5 Money Moves to Make at 45—The $5 Million Difference

About this video

• Video Title: 5 Money Moves to Make at 45—The $5 Million Difference
• Channel: Tae Kim - Financial Tortoise
• Speakers: Tae Kim
• Duration: 00:13:57

Overview

This video outlines five crucial financial and health-related steps individuals should consider taking around the age of 45 to significantly impact their retirement and overall financial future. The speaker emphasizes that decisions made at this age can lead to a substantial difference in wealth by retirement.

Key takeaways

• Fire Your Financial Advisor: The video argues that relying on financial advisors often incurs significant fees (0.5-1% annually) that compound over time, reducing potential returns by hundreds of thousands of dollars. More importantly, it hinders personal financial education and independence.
• Simplify Your Finances: At 45, life is already complex. Financial complexity, such as managing multiple old 401(k)s, numerous credit cards, and an overly complicated investment portfolio, adds unnecessary stress. Simplifying involves consolidating retirement accounts, closing unused credit cards, and reducing investment holdings to a few core index funds.
• Create Your "Money Operating System": This involves automating financial tasks to make money work for you without constant manual intervention. Key actions include setting up autopay for bills, automating savings and investment contributions, and using an account aggregator to view all finances in one place.
• Max Out Everything Tax-Advantaged: With retirement approaching, it's critical to maximize contributions to all available tax-advantaged accounts (401(k), IRA, HSA) before their respective deadlines pass each year. The video notes that catch-up contributions become available at age 50, and there are ways to access retirement funds earlier if needed.
• Invest in Preventative Health: Poor health can derail even the best financial planning. Prioritizing quality sleep, managing stress, and engaging in strength training are essential for longevity, quality of life, and avoiding excessive healthcare costs in retirement.