Winning Financially in 2025: Setting Yourself Up For Retirement
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I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab.
Hey, it's Morgan, the executive producer of the show. 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. Today's episode is all about saving for retirement. Enjoy.
In the financial world, retirement is a really big deal. So it's a really big deal here on Money Rehab as well. 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. 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. Here she is.
Hey, Nicole. My name is Mara. And after listening to some money rehab, I'm ready to get serious about planning for retirement. 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? Thanks so much. 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. 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. 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 the pretty rich life for you. 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. Last but not least, we have the super rich level, which entails having more money than you can reasonably spend, aka baller status. 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. 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. 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. For this, you'll need a writing utensil, a pen, paper, a Word document on your computer, a whatever you have handy. 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. These are the expenses that are absolutely essential. No more, no less. I'm talking housing, brown rice and beans, utilities, the necessities. 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. 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. To do this, you should take your minimalist, rich enough budget and then add on some extra layers of, well, extras. 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. Then add up these extras and multiply that number by 12 so you get your annual extras for the pretty rich lifestyle. And then on top of that, add your rich enough annual expenses to get your total pretty rich budget. Should I still have you see what I did there? 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.
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