Why $100K Beats $300K (The Secret to Strong Retirement)

Someone making $100,000 with the right savings rate, they can become a millionaire faster than someone making $300,000 who only saves 5%. Most people believe income is the key to building wealth. But after more than 30 years helping families and high earners plan for retirement, here's what I see consistently.

Income without a savings rate, that creates stress, while disciplined savings, that'll create options. So, in this video, I'm going to walk you through the five questions that you must ask yourself to know whether you're actually saving enough to retire the way you want or if you're slowly locking yourself into a future that you just didn't plan for.

Do you know how much you could save every month? Could you answer that question without guessing? And I find that so many of our clients, at least at the outset, they can't. When it is that hard, chances are you don't know the answer to the next question, which is what is your burn rate? If you know your burn rate, then you know what you need every month and you know what's left every month. And if nothing's left, then you have a bigger problem.

Working with a client just a few weeks ago, this is a doctor, million bucks a year, and he felt like life is in the fast lane. It's great. No worries. Problem is, when I asked the question, "How much can you save each month?" What he said was, "I don't really have a lot to save." That's a bad answer when you're making that kind of money. So, think about what it must be like if you're making only a h 100,000 a year.

Regardless of where you are on the income spectrum, what I've got to do is get you to the point that we can say definitively here's how much you can save each month, and from that then I can help you build what that is going to do for you long term. Then you're going to know what your retirement can look like.

Next question. Do you know where your money is going? So I don't care how much you have coming in now, but if you don't know where it's going, we got a problem. Every dollar that you bring in, I want you to understand it fits into two categories. Required expenses, desired expenses. I hear some really interesting stories about what's required and what's desired. I hear more justification than I care to remember.

Recent story, family in Florida making 3400,000 a year. Well, this couple had no idea where their money was going. They were spending $75,000 a year on food out to eat, just drinking great wine and drinking certain types of other alcohols. If that's your vice, then go for it. But you ought to know how much is going out the door.

In this case, they were thinking all of that's required. Well, I'm here to tell you as we start to work through your planning, that's not required. They're desired. And if you can't get those two separated, there's no way that you're ever going to get where you're trying to go unless you just get really, really lucky or you win the lottery. Maybe that's winning the same.

How important is your future compared to your current lifestyle? If you're spending on required and everything else is going out the door on desired, then don't tell me that retirement really matters. Your spending habits will always reveal what you really mean. What matters more to you right now? Is it the fun, the desires that you have today? Is it getting out there and doing all the things that you think are really bringing you a lot of joy? Or do you really want to plan for tomorrow so that you're going to have what you need to sustain the life that you say you really want?

And let me just share a couple stats with you. Vanguard, they're one of the largest mutual fund and ETF providers on the planet. Their study recently told us that about 58% of Americans are not expected to be able to maintain their current lifestyle when they reach retirement. That's pretty sobering. If you're one of those 58%, do you want to change that? And then about 35% of all Americans feel like they're on track. That is a very small group when you think about it, and a lot needs to be done if you're going to be on track.

The next one is, are you willing to do what's necessary? It takes work. It's not going to just happen when you wake up tomorrow morning. None of this is possible if you don't take action. And you might be saying, "Well, I can't do all that's needed. I can't do this overnight." You're right. You can't. But if you don't take action, you'll never do any of it. So, it could be baby steps here. First thing you have to do is you have to realize that action must be taken.

Everyone seems to have the same notion of I want to get there, but they want it without a different behavior. What are you willing to give up today to gain control over tomorrow? And what expenses are you defending today? Almost everyone that I've talked to, they have a vice, something that's stealing from their future, meaning it's a habit or something they can't let go of, and that very habit is taking away dollars that ought to be allocated towards your future.

Clients who say we know what we should do, we're just not ready. Those are the ones that fail. And so I want to make sure that you don't fall into that trap. So taking action, critical step. If you get this part right, you're going to be miles ahead of all of those around you. My last question for today's session is

We'll get right back to today's show, but first, I'd like to ask you a quick favor. If you're enjoying this episode, hit that like button and make sure that you're subscribed to our channel so you don't miss what's coming next. And hey, if something in today's episode has you wondering about your own financial plan, why not get a second opinion? Visit omnistarfinancial.com to schedule a consultation with one of our team members. It's quick, it's easy, and it could make a huge difference in your financial future. Now, let's get back to the show.

Are you willing to follow a system, even if it's uncomfortable, in order to achieve the future life that you want? Discipline without a system, chances are it's going to break. Motivation is emotional, and it's temporary. And once our motivation is gone, then what's going to keep you on track? What's going to help you finish that project?

Now, you need discipline to force yourself to keep doing it, which is why you need a system that's really designed to let you see, to help you see where you're trying to go, when you're trying to get there. Those things can pick you up when the motivation and the discipline fail you. No matter what, that system is there to help guide you.

And if you have a good adviser working alongside, that's going to help you even more because they're going to be that voice of reason that's going to help you work through those challenging times. Sort of like a workout buddy. When you go to the gym, you'll always do a much better job working out if you have someone there to support you. You've got to have that person.

And we're there to hold your hand, take you through these tough times when you might want to give up on the savings rate that you agreed to or when you might want to go make that frivolous purchase, the one that you know you probably shouldn't make, but you want to do it anyway. And so having that guide, having that sage advisor right beside you, that can be incredibly valuable.

I always think back to this lottery winner in North Carolina. 90 plus million dollars. That's what they took home. And five or six years later, I remember a news story that was talking about this lottery winner and how close they were to broke. Can you imagine 90 couple million dollars and five, six, seven years later, someone's doing a story on you because you've shared the unfortunate realization that you're broke? I almost can't fathom going through $92 million, but it happens. And so, without a good plan, without a system, without people around you to help you make good decisions, unfortunately, you can probably make some really bad ones.

I don't think there is such a thing as a perfect plan. What you do need is an honest plan. Meaning, you're honest when you begin to answer the questions, when you're talking through these things with your advisor. Answer honestly what it is that you really want now and what you want later. And really focus on what you're willing to do now in order to get where it is that you want to go.

If you'll do those things, I'm absolutely sure you'll be on track before you know it. And if you're already on track, it's going to take you to another level of getting your financial journey in the best order it can be in. And it's going to get you closer and closer to your goals. And you are going to have something to smile