Winning Financially in 2025: Setting Yourself Up For Retirement

Speaker 1 Here's one piece of advice that I've given for years: Build an emergency fund. Aim to stash away enough to cover at least three months of expenses in case your income suddenly drops.

Speaker 1 Sounds simple, right? But let's be honest, it's not. Saving even one month's worth of living costs can feel impossible.

Speaker 1 Just when you're making progress, that check engine light blinks on and derails your plans. Life already throws enough curveballs.
You don't need your bank adding to the chaos.

Speaker 1 That's why it's so important to choose one that makes savings easy and doesn't nibble away at your hard-earned money with ridiculous fees. QIIME understands that every dollar counts.

Speaker 1 That's why when you set up direct deposit through QIIME, you get access to fee-free features like free overdraft coverage, getting paid up to two days early with direct deposit, and more.

Speaker 1 With qualifying direct deposits, you're eligible for free overdraft up to $200 on debit card purchases and cash withdrawals. To date, QIIME has spotted members over $30 billion.

Speaker 1 Work on your financial goals through QIIME today. Open an account in just two minutes at chime.com/slash MNN.
That's chime.com/slash MNN. Chime feels like progress.

Speaker 2 Chime is a financial technology company, not a bank. Banking services and debit card provided by the Bank Corporation Bank NA or Stripe Bank NA.
Members FDIC.

Speaker 2 Spot me eligibility requirements and overdraft limits apply. Timing depends on submission payment file.
Fees apply at AutoNetwork ATMs, bank ranking, and number of ATMs, according to U.S.

Speaker 2 News and World Report 2023. Chime, checking account required.

Speaker 1 Here's one piece of advice that I've given for years: build an emergency fund. Aim to stash away enough to cover at least three months of expenses in case your income suddenly drops.

Speaker 1 Sounds simple, right? But let's be honest, it's not. Saving even one month's worth of living costs can feel impossible.

Speaker 1 Just when you're making progress, that check engine light blinks on and derails your plans. Life already throws enough curveballs.
You don't need your bank adding to the chaos.

Speaker 1 That's why it's so important to choose one that makes savings easy and doesn't nibble away at your hard-earned money with ridiculous fees. Chime understands that every dollar counts.

Speaker 1 That's why when you set up direct deposit through QIIME, you get access to fee-free features like free overdraft coverage, getting paid up to two days early with direct deposit, and more.

Speaker 1 With qualifying direct deposits, you're eligible for free overdraft up to $200 on debit card purchases and cash withdrawals. To date, QIIME has spotted members over $30 billion.

Speaker 1 Work on your financial goals through QIIME today. Open an account in just two minutes at chime.com slash MNN.
That's chime.com slash MNN. Chime feels like progress.

Speaker 2 Chime is a financial technology company, not a bank, banking banking services and debit card provided by the Bankor Bank NA or Stripe Bank NA.

Speaker 2 Members FDIC, spot me eligibility requirements and overdraft limits apply. Timing depends on submission of payment file.

Speaker 2 Fees apply at out of network ATMs, bank ranking, and number of ATMs, according to US News and World Report 2023. Chime, checking account required.

Speaker 3 I live in LA now, but lately I have been craving the seasons. Snow, hot cocoa, the whole thing.

Speaker 3 I don't even ski, but I have been daydreaming about working remotely from somewhere really cozy on the East Coast, like a cute little ski town for a little bit.

Speaker 3 And whenever I know I'm going to be gone for a while, I always remind myself that my home can actually be working for me while I'm away because I host my space on Airbnb.

Speaker 3 It is one of the easiest ways to earn passive income from something you already have and that extra income feels particularly helpful this time of year as we approach the holidays.

Speaker 3 A lot of my friends say that sounds amazing, but where do you find the time to manage guests and bookings? And that's when I tell them about Airbnb's co-host network.

Speaker 3 Through Airbnb, you can find a local co-host who can help you set up your listing, handle reservations, communicate with guests, provide on-site support, even help with design and styling.

Speaker 3 I like to give a personal touch when I'm hosting on Airbnb. So I make a list of my favorite restaurants in the area and I hand write a note welcoming my guests to the property.

Speaker 3 My guests love it, but I also know that some of those little personal touches can take a lot of extra time. So this is the exact kind of thing that you would want your co-host to help you with.

Speaker 3 Whether you're traveling for work or chasing the snow or escaping it, or you've got a second place that just sits there empty more often than you'd like, your home doesn't have to just sit there.

Speaker 3 You can make extra money from it without taking on extra work. Find a co-host at airbnb.com/slash host.

Speaker 1 I'm Nicole Lapin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab.

Speaker 4 Hey, it's Morgan, the executive producer of the show.

Speaker 4 And as you know, this week we are playing the money rehab episodes that will make the biggest difference to help you meet your financial goals in 2025.

Speaker 4 Today's episode is all about saving for retirement.

Speaker 1 Enjoy. In the financial world, retirement is a really big deal.
So it's a really big deal here on Money Rehab as well.

Speaker 1 Naturally, I have covered it on the show, like in episode 136, The Secret Way to Snag a Roth, and episode 63, Choose Your Fighter, 401k or Roth IRA.

Speaker 1 But the very first step in making a successful retirement plan is to know how much you'll actually need for retirement. Money rehabber Mara wants to know exactly how the heck to make that prediction.

Speaker 1 Here she is.

Speaker 5 Hey, Nicole, my name is Mara and after listening to some money rehab, I'm ready to get serious about planning for retirement.

Speaker 5 I started making contributions to my 401k, but I'm not sure if I'm contributing enough because I'm not sure how much I should save for retirement in general. How do I know how much is enough?

Speaker 5 Thanks so much.

Speaker 1 Love the show. In my upcoming book, Miss Independent, Mara, I outline three levels of wealth, but I'll give you a quick sneak peek before it comes out.
Here is number one.

Speaker 1 I affectionately call this one rich enough, where your super basic expenses are covered without any frills. Think of the brown rice and beans diet.
Here's number two.

Speaker 1 If you feel best maintaining your current lifestyle, complete with occasional splurges like dining out or buying yourself something pretty, we all do, it is is the pretty rich life for you.

Speaker 1 Being pretty rich in retirement allows you to live comfortably with some indulgences, but doesn't factor in a ton of future growth. And here's the third.

Speaker 1 Last but not least, we have the super rich level, which entails having more money than you can reasonably spend, aka dollar status.

Speaker 1 You may already have a sense of which lifestyle you want to shoot for, but the next step is to crunch the numbers to see how much you'd need to save in order to achieve this lifestyle.

Speaker 1 There is no one right answer for how you want to spend when you retire. The only way to get this wrong is to not think about retirement savings at all.

Speaker 1 Your plans can and will change, but having a realistic idea of what you're aiming for is the only way you'll be able to figure out how to get there. So let's make your retirement roadmap.

Speaker 1 For this, you'll need a writing utensil, a pen, paper, a word document on your computer, whatever you have handy.

Speaker 1 First, we're going to map out how much money you need per year for the rich enough lifestyle. To do that, write down all of the monthly expenses in your bare bones budget.

Speaker 1 These are the expenses that are absolutely essential. No more, no less.
I'm talking housing, brown rice and beans, utilities, the necessities.

Speaker 1 Once you have your list, add up all of the expenses in your monthly budget and ta-da, You have the rich enough category. Now multiply that number by 12 and you get your annual rich enough budget.

Speaker 1 Keep that writing utensil handy because we're going to go through this same calculation two more times. Get excited.
Next, let's find your annual expenses for the pretty rich lifestyle.

Speaker 1 To do this, you should take your minimalist rich enough budget and then add on some extra layers of, well, extras.

Speaker 1 For this step, list out some mid-level financial treats, eating out every so often, signing up for a bougie gym membership, whatever sounds good to you.

Speaker 1 Then add up these extras and multiply that number by 12 so you get your annual extras for the pretty rich lifestyle.

Speaker 1 And then on top of that, add your rich enough annual expenses to get your total pretty rich budget. So I still have you see what I did there?

Speaker 1 Your pretty rich budget is going to be your rich enough budget plus some pretty rich extras. Got it? Got it? Good.
Now let's calculate the super rich annual budget.

Speaker 1 This is where we dream really big with the biggest ticket items you ever think you could possibly want. Again, we'll end up doing some layering here.

Speaker 1 To find your total super rich budget, you're taking your pretty rich annual expenses and then add on all of the annual expenses for everything else you could possibly think of.

Speaker 1 A vacation home, a yacht, a fleet of jet skis, a big monument with your name on it. Seriously, go crazy.
Now estimate how much per month you think you'd shell out to maintain that fleet of jet skis.

Speaker 1 And honestly, some of these things are totally within your reach.

Speaker 1 If you think about the spirit of what you want, maybe it's not buying a fleet of jet skis, but maybe it's renting one at a lake once a year. Then you know what to do.

Speaker 1 Multiply the total monthly costs by 12. Now you should have three numbers.
Your annual rich enough budget, your annual pretty rich budget, and your annual super rich budget.

Speaker 1 We're not quite done yet because this is just the amount you're anticipating spending in one year. Remember, this is your retirement budget we're talking about.
You won't be working.

Speaker 1 That's kind of the point. So you won't have any income coming in.

Speaker 1 So your next task is to calculate how much you need saved in total to support your lifestyle throughout the whole span of your retirement you do this by taking your annual totals for your rich enough pretty rich and super rich levels and multiply those numbers by how many years you expect to be in retirement typically when i coach people on calculating their goal retirement savings i recommend that they anticipate spending 20 non-working years in retirement other financial experts recommend budgeting for 30 non-working years.

Speaker 1 Really, that's a personal decision. I know you might be thinking, sheesh, warn us before you bring up our mortality.
I get it. No one wants to think about how much time we have left.

Speaker 1 It is the big ol' elephant in the retirement room, though. Here on Money Rehab, I don't let that elephant go unacknowledged.
Dumbo can grab a seat and join the rest of us in the pod closet.

Speaker 1 So did you do the math? I'm going to throw out some numbers for three levels of retirement wealth, but your numbers might not look exactly like this.

Speaker 1 I'm just gonna make some educated guesses so we can talk hard numbers. Let's start with the rich enough level.
The median household income in the United States is about $63,000 a year before taxes.

Speaker 1 The average annual burn rate, that is how much you spend per month and per year, is about half of that or $30,000.

Speaker 1 If we go off the average American needs, that's 20 years times $30,000 a year and we get $600,000 we need to live the rich enough lifestyle in retirement. Now let's move on to pretty rich.

Speaker 1 For the purpose of this example, I'm going to use the $67,000 figure as the target annual spending in retirement because it's the average salary in the United States.

Speaker 1 So that means you'll need to have $1.2 million for a pretty rich lifestyle level of retirement. Finally, let's check out our super rich rich option.

Speaker 1 If you want to be super rich and your annual spending is clocking in at something like a hundred grand, then you'll need to aim for around 2 million bucks to live out your days like our patron saint of badass old ladydom, Betty White.

Speaker 1 For today's pep talk, you can dig straight to the bank. Listen, in today's episode, we face the music.
Well, numbers, but we'll end with some music.

Speaker 1 And we started with some too, which is by far the hardest step when thinking about planning for retirement.

Speaker 1 Crunching the numbers may have made you realize that the retirement life you're envisioning will take more work than you actually thought or you may need to scale back. That may be the case.

Speaker 1 But also remember, after listening to the show, you're not going to have just one source of funding for your retirement. I am not saying you have to make $2 million to have $2 million by retirement.

Speaker 1 You can make part of your retirement nest egg through index funds and chilling, for example, and retirement accounts that are growing with the beautiful, beautiful forces of compound interest and investment gains.

Speaker 1 And rest assured, you are here in Money Rehab, which makes you in the exact right place to get your retirement shit together.