I'm unsure if I'm going to retire in my 50s, so when do I consider an after-tax bucket? My wife and I are 31, we're in the messy middle, we have a 27% savings rate and a six-figure investment portfolio.

but no boiling point yet. So what would you say to Josh? All right, I want to make sure I got the numbers right. He's 31, 27% savings rate and then what was right after that? He said six-figure investment portfolio, so he doesn't consider himself

in the, in the boiling point. Well, I mean, I'm high expectations, yeah. I mean, when you, when you start thinking about like, counts as boiling point, yeah. So, um, 100,000, six-figure portfolio, I'm just saying 100,000, you may be even more than

that. Let's say it was 200, 250,000. Well, all of a sudden, if you have a $250,000 portfolio and you make 10% on that money, the portfolio by itself, without you adding another dollar, made $25,000. That may very well be more than

you save in a year. So, that is an idea of when the boiling point begins to happen, like you begin to see the money just start to grow and build and grow and build and grow and build. And so, uh, you're asking the question, hey, I'm doing

the stuff that I'm supposed to be doing. I'm 31, but I'm in the messy middle. I'm not planning on retiring early. Should I be doing an after-tax brokerage account or when does that come in? Well, fortunately, we have a nine-step tried

And the process to help you figure out what you should be doing with your next dollar, Brian, can you hold the thing up? Do you have the thing you can hold up? Oh, I have two of them here, that's why I got confused. He saw two of them down

there and he didn't like when Spider-Man starts pointing. See, you had two of them, one's in the bond, you know, bound sections on that page. So what I love is you can follow the financial order of operations through and once you've, you know, you you've filled out your full

emergency reserve and then you've maxed out your Roth and you've done the spousal Roth and you've maxed out your 401(k) and you're at 27%. Here's what's unclear to me: Does 27% mean that you're

still inside the AEP? You're still at the process of maxing out your employer retirement account. If that's the case, I think he could keep doing that. I don't think there's anything necessarily wrong with that and a lot of people find themselves in that place where I'm able

to begin maxing that out and I hang out in Step 6. Or if you're already at the 25% and you're satisfied that, I don't think it's crazy to go to Step 7 if there are goals that you have that a taxable bridge brokerage account might

help you complete. And that's what we often talk about is when does that account come in? Well, it begins to come in when there are goals you think about funding that that might be utilized for. Yeah, I I mean I'm going to get philosophical here because I'm the older

One, I get to do this because I'm the sentimental one. Also, Josh is, I mean, I resemble this in some ways, and I've shared with you guys that I thought I was leaving the workforce at 50. And that's why, if you ask me my why back in

the 20s, that I started saving in an aggressive manner. It's cuz I wanted to be able to leave work at 50. Now here I am, beyond 50, um, not leaving work anytime soon. I actually absolutely love what I do. I'm still very thankful of my 20-some

year-old self that was saving because it gave me more flexibility and options. So I'm, I'm not, you know, if you're looking for us to say quit saving, I, I look back and my older self now talking to my younger self, I'd say no, keep, keep saving.

But here's where the sentimental version of myself kicks in. I want you to take inventory of where you are. You're in your early, early 30s, messy middle, the messy middle. So that means spouse, kids, take inventory of how you feel like you're doing and be honest with yourself.

on not only being a good, prolific saver, but also maximizing life. And do you feel like there's drama within your family because you caused the financial mutiny? You were leaning a little closer to financial miser and maybe you, you and the family didn't do vacations, or maybe

y'all didn't um, make memories in the best way possible, or you created some hard feelings because of some of the ways that you, your family's calling you a tightwad. Take inventory. That now there's another side of this is that because I found myself on this is that

if you get to stages of life like in your early 30s where you know every one of those dollars is still so valuable cuz remember when you're 20 every dollar can become $88, has that potential. When you're 30 it's $23, when you're 40 it's

$7. So you do have a huge responsibility is that there's a huge power and just the value of your time when you're younger. So I would ask you take inventory of your life but then say you know I still feel like we're maximizing

life, we go on great family memories, we have vacations, my spouse is not upset with me, my kids don't feel like I'm some jerk who, who you know, yells at them because you know I'm not being a good father or whatever else and we're making

memories. Then there's nothing wrong with you saying well if I don't have a purpose for this money, you know, if you've taken account on being charitable but you just don't have a need for it, I'd still save it because a lot of

problems I see with people, like I remember this is a number of years ago I had an attorney come to me, he was making over $300,000, and then I said well let's see what you had saved and it just wasn't enough. I mean it was, it was a few

hundred, but I was like how are you ever going to retire at your age? I didn't say this, I was thinking this cuz I'm not a mean guy in person but, but the, the, the bigger your income is and if there's a

big disconnect between what your expenses are and your income. If they stay really close, but you never built the margin of savings, you're going to find that it's hard. And that's why I'm saying sometimes I have forced scarcity in my life, is where if I feel like I'm

checking all the boxes on the memory making and I'm being generous with charities and other things, I'll just keep saving and investing because I feel like that at some point in the future I might need that money. And it's it's never failed me so far. I think about all

the opportunities of buying commercial real estate, investing in businesses, buying equipment, that we don't know if the things we're doing with a social media channel is going to bear fruit. But I was thankful that in that season where I had plenty that I was

able to put a little bit extra aside, and versus just saying maybe this is, if I don't have a why to it, just going into more lifestyle, that that never seemed valuable. I I always consider myself a builder, not a consumer. And I think that

that that that understanding of maximizing both the sentimental stuff but also wanting to be a builder versus a consumer of life, um, never has failed me to this point. That's I love that. When do you think Josh should consider the after-tax bucket? I mean, if he's if he's

at step seven and he's, you know, he's loaded up all the tax-favored retirement accounts, 401Ks and everything else. Yeah, that's where that probably that extra savings, cuz that's where when you get into if you're doing real estate or other investment opportunities, the the

The easiest access to this point is going to be that after-tax account, but what if he's not doing it yet because he's still trying to get to 25% inside of Step Six? Does he have to start building the after-tax? Is it okay if he's doing Roth and

doing HSA and doing 401(k), especially at 31 in the messy middle? Is it okay if he just stays on that path as long as he's got his emergency reserves respected, meaning Steps One and Step Four? Because there is no replacement to access to good cash, but I think it's okay to lean

into the tax-favored stuff while you are in that building phase because if the government's going to give you an incentive, take advantage of it. Because believe me, once you get to a level of success, you're going to be like, 'Why is

the government no longer working for me? Why do they feel like they're taking so much?' It, it, it does flip on you at some point. Love it.

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The Money Guy Show

Question about after-tax buckets and retirement planning for a 31-year-old couple.

A 31-year-old couple with a 27% savings rate and a six-figure investment portfolio is unsure when to consider an after-tax bucket.

Discussion of the couple's financial situation and the concept of a 'boiling point' in investment growth.

Illustrative example of investment growth exceeding annual savings, indicating a potential 'boiling point'.

Further explanation of the 'boiling point' concept and its implications for investment strategy.

Question about the timing of incorporating an after-tax brokerage account into the couple's financial plan.

Nine-step process for financial planning and the role of after-tax accounts.

Description of a nine-step financial planning process, emphasizing the order of operations.

Clarification on the 27% savings rate and whether it includes maximizing employer retirement accounts.

Advice on continuing to maximize employer retirement accounts before considering an after-tax account.

Discussion of when to transition to Step 7 (taxable brokerage account) in the nine-step process.

Suggestion to consider a taxable brokerage account for specific goals.

Personal reflection on long-term saving and life balance.

Personal anecdote about initial retirement plans and the subsequent shift in perspective.

Emphasis on the importance of continued saving despite changes in retirement plans.

Advice to maintain savings while also considering life balance and family needs.

Recommendation to assess current life situation and family dynamics.

Importance of balancing saving with maximizing life experiences and family relationships.

Caution against neglecting family needs and creating financial tension within the family.

Discussion on the diminishing value of a dollar with age.

Importance of considering the value of time and prioritizing life experiences.

Recommendation to prioritize family well-being and assess the need for an after-tax account.

Advice on maintaining savings even without immediate goals for the funds.

Anecdote about an attorney with high income but insufficient savings, highlighting the importance of consistent saving.

Importance of building a savings margin even with high income.

Importance of maintaining a savings margin even with high income.

Personal approach to forced scarcity and prioritizing saving for future opportunities.

Mention of potential future investment opportunities and the value of having sufficient savings.

Importance of prioritizing building and saving over immediate consumption.

Emphasis on the mindset of being a builder rather than a consumer.

Recommendation on when to consider an after-tax bucket.

Suggestion to consider an after-tax account after maximizing tax-advantaged accounts.

Discussion on the accessibility of funds in an after-tax account for real estate or other investments.

Question about the necessity of starting an after-tax account while still maximizing tax-advantaged accounts.

Advice to prioritize tax-advantaged accounts while building wealth, emphasizing the importance of emergency reserves.

Encouragement to take advantage of government incentives while available.