(audience applauding) First speaker today is SC Gutierrez, wherever she is, did I get that right? See, I knew it, we practiced this. (laughing) And she's gonna talk about what you need to know before you invest, how to set your savings target. SC is the CEO of Aptis Financial, and she holds a MPP from Harvard University, is a certified financial planner, a certified retirement plan specialist.

And she is the author of "But First, Save 10," "The One Simple Money Move That Will Change Your Life." And her company, Aptis Financial, provides a flat-free financial planning services for early career attending physicians and other young professionals. So SC, you have the mic. - Thank you, Rick. It is great to be here today, and I am such a fangirl of everything Boglehead and this conference, and I have a story that I told Christine, she was like, "You gotta tell everyone this story." So I used to be a sell-side stock analyst, actually.

So we are the ones that would recommend whether people should buy, sell, or hold in their mutual funds, stocks in their mutual funds. And I read the book, the little book of "Common Sense Investing," and it just changed everything. And I left my job and started a new company to do financial advice in a new way, all because of Jack Bogle and his inspiration.

So it is a really big deal to be here with you all today. And I keep meeting people who are like, "This is my fourth conference." Like, I wanna be that person, like, "This is my 10th conference." Like, that's gonna be me here one day, I promise. Okay. So today, actually, went too far.

Today, what we're gonna do is we are gonna combat something that's happening in the financial industry, and the financial industry is doing one thing to us. They're telling us, "We need you to care about one thing. "What's the one thing that we need to care about?" What, retirement? Yes, it is.

But what's continuously being asked of us is that we care about investing. We need to care about the latest hot mutual fund to buy. We need to care about buying or not buying crypto. That's where the conversation is being had. And what's interesting is we're in the middle of a retirement crisis, right?

So we just saw the first people who were in this thing called the 401(k), a defined contribution plan. The first group of people, as we switch from pensions to defined contribution plans. Tell us whether this experiment was successful or a failure. What was it? Here, right? We're still talking about investments.

I run retirement plans. You know the only thing they care about in retirement plans? The investment menu. Are people saving in it, are they not? No, we just care about the investment menu, right? So here's the funny thing is, we are parroting back exactly what they're asking us to talk about.

So in our financial planning firm, we have people who write in, "I wanna work with your firm." And so they'll say, "Can you help me with investments? "Can you help me with this?" And y'all, I love investments. But you're looking at their portfolio and going, "Whoa, whoa, whoa, whoa, whoa.

"We need to be talking about something a little different. "What do we need to be talking about? "What do you need in order to invest? "What's the first thing you have to have?" Money. Money, money, money, money, money. That's what we gotta have, we gotta have money. Okay, so let's start there.

Does anybody in this room think that any young person in America does not know I need to spend less than I make? Right? I mean, we know that, right? No one would be like, "Oh, that never occurred to me," right? Like, we all know that. But here's the big question I have.

Does any young person really know how much to save? But you know there is an answer, right? If you're median income and you're 22 years old and you expect to reasonably retire in your 60s, we know you need to save 10%, right? Right, save 10%. That's gonna get you to retirement.

You're gonna be able to replace your income. You're gonna be able to probably maintain your lifestyle. And that's assuming a five or 6% rate of return, right? Like, we're not talking about anything crazy. Save 10%, save 10%. It's a real simple idea. But why are we not discussing it?

Does anybody here know what your percentage savings rate is that you need for you to be able to stop working one day on your own terms? People don't know our number. So I'm gonna tell you my number right now. I have a 35% savings rate. Sometimes it's 40, sometimes it's 30.

I am aiming to be able to be work optional 'cause I do not resonate with the word retire. I love what I do. I like to use the words work optional. I wanna be work optional in my 40s. Have I told you anything about my wealth? Nothing, right? You know nothing.

You don't know how much money I have. You don't know how much money I will have, right? We can openly discuss our savings rate, folks. Do you realize that? We are allowed to absolutely talk about how much car we buy, how much house we buy. We can absolutely show any measure of our spending.

But the moment that we wanna talk about wealth, that is suddenly taboo. So we live in a society that only talks about spending because it's taboo to talk about saving. But this metric that we're gonna do today, you are gonna walk out of this room with a number. It's your number.

You're gonna walk out of this room with this number. I want you to talk about it. I want you to share it, not just with Bogleheads. Yes, we share a lot of things at Bogleheads, right? I'm talking about the greater world. We are all better off if we all save enough to retire.

All of us. This is not a pie thing, okay? We're talking about growing the pie here together. So I want you all to not only take your number away that we're gonna calculate today, or get a start with today, I'll explain in a second, but I want you to take it to your people that you love, to your kids, to your spouse, to your grandkids.

Take this notion of we talk about our savings rate as a society. Okay, so this is a math problem, right? It's a math problem? Just math. If we just knew our savings rate, we're gonna solve the retirement crisis, right? Yeah, no. Okay, we're not. So this is my budgeting system when I got out of college and got my first job.

And I was sitting across from the HR director, and she said to me, "Okay, so your salary is going to be $23,000 a year." And I remember looking at her going, "I will never be able to spend all that money." (audience laughing) But we know what happened, right? Okay, so this is the rite of passage for all young people in America.

Anything different is un-American. So we get the money in, and we pay our bills. And we assume, because we lived on less before a broke college student, that we're just gonna spend so little that there's gonna be money just piling up in our checking accounts, and we're gonna have to get a shovel out to put it into a savings account, right?

But what we actually do is we break even. Now, I'm gonna explain why we break even, but we operationally break even. And then somebody pounds through my Honda Civics back window to steal my radio. This was in 2001, when we had radios. And I had to pay for that, because my deductible was $500.

And so I went into debt, right? And then I get a flat tire, so I get into more debt, right? Debt, because I was operationally break even, and couldn't afford those things that come up. So I know how we can solve this problem. All we need to do is just make more money.

The reason I couldn't save was 'cause I didn't make enough money. So I remember when I started my financial planning practice, I was gonna help like normal people, like nurses and firefighters. They could just pay a fee, and I'd help them get on a budget, it was very exciting.

But one of my first phone calls was from a physician. And she made $250,000 a year, but couldn't make ends meet. So she took on extra shifts as a single mom in the ED. And so her income was $325,000 a year. And I thought, oh, no worries, yeah, come on in.

We're gonna fix this. And I'm already thinking, there is so much money here to go around. We're gonna work this out easily, because I don't make that much money, and I live on so much less, this is gonna be really easy. So she comes in, and we start going line by line.

And I start sweating, 'cause I'm like in her life now. And I'm going, what are we gonna do? We can't possibly make it on anything less than $400,000 a year, right? Okay, so is this a math problem, folks? No, this is not a math problem. Okay, but here's the problem.

It's a big problem. So, okay, I'm married, and I have kids, and I'm 44 years old. I have a lot of stressors in my life, right? Stressors that are completely out of my control. But what's wild to me is that if you look at one of the biggest stressors that we have in life, finance is one of them.

Finance is always like a stress, it's like one of the top causes of divorce. So I had this in my early 20s, stress, stress, stress. I felt this. But what's crazy to me is we feel like everything's chaos, complicated, it weighs on our relationships. And so then we go spend more because of YOLO, okay?

I did all that. But it's all made up, right? Financial stress is completely artificial because you can have it or you can choose not to have it. So that's what's crazy to me. So is this an intellectual problem? Is this about being smart enough? Maybe if we're super smart, we'll be really good with money.

Is that it? Are physicians not very smart? Because did you know that 25% of physicians who are in their 60s do not even have a million dollars? So if you do the math on that and you make about 250 or $300,000 a year, that's what you live on essentially, how long is that million dollars gonna last?

Does not take complicated math to figure that out. So is this an intellect problem? No. So lots of people are gonna assign a lot of blame to our savings problem, but I'm gonna give you mine and because I'm the person up here, we're all gonna believe it. Set point theory of happiness is my, it sounds so sweet, doesn't it?

What a sweet thing that we have in our brains. The set point theory of happiness. Has anybody heard of this? Oh, okay. Well, has anybody heard of the hedonic treadmill? That sounds a lot darker. I like the more optimistic one. Set point theory of happiness. It is a wonderful brain phenomenon because here's the deal.

We all in this room have a baseline happiness. I might be a little bit higher, you might be a little lower, but it's our own baseline. And here's what's unbelievable. We can have something super terrible happen to us in our lives and our happiness can plummet. But look what's gonna happen after it plummets.

Our brains are gonna fight to get us back to our set point happiness. What an incredible adaptive thing. Jonathan Haidt, who wrote "Anxious Generation," he writes about this in "The Happiness Hypothesis" and he talks about that study of quadriplegics who in a terrible accident, they lose the use of arms and legs and within a year are kind of statistically back to their same level of happiness.

What an incredible adaptation. But on the flip side, I'm in the Kahara market. I drive a minivan and I feel like I would look really good in a Porsche Cayenne. Do we all agree with that? Black? I mean, we all can agree. I'll roll down the windows and my hair will be flying and people will be like, "Look at that very successful woman." Because right now I have a minivan that has Chick-fil-A stuck in the corners and my kids are in the back in car seats.

I am a soccer mom. My whole identity can change and you know what? I will be happy. I will be happy for a very long time. See, this is what my brain is actually telling me. Do you know that my brain actually said these things to me? Oh, my son really wants me to get a Porsche Cayenne.

He goes, "Mom, think of all the friends you'll have." (audience laughing) I waited a while and then he said, "They're probably not very good friends." Okay, so here's what's happening in the brain. So the brain is gonna fight because it loves those dopamine hits that take us high. But then our limbic system is just gonna bring us right back down.

And so then a Porsche Cayenne, gosh, to get to that same level of happiness, I'm gonna have to get like a Rivian or something. It's not gonna work. It doesn't work. This is what's happening to us. We are fully adapting to whatever money we have or don't have. We're adapting to OPM, other people's money.

We've got credit card debt. We can buy now pay later with afterpay. This is what's happening. So if we don't understand what is happening in our brain, then we will constantly be victims to it. So we have two jobs today. First of all, we need to know the math.

We need to know the math of what it will take for us to be able to one day stop working on our own terms, okay? Does anybody in here like the idea of being forced to work through your 60s or later and not being able to stop if you get sick or just wanna stop on your own terms?

Anybody like that idea? No. But it's funny, when I ask people if they wanna retire, people don't really raise their hands. So that's why I use, I want you to one day have the option to be able to stop working on your own terms. That usually resonates with most people.

So we got into the math of it, but then we have to also understand that our brain is a vicious, vicious animal when it comes to money, I promise you. It is not built, we are not, our brains are not built for money. I could keep on going. There are so many other brain factors that we have that make us bad with money.

So if any of you are walking in with fear or shame when it comes to money, let it all go. It's our own brains that we're reckoning with here. So if you know that and you respect that and you can't say, oh, I'll just think my way through it, then we can set up a system, a system.

And folks, this is the only curse word I'm gonna use this whole time. We'll set up a budget. Okay. This is what we have to do. It's as simple as this. And you're gonna get a session right after this that follows exactly this, okay? You have to pay yourself first.

And I know that sounds so like, aw, that's so cute, like a five-year-old could do it. No, let me tell you, I have seen millionaires who are break even, paycheck to paycheck, get on this system. This is the only system that works because it's the system that tricks that hedonic treadmill.

It tricks that set point theory of happiness. And all you're doing, folks, get this, you're just getting the money out of there before it hits your paycheck. That's it. You might think it doesn't work. Here's a crazy statistic. Did you know you are 12 times more likely to save for retirement just by having a retirement plan at work?

12 times more likely to save. The crazy thing is it's because they take your money out of your paycheck and they make it disappear. That's it. So you do that. You do that with your money. Get your money out and make it disappear. And now you know how much to take out, right?

Now you know I need to take this percentage out and make it simply disappear. Later, I'm going to be giving a talk on the places where I think you should make it disappear based on tax efficiency. We're gonna get to that later. But fundamentally, I just want you to think, once I know my number, I need to get it out of my life.

Get it into other buckets that I don't see, that I don't play with, and then that will work. Pay yourself first. You know, it's crazy to me to think when people can't retire that they would look back on all those paychecks from all those months that they worked in their lives and realize something very fundamental.

I paid everyone else first in my life. I paid my taxes first. I paid my health insurance first. I paid the mortgage first. I paid the car payment first. I paid private school first. I paid everybody else first. But I never put aside for myself. So if any of you are in that situation, this is what I want for you.

I want you paying yourself first before you pay anyone else. So now let's do the numbers. So there's gonna be two tables here. These are your slides. I think they're gonna get these slide decks, right, Rick? - Yes. - These are gonna be yours. You don't have to take a picture of it.

You can. It might be hard with how small these numbers are. This can be a start. This can be the moment where you're like, I am going to experiment with this number in my life to see if this could be my savings rate. So let me explain how this works.

So if you are median income and you are fine with a work optional age of, say, 65, then what you can do is you can do a little math. How much money do you have right now? Think about that. Add it all up in your retirement accounts. Not home equity, just retirement accounts, brokerage accounts, add 'em all up.

And I mean, if y'all wanted to do this right now, we'll kind of, we have time. So we're gonna, these are my last two slides. So we got a few minutes here. So add up all that money and then divide it by your income, your current income right now.

And that is how you're gonna find which column you're gonna be in. So here's an example. Let's say you have $500,000 in assets right now and you make 100,000 between you and your spouse. Should never do public math, but I believe that puts me in the five times column.

Yes, I see some nodding, good. We've done math well together. And let's say that I am 50 years old. You can see that I would need to have about a 15% savings rate. So I'm median income because between myself and my spouse, we make $100,000 a year. We've been able to manage to save 500,000 over the course of this time.

Maybe we were saving 5% into our retirement plan and our company was matching us a little bit, but we've kind of missed the mark a little. So instead of saving 10%, we got to catch up a tiny bit. We've got to get to a 15% savings rate. That is gonna allow me to have a shot at retiring by the time I'm 65.

Now, a lot can change. We can't guarantee that there's gonna be a nice steady rate of return of five to 6%, but in general, this could be a start. Now, you can also use some other calculators to try to triangulate this a little bit, but I want you to have a starting target today that you can start with.

So has anybody gotten your savings rate off this table? Has anybody been able to calculate it? Yes, does anybody wanna share what their savings rate is? Yes, go ahead. 5%. You'll see, we're gonna do a book giveaway. I wrote a book called "But First, Save 10." I assume that most people don't actually read books anymore, so I just put the whole thing in the title.

Just save 10%, folks, just save 10%, that's it. So this book is yours. You probably could give it away to somebody if you wish, but yes, thank you so much for sharing that. Was that scary to share? No, because I don't know anything about your wealth. I know nothing.

See, it's safe. We can share this number. Okay, so let's say you are higher income. So it's a little harder to retire in the same way. It's a little harder to have these lower savings rates when you make more money. Social security is not gonna have as big of an impact in replacing your income, and so it's a little bit harder, actually, to retire and replace your income when you make more money.

So that's why you'll see that on the high-income households, you're gonna have higher savings rates in these assumptions. So again, the same math to kind of start trying to figure out your number, but you'll see that the savings rates are quite a bit higher. So a lot of people say, "I save X percentage," right?

So there are people who talk about saving as a percentage, and there's some people that talk about saving as a percentage of their net pay, so their pay after they pay their taxes. I think it's a little easier to talk about saving as a percentage of your gross pay, because that way we're all on the same page on exactly where we are on our savings rate.

So that's what all of these numbers are based on, is our percentage of our gross pay. So I wanted to show you just the simple math of how to apply this. So you take your gross pay, which is you are going to make $23,000 a year times the 10% I should have been saving, and then it equals how much money you should make.

So in this case, $150,000 times 15% is 22,500. Any questions on that? Okay, so the final step here is you automate it. I hope that all of you are extremely motivated to go apply your savings rate. I hope you are all excited to go tell everybody to pick a savings rate and to be proud of it and to make it disappear and go away.

But how many months is your brain motivated? Does anybody know? To do something. The prefrontal cortex, when it makes a decision to do something, how many months will it be excited about something? Two weeks, that's funny. That's more, we're on the same page. So some people, it can be as much as three months.

You can be excited. So a lot of people will tell me I love this and I'm gonna make those transfers mindfully into my brokerage account or into an IRA or a Roth IRA. Please don't do that. The financial industry has done us a huge favor in helping us figure out how to automate our decisions.

And trust me on this point, once you figure out where your money will go, the amount of money and where it goes, I want you to take the final step to automate it and I cannot overstate this. By you saying on the eighth of every single month, I want this much money to transfer out of this checking account and go into this brokerage account and automatically purchase these three mutual funds.

You can do this and then you can check in on it every three to six months, but do not skip this step because this is where people get into trouble or they try to time the market. Oh, this seems like a really terrible time to be putting money in a brokerage account.

The market's up, the market's down, the market's flat. It's always a bad time, right? So this also prevents you from market timing. So I think I am right at time, but I am going to be hanging around. If anybody has any questions for me, let me know, but thank you all so much.

(audience applauding) you