes you nine years. So 72 divided by eight equals nine, nine years to double your money. Now, the same idea with the rule of 72 is that, okay, an 8% return is pretty good. Taking a look at it from a long term. Now we can try to get higher, of course. So if you get 10% annualized return now, it takes 7.2 years to double your money. And a big thing I like to show when it comes to the rule of 72 is, okay, well, what if we take away less risk for our long term money, and now we're only getting a 4% return, and that's generally about what CD rates are. Now, the problem is that it takes 18 years to double your money, and it's this idea of compound interest, the actual return that you get out of it, the way you invest your money is a big determiner on how, basically, how much money you'll have, and how long it will take for that money to double.

BRIAN AKERS: 14:51

Yeah. So one way of an example is if you put your money in a money market making 4% and let's say we put a whole dollar, $1 in. In and you're 30 years old at rule 72 says it would double in 18 years. So that means $1 becomes $2 and and so if you start at 30 you're 48 and you have an amazing $2 whopping $2 and then 18 years later, if you leave it at 4% 18 years later would be age 66 you could have $4 yeah, now that's compounding at 4% lot of times we talk about investing, we'd say that that's money on the sideline, that's money parked. That's money not engaged in investing and taking risks to grow your money. And that's why we want you to change your mind on that and to do something better. So the example of 8% let's take that number and we start at age 30 all sudden. We're 38 we have the first double. Is that right now, 39 Yep. 3039 Listen, every nine years at 8% so 39 becomes two at 48 becomes $4 Yep. And then 48 plus nine is what? 7457 57 if I knew it was I was just drinking because someone ends up being 57 right? Now, that's right, all right. And then, so you get from four to eight, and then from 57 to 66 it comes 16. So the difference between money on the sideline or money in the market, if you take this over a lifetime, between age 30 and 66 is $4 to $16 all you got to do after that is add zeros to it, and you can see a major difference for those that go into the market and stay in the market for their career, especially for 1k so the topic with the rule of 72 is, yes, the math says that we have great doubling is one of the most Amazing Things to watch compounding. It's like to see clients go from 1 million to two, two to four, four to eight, eight to 16 million has been wonderful to see. But it's not abnormal growth. It's not like, Oh, they got special growth, correct? They just had the time, time, time. So go over the word time. What does that mean? I'll

Paul Franco: 16:57

give you an example. So I a client just about two three weeks ago, where we're looking at her 401 K, she had about $1.6 million in her 401 K, and she looked at me and she said, how on earth has this thing grown to $1.6 million I've only been putting in? Well, now she's been putting in enough to max out her contribution each year. But she's like, I don't know how it happened. So what was interesting was we actually went into her 401, K. We were online together, and I showed her the history of it, and I showed her that first contribution she made in her 30s, and how she was putting that money into her 401, K. She was still adding new money to it. She's 56 now. So she that was first contribution. I can't remember exactly. We'll call it 30. So 26 years of contributions that she had been making, plus the earnings that were actually occurring in the account that first, you know, $200 a paycheck that she put in has now grown to$1.6 million she

BRIAN AKERS: 17:55

made a lot of money. She does now, she did

Unknown: 17:58

not then, yeah, not then she did not. Just saved, correct? And that's

Paul Franco: 18:01

but that's time. It took her 26 years for that account to grow to that level. Now that was through an aggressive growth strategy, which the younger you are, you can be aggressive, but that works. It's proven to work if you have time,

BRIAN AKERS: 18:16

right? And so what's great about being younger is the fact that you have time, and time has this great financial tool called compounding, the compounding of your wealth, compounding of the growth, and then you look at the risk. Now, risk can have the concept of zero, and so compound math doesn't work well when you throw a lot of zeros in there. So you don't want to take the risk beyond normal risk. And that's when people take a little crazy risk. They sort of risk it all. You know, you find younger people that will do day trading, and they'll put all their money on one type of thing, and then they'll lose most of their money with one fell swoop, where, if they were more dialed back a little bit to moderate, aggressive, aggressive and diversified, you hit this number, 8% it's not a crazy number to try to achieve, and also they can reach that goal without risking everything. Correct?

Paul Franco: 19:06

Yeah. I mean, it's this idea of trading versus investing. And there's, they're completely they're two completely separate things.

BRIAN AKERS: 19:13

I treat trading like a business. I mean, that's a business. How much you're willing to risk, you want to risk it all. But let's have a sideline money. That's that sideline money is going to be in the for emergency fund, and then money that's going to be your nest egg, your nest egg. We don't want to risk at that level. Let's build that wealth, and then you can have your Play account for some of it, but not all of it, right?

Paul Franco: 19:31

So practically, the beauty of it is we can work it in sort of different time horizons, right? The different time horizons of how soon do you need the money? And that can sort of govern how we should be investing. So looking at it from okay, if we need the money less than a year from now, we probably don't want to take any risk with that money. The reason for that is we don't want to lose the principal if we can get small rates of return, but we need it over that less than a year period, we're okay with that. But then. You look at the next one to four years out, we can take a little more risk, maybe we buy lower risk, conservative dividend paying stocks, and match that with CDs money market, and have it in a short term one to four years out, conservative, low risk investments. Then you look the next five to 10 years, we can take a little more risk, a little moderately aggressive risk, and that might be in growth stocks paired with dividend stocks in a way that to provide better rates of return, but you're also adding more risk, and then there's that 10 plus years out, you can be much more aggressive. That's when the whole that portion of the portfolio should 100% be in stocks. There's no world that we'd want it to be in anything else we'd want it to get the most, the best rate of return over that long period of time.

BRIAN AKERS: 20:43

Those stocks are owning companies, and by owning companies, you get a risk reward for taking, taking that extra risk. By owning equities, you end up having the ability to make more money over time. If you take less risk, you're only going to be doing the fixed rates of return. Fixed rates are in that four to five range right now. They were, for a decade, in that zero to one, zero to two, and so that would never really truly double. No,

Paul Franco: 21:09

no. It would take a long, long time. Yeah, the problem is that, and this is something that a lot of folks can use, I like to show that, especially when I'm in the meetings, and if you're listening to it in the car, this is something you do when you when you get home, but you go on your phone and go to the compound interest calculator on investor.gov, and you can play with the numbers in there, and then, and I say, play with the numbers. I'm gonna, I'm gonna try to pull it up so I can show you, but you're gonna do some live. I'm gonna do some live calculating on the phone, if I can get it right. So looking at it from okay, if we started with$10,000 right? And let's say you're 30 years old now, and let's say you added $1,000 a month. Okay, so we're gonna add$1,000 a month. That's between your 401, K contribution, your Roth contributions, where we're saving $1,000 a month, but it's growing for us. So we're putting in $1,000 a month. And let's say we have that time frame of 55 right? So 25 years from now, and it's gonna, let's use an 8% return over that 25 year period. And it compounds every month, because you're adding to it every month. Do you want to take a guess what the number is? Brian, in 25 years?

BRIAN AKERS: 22:20

I need a second to do that. Well, I mean, it's basically $12,000 a year. So you have all that, and you have that the 10,000 that starts. So let's call it 800,000

Paul Franco: 22:31

close. It's one a little over 1,000,001 million.$24,428.15

BRIAN AKERS: 22:37

All right, so what Paul is saying is a couple of things. One is at 55. Is retiring early? Yep. Is a million going to be enough? That's going to be a topic later in the show. Correct? We probably say no, but the idea of 1000 a month sounds like a lot of money, but only started with 10,000 and started at 30. Correct.

Paul Franco: 22:58

And guess what, Brian, if you just shut, yes, if you shed, if you shed off 10 years. So let's say you start at 40, right? And you have that same 15 year time frame. Now they're same. Now you're dropping from 25 to 15. Do you know what the math is now? 360, I mean, almost spot on. 379, 107, so $600,000 less, just by starting 10 years later, right?

BRIAN AKERS: 23:21

And so the math also works by starting earlier, correct. The amazing thing, if someone saves from 20 to 30, I can show mathematically how you can stop at 30, yeah. And sometimes you need to stop at 30 because those kids want fruit, they want food. They want $4,000 volleyball lessons or basketball training. And so if you start early and often while you're 20 or 20s, the 30s become expensive years, correct? And

Paul Franco: 23:49

you can let that money work for you without you putting as much into it. You're right. Yeah.

BRIAN AKERS: 23:53

So the idea is this, the compounding interest, buying the market regularly and adding more during the dips, and buying and buying and buying and almost being a little blind to the market by buying without listening to the noise, not worrying about the highs and the lows. But buying is the key to compounding, right? Absolutely. Yeah. So what we try to do is, have you save your money, invest it, so that when you get to retirement, whatever age that is for you, you can do what is the best part of retirement? You know what the best part of retirement is? And that's when you get your time back, where you decide how to use it. Before retirement, your time is tied up by many other commitments. A lot of that has to do with your current job. A lot of that goes away in retirement. Your time is now consumed by things that you want to do it's so easy to begin winning in retirement. You go to our website, at AKERS Financial group.com scroll through the schedule meeting section and let us know you'd like to schedule your free consultation with one of our team of advisors. That's AKERS Financial group.com or you can call us at 833 when retired. That's 830 3w. I N. R, e, t, I, R, E, we'll give you a call on Monday to schedule your free in person meeting. Go to AKERS Financial group.com, or call us at 833-946-7384, to start planning for your retirement. Now, your retirement will depend on you, not your employer. We'll talk about this when we return.

Unknown: 25:19

You're listening to a pre recorded Show. Welcome back to winning in retirement. Call 833, win retire now to schedule a visit with Brian and his team and begin winning in retirement once again. Here's BRIAN AKERS, welcome

BRIAN AKERS: 25:35

back, indeed. Welcome back to winning in retirement. This is BRIAN AKERS from AKERS Financial Group. Here with me today is Paul Franco, better known as J Paul Franco, financial advisor NBA from AKERS Financial Group, Paul, this is the second half of the show. This show is financial tips for those under 40. You and I co wrote it together. You carried more of the load, I think, when they're in the writing of this. But I think it's a great topic to motivate people that is a great time to get started, correct?

Paul Franco: 26:04

It applies to so many individuals, even those under the even those over 40, that whole idea of compound interest, it applies to everybody. If you're

BRIAN AKERS: 26:12

listening to this and oh wow, this person needs this, this person I know, or my grandkid, my my kid needs us. You just have them go to our website, at AKERS Financial group.com and have them check out the website. We have it right on the website, or then go to a podcast and type in winning in retirement. And it's just a way for us to get out there get the information. Then they sit down with that free hour time where we go over really all about them, and then we try to build these concepts into into what they need to do. All right, so this topic, this quarter, is going to be a tough one. Paul, it says this, your retirement will depend on you, not your employer. What does that mean? Paul, yeah,

Paul Franco: 26:52

it's this idea, and we talked about this on the radio before, Brian, this idea of, and I think you coined it, yo, yo. You are on your own. I

BRIAN AKERS: 26:59

never coined that. Yeah, someone else coined that. I just borrowed it. Borrowed it.

Paul Franco: 27:03

Good, well, you borrowed it. And I love that, because I like to use that as well, that idea that you are the one who's going to be saving to your retirement nobody else is. That's the reality of it, and

BRIAN AKERS: 27:13

no one's going to care more. But the reality is, the structure of retirement has changed because pensions have gone away, yep. So security is, we're not quite sure what's going to give us in 10 years. It's going to be about 20% less. That's what they're telling us at this time. Yep. So that can't be your only retirement plan. You have to have more, and you have to be the one that does it

Paul Franco: 27:35

correct. And I think that really applies to those and this is why, especially when for those in their 30s, even in their 40s, sometimes, and I definitely believe Social Security will be there in some capacity. I'm not sure what it's going to look like, but if we can plan retirement as if it's not going to be there, then you're going to be in much better shape. Meaning we don't know what if there's if we save enough money on our own that we're not reliant on some sort of social security income in our 30s and 40s that we're expecting when we reach our 60s. Because the reality is that they're probably going to raise that retirement age, they're going to raise that ability, they're going to very likely, means test it based off of your income, like they do with Medicare. So there's a lot of question marks around the Social Security fund. So what can we do now that helps us to our future without having to be subject or being being worried about what's going to happen with the Social Security Well, we save on our own. That's how we do it. Yeah,

BRIAN AKERS: 28:34

I think you got to save 10 to 15% of your pay from the very first paycheck. If you don't save 10 to 15% there will be a shortage of amount of money there. The reason 10 to 15 The earlier you do that, there might be a day based on your investment success to be able to say, hey, I can dial that back. But if you build that into your budget, and you put that money away, you'll then have the rest to live on, and you'll understand that you can make that work? If your job does not trick, bring you enough money, then you really do need to address how you're bringing in money. Can you make more money? Is there a way to earn more money?

Paul Franco: 29:10

Yeah, we love to match your retirement expenses with your net take home pay. So if we're putting more into our 401 K, 403 B, TSP, whatever it might be, our workplace retirement plan. Then ultimately, what happens is we know we can live off of that little bit less because our net take home pay is less.

BRIAN AKERS: 29:29

I gotta find my soapbox to get on, and that is this, if we think about the way the world is today, and we know that AI is coming, AI is going to be taking certain jobs certain parts of business, and especially taking certain jobs, we really need to understand that if we haven't got ourselves in a position that's technically valuable for a company, we're never going to earn more money. We're going to be stuck at a certain set hourly rate, wage not be enough to be able to reach all. Goals. If we accept minimum wage as just what we make, that's something that the mindset has to change, because if we can change the way we work and make more money with our hour with our time, then we can then save more money. That's a hard change to do, because people have to instead of spending money on fast food and$7 coffees. Maybe they need to take trade school training classes, tech schools, all these med schools, all kinds of things that they can spend money on to invest in themselves, so they'll have the money to then build the wealth that they need and want to have to help them and their family.

Paul Franco: 30:36

I think you're spot. I think that's great. That's great advice, because I really don't believe a lot of people now, in their 30s 40s, understand how much they're going to need in retirement. I don't think they understand the number, like, if they want to maintain their standard of living, the number that you need to have saved to be able to live and drawing come from that investment is is a lot higher than most people understand. Is it a million? A million? Good enough anymore? Generally, not. Because if you take a 4% withdrawal rate off of a million dollars, if you can live comfortably off of $40,000 a year, then the answer would be yes, because $40,000 is that 4% withdrawal rate off of the million dollars. And so for most people, that's not enough to live off of. And so if we take out the Social Security, take out pensions as part of the equation, which is very is much more likely nowadays. It's not million dollars is not enough to retire off of.

BRIAN AKERS: 31:28

Well, a million dollars in the future will not be worth the same as today. Correct? If you think about inflation over the last few years, that inflation has made everything cost 2030, 40% more, and if you don't have the ability to grow your portfolio, even in retirement years, you're not going to be able to keep up. But if you have a realistic goal for someone in their younger ages, I think the numbers in that to the 5 million and even higher, depending on what kind of income you make, correct. I

Paul Franco: 31:54

mean, just doing the math off of if you want to match $100,000 a year of gross income, taking a using a using a 4% withdrawal rate, you need two and a half million dollars saved. You want 80,000 you need 2 million. Say, I mean, it's and then you adjust that for inflation, it's probably not going to be enough. You take taxes out of it as well. Now, if you're at a 30% effective tax rate, Brian, you're $70,000 it's, it's not enough.

BRIAN AKERS: 32:18

One of the quick maths I do is, so we calculate how much life need based on 10 times your pay, right? Yeah. So what if I told you, that's your nest egg number? What if I said, Okay, 10 times you pay. If somebody makes 150,000 they need 10 times that, yeah, one and a half million. Yep, and that's probably not enough, correct? You need more than 10 times really, to retire. Yeah? Because the idea of 150,000 a year. If your portfolio is doing that at 5% withdrawal, you need 3 million. And that's to maintain a portfolio to give you increases through your 60s, 70s and 80s. But the idea of having a goal, putting a number in your mind, but also getting it in your head that you have to be the one saving money if you're not saving anything, maximize your match at work today. Yeah,

Paul Franco: 33:05

absolutely. I think that's number one. Maximize your match. And then let's look into different ways that we can start saving more. That's the first thing you need to do, though, is take a look at the match you have at work and make sure you're maximizing it. It's critical.

BRIAN AKERS: 33:19

Yeah, I I believe people can save more money. And the thing is, is that when it becomes a passion to save money, you'll find ways to save money. You actually find ways to save more money. You do not need$1,000 a month to start saving you got to start with 50 bucks and then start building from there. Yep, you can actually have your paycheck, send money to your checking, and also send money to a savings so that you're building up something. Yeah,

Paul Franco: 33:43

yeah, exactly. And that's that same idea we love to work through with our clients. And planning is this idea of first we need to save to an emergency fund, make sure we have more than enough money set aside in cash in case there's any emergency because I do have some clients, Brian, that are 401, K IRA, very rich, but don't have a lot of money in the bank, and that's that has problems. In and of itself, is if we have any emergencies now we're not tapping into that 401, K, we're not tapping into that. Ira for that. So anyway, that's another conversation. Though. People

BRIAN AKERS: 34:13

like to ask me questions like, oh, what should it where should I be when I retire? What do you want? Well, my goal for people retired as though have a place you want to live in, at least know where you want to live. Make sure it's paid for. Make sure you have no other debts. You have emergency fund of six months expense or more. You have everything fixed up for your retirement years. You then have multiple sources of money you need tax free sources of money. Taxable is fine, because that's was the only way to save for a long distance time. But tax free, savings, some tax advantage, savings, having these different buckets will then give you so much choice. Financially, you can do what you want, you come to a point where you can say, well, do I have more than I need? I love that conversation with our clients. Do you have more than you need? Do you want to give it away to your family? Do you want it away to your favorite. Know, charity or church. What do you want to do with that money? Because you can bless many people, because you're financially successful, and then you realize the role of money in your life that you don't. It's not just being a certain number. It's about the use and the tool, being able to make that money work for you and your whole family. Yeah, it's

Paul Franco: 35:16

especially, you mentioned buckets, this idea of having different sources of money. I mean, it's a financial planners dream to be able to look at your taxes, do the tax planning, and say, okay, hey, let's draw some money out of our IRA. Maybe do Roth converting to maximize your tax bracket. Have more money set aside in Roth, or maybe we're looking okay, maybe, way me, we need to take more income this year. Maybe we need to take it from the Roth, because our incomes too. Having that flexibility, having tax free money, tax efficient money, you also have taxable money, allows us to have more flexibility to keep your wealth building for you, the best way and have the goal would be to pay the least amount of tax possible. That's that's what we love to

BRIAN AKERS: 35:58

do. Yeah, taxation is brutal. You're going to pay taxes now or later, or now and later, more now or even more later. It depends on choices you make. I love the Roth concept. I love the idea of pay tax now, never again. And I think having that inside your in your plan, is something we need to do. We have to do correct.

Paul Franco: 36:20

I mean, I wholeheartedly believe taxes are going up in the future with you, and so that idea is that one your income is going to go up over time. That's the reality of it. But if you're sitting there and you're under the age of 40 and you're thinking, Okay, well, should I be putting money in pre tax, or should I be putting in Roth? We'd love to sit down and help you work through that, but generally the answer is going to be, Roth, have that money you put in doesn't help you with your taxes now, but it grows for you. Tax free, absolutely

BRIAN AKERS: 36:46

Roth is a great place to be this this quarter has been all about depending on yourself rather than your employer, because pensions, everything like that, has been going away, and that's why you got to understand early on that you need to put money away. You need to throw money to your own retirement. So we are talking about your dreams on how to achieve them. This is what we do for a living at AKERS Financial Group. We do this so you don't have to, so you don't have to figure this all out on your own. We love doing planning. We love to come alongside and coach you with us. We want you to start planning, but that might not be your favorite thing to do. We know that, but that's what we do. We want to make it this as easy and comfortable for you as possible, so that as we meet with you and put a plan together, it includes that make sure that everything's taken care of, it's planned for, and then when it happens, you know good things and bad things you plan for it, you know you're going to be okay. Perhaps you've been sold something, regardless of whether you need it or not, not at AKERS Financial Group with us, your retirement money follows your financial fingerprint. It's a retirement plan based on your unique fingerprint that determines where your money goes. It's not about us, it's about you. So give us a call at 833 when retire. Schedule an in person meeting with one of our team of advisors. Or you can go to our website, AKERS Financial group.com, just give us a call at 833 when retire, to set up this free initial meeting. Get your financial house in order. We will give you the things to do when we return.

Unknown: 38:20

You're listening to a pre recorded Show. Welcome back to winning in retirement. Call 833, win retire now to schedule a visit with Brian and his team and begin winning in retirement once again. Here's BRIAN AKERS, welcome

BRIAN AKERS: 38:35

back to winning in retirement. This is BRIAN AKERS from AKERS from that trip. This is our radio podcast, and we welcome you to our fourth quarter of our show. Our show today is called financial tips for those under 40. And we brought Paul Franco, financial advisor from AKERS dance group, to talk about this topic. Paul, financial tips for those under 40 has been something that you've been working with a lot of clients on, trying to develop these habits and putting everything in order. And so this quarter, we want to talk about getting their financial house in order. So what kind of things do you do and say for people that first come in? Yeah,

Paul Franco: 39:07

I think that's a real interesting sort of viewpoint I can have on it. As someone who's in under 40, this idea of what you should be doing, because it's things that I have to do for myself and my wife as well, this idea of getting our financial house in order, setting aside money, saving to our future, figuring out our goals. When we figure out our goals, that helps govern what we should be, how we should be investing, what we should be investing in. But the first thing we have to do is figure out what our goals are. That's that's the number one important thing. If our goal is, maybe we're buying a house in the next few years. Maybe it's we're buying another property in the next few years. I had a client just the other day that we've been saving money to a separate account that's strictly earmarked for buying rental real estate. The likelihood now is that it's not going to happen this year, and that's the problem of the cost of real estate now, with also not having enough save, but that idea of we still have an earmark for that, for whenever. That time comes, that's a big goal. Was it also we want to retire one day. Maybe I want to retire when I'm 55 maybe I want to retire when I'm 65 having these goals in mind helps determine how we should be investing money

BRIAN AKERS: 40:13

and getting that financial house in order so that any worst case scenario won't deter your goals. So no matter what age, if you're under 40 or over 40, you need to have your financial house in order. That means some simple things, like, you need to have the insurances that you need if you work for a company, a larger company, usually you have benefits smaller companies. You have to get them on your own. You need health care, least some version of it, high deductible or whatever. Is that, whatever covers with your medical conditions that you have now, it'd be wise to have that to avoid not having health care and being stuck and going bankrupt because of medical bills, and that happens to people all across the country. Yep. The thing is that having insurance, from life insurance to disability insurance, helps prevent these worst case scenarios in life, having things such as a Will Power of Attorney. All needs to be done the second you become financially responsible, not when you're 65 it needs to happen as soon as you're financially responsible. Yeah,

Paul Franco: 41:09

it's funny. I have some clients in their 30s where we're trying to figure out when the best time is to set up their legal document. You know, wills power of attorney, healthcare directive. And the reality is, they have kids. They have kids. They have a house. There's no reason to wait. It

BRIAN AKERS: 41:24

should be set up right away once you own anything. That's the hard part is that when when you have kids, and your kids get out of college and they get on their own, the parents have no responsibility legally for them, they can't pay their bills for them, if they got a car accident, they can't take care of things for them. They need the legal right. They need a power of attorney. They need to have these things to take care of people while they're alive and wills take care of your situation if you passed away without that. You have to do that through the court systems, through guardianships, or through the intestate law of Maryland, which you don't want Correct.

Paul Franco: 42:00

Yeah, that's a costly and it's not generally what folks how they divvy up assets, not generally what they want.

BRIAN AKERS: 42:06

Yes, it gets your financial house in order, is one of the key things for everyone. But if we start out right then all sudden, you got the worst case scenario handled, everything else can happen financially for you, and that's where you can save money and take advantage of compound compounding and investing like we talked about earlier.

Paul Franco: 42:23

Yeah, exactly. That's the I'll tell you. It's in most people. A lot of people do know this. But when I was 17, I was this young boy, had some money that I saved on my own just led sitting in my bank account, and I figured I had to do something with it. And you know what I did? Brian, I came here to AKERS Financial Group as a client first, like, what on earth do I do? Here's what my goals are. I very I vividly remember that first appointment I had with you, which is so funny, because now hindsight 2020 it's like I found my passion when I was that, when I was that young, and now I'm here being able to help clients in the same exact way. But that took that first meeting of, hey, I have, I don't know what I'm supposed to do right now, right?

BRIAN AKERS: 43:03

Just getting it started and that. And we started small, and we put some money into the future, correct? And the idea of actually thinking about your future, for some people, that might be a new thing, absolutely. And so thinking about a future is how we can obtain it correct. And that happened

Paul Franco: 43:19

to me when I was 17. It could be in your 30s. This is what I help people with in their 30s. Now, they're like, I've saved some money up. It's sitting in a bank account. I don't know. It's not earning me any interest. It's not doing what I want. And the first thing I say to them, Brian is, okay, well, what are your goals? What are your goals in life? Do you have anything? Is there anything you want to do with that money now? Do we want to start saving it to our retirement? Should we maybe? Okay, maybe we keep that money in a savings account, but the new money that's coming in every paycheck, we have to allocate that more appropriately. Let's save it to our 401. K, okay. Oh, you're already putting money in to maximize the match. That's great. Let's fund Roth IRA. Oh, we have. We don't have. We only have $25,000 of life insurance. Is that really enough? Well, okay, let's see what we can get more through the through the group life plans at work. But if not, it's probably cheaper to get it on your own. So they're all these different ideas we want to work through. But the first and foremost, to get your financial house in order, you have to get started somewhere. So

BRIAN AKERS: 44:17

getting started usually means the free meeting with a financial advisor. You don't have to have a certain net worth to start. We'd love to help people that want help. So imagine when somebody walks through a door and they want financial planning help. We don't want to be a firm that says, Oh, come back when you've hit a certain number, because that's basically they want to help you grow your money and get you started. They want to once you've been successful, then they'll help out at that time. And we want to be the kind of firm that's going to guide you in and up and into what you need to do, and then up and be able to reach all their goals, no matter how good life it becomes over time. Yeah. Again.

Paul Franco: 44:53

The idea is that our clients are our biggest asset here at AKERS financial, so the more money we can help you. Grow and set aside on your own, the better client that you are for us and that you have to start somewhere. That's the reality, Brian, the smaller money, the littler amounts of money that you have, the younger you are, you will become great clients the future. That's the beauty of it.

BRIAN AKERS: 45:14

Yeah. The key is that mindset of being coming with saver, and that means you wake up one day and go, I want to change what I'm doing, and then you got to work on, how can I do this? And how long will take me to get my ship upright in get it organized the way, the way it should be. And so when you talk about financial tips for those under 40, our recommendation is, get things in order now. Get things going. Get things saving. If you're not signed up your employer plan, you got to go do that right away. The hardest part when it comes to financial planning and everything is getting started. Normal Retirement Planning. A lot of people come when they hit certain ages, 5560 6265 and they say, Are we retirement ready? And then that's when we first meet them. We got to then say, well, looks like you're close, but we need to go over all these fundamental things, put the financial house in order, and then come back and say, yes, you're okay. Imagine a client who's been with us, how we get into their 50s, and all sudden it's like, you're good to go. I mean, I know the client last night's been a client since they were 30, and now they're right around 60 years old, and it's like, I've like, you've been financially independent since you're 52 What do you want to do? There's a choice of what do you want to do with your life? Is really to talk the conversation. We had nothing about money when it came to the money was up more than enough to supply whatever they wanted to do. But that decision of what to do with your life is really the next step for in their case, yeah,

Paul Franco: 46:38

and that's that's a great story, because it's very true in the sense of that somebody who started when they were young, made the sacrifices and saved and grew their wealth over time, and had the help of Brian, you know, helping them alongside

BRIAN AKERS: 46:51

a very hard worker, small business owner. I met him in a very small house at that time, and they saved from from that day, and really, truly did, a lot of hard work and put money aside and let that money grow for them, and that's why they have a lot of choices and retirement years. Hard part is when you love your job and you don't want to give it up, but physically you might have to, or whatever else goes on in life. So the day's show has been financial tips for those under 40. Hopefully you've understood some of the concepts. So let's, I'm sort of run through some things, Paul. We talked about saving money and why that's so important to get started. And then we talked about things like compounding it, compounding interest, compounding of your money over time.

Paul Franco: 47:32

Yep, so Exactly. So that idea of compounding interest and also that we're we're on our own, we're saving to our future, and we're on our own. Nobody else is doing it for us, so we have to set money aside and set it and invest it in a way that's going to provide growth. Another big part of it Brian is know your expenses. Know what? You don't have to have a set budget every month. But let's have an idea of what our expenses are, because that helps govern how we can be growing money, saving money, how we can actually compound it for us, that's how we can do it is we know what our expenses

BRIAN AKERS: 48:06

are. Yeah, absolutely so. So the show is called financial tips for those under 40. This is not designed as a show that was just for those under 40. It's sound financial planning that can be applied at any time in your life. But we want to get across the need to start early. Now, 40 does not seem early. Under 40, it gets early. We believe when you get the first job, you have to start thinking this way. But what happens is you might not have done that. So when's the best time for you to get started? Paul, right now. Right now. Not yesterday, I like to say yesterday, but it's right now yesterday. That means you missed the appointment. So today, tomorrow, getting it started right away is really the key thing to growing your goals, getting money to be able to reach whatever your goal may be, absolutely

Paul Franco: 48:51

you know, it's, it's a beautiful conversation to have with a client when we've when they've saved and we've worked through a plan to have them save money, and we get to that point of a conversation of financial independence, of we've done everything we need. We have more than enough money that's going to last us a lifetime. We have the plan of how we're going to withdraw that money, how we're going to do it. And it's your choice whether you want to work anymore. You might like how much they pay. You might like that. She keeps you busy, keeps you out of trouble. But that's your choice. That's financial independence. Yeah. So,

BRIAN AKERS: 49:21

like, I was thinking about this 30 year old small business owner, and they came in and they hit the success year. All sudden, taxation is a problem. They made too much money, and they're not sure what to do. And I'm like, let's meet your financial house in order use that money to get everything right the way it should be, so that you can grow wisely and make sure you incorporate properly, or LLC, make sure you organize everything to the next step, and then begin the concept of saving money to make sure you're going to make this money last your whole lifetime. Absolutely. So the hardest part with a show like this, it has to come to an end. Paul, yeah,

Paul Franco: 49:55

it's too bad. Well, it's a it's on pause till we talk to you in person. Hopefully. Yeah.

BRIAN AKERS: 50:00

Well, Paul, thank you very much for a good show today, I really appreciate that today we did cover financial tips for those under 40. It's sound. Financial Planning is what we're trying to get across for you. Today, we do look forward to meeting with you. We want you to be to win in your retirement by taking advantage of an opportunity to begin planning with us at AKERS Financial Group, to schedule your free meeting with one of our team of advisors. Go to our website, at AKERS Financial group.com scroll to the schedule meeting section and let us know you'd like to schedule your free meeting. That's AKERS Financial group.com or you can call us at 833 when retire. That's 830 3w. I n, r, e, t, I R, E, we'll give you a call on Monday to schedule your free in person meeting with one of our team of advisors. Start planning for your retirement now. Go to AKERS Financial group.com or call us at 833-946-7384, thank you for listening. I'm BRIAN AKERS from AKERS Financial Group, and we want you to be winning in retirement. You've been

Unknown: 50:56

listening to winning in retirement with your host, BRIAN AKERS of AKERS Financial Group. AKERS Financial Group offers securities through arcadios capital and SIPC and FINRA member firm. Advisory services are provided through arcadios wealth. AKERS Financial Group and arcadios do not share any common ownership. Neither arcadios nor AKERS Financial Group provides tax or legal advice. Advice given on winning in retirement is general in nature, and one should seek further advice from their financial advisor, broker, attorney andor tax accountant before investing, be sure to read each prospectus carefully to understand all the risks associated with each investment. Examples and scenarios shared are meant to be for illustrative purposes only past performance is not indicative of future results.