Here’s Why Your 6-Figure Salary Won’t Make You Rich (Unless You Do THIS)

Episode TL;DR

A six-figure salary alone will not make you rich—what you do with those peak earning years will. In this episode, Dan Pascone shares a three-part framework to optimize your tax picture, turn income into real wealth, and buy back the freedom to work only when you choose.

You’ll learn how to engineer your “tax architecture,” create a deliberate lifestyle gap with automated savings, and tie every dollar to dated goals so your money compounds toward a life you actually want, not just a high income and higher stress.

Key Takeaways

Your income isn’t the problem—your architecture is. Without a plan, taxes, lifestyle creep, and scattered accounts quietly erode what should be the most powerful wealth-building years of your life.
Strategic tax architecture is where your money lives and what it holds. Using tax-advantaged accounts, HSAs, Roth strategies, and smart asset location can reduce tax drag and give your investments more room to grow.
Asset location is free potential return. Placing tax-inefficient assets (like taxable bonds and REITs) in tax-deferred accounts and tax-efficient assets (like broad ETFs) in taxable accounts can add meaningful after-tax return without more risk.
Your savings rate is your real superpower. Targeting a 25–40% gross savings rate—then automating it—turns a high salary into a high surplus instead of a high-cost lifestyle.
Automated surplus deployment keeps lifestyle creep in check. Direct money first to 401(k)s, HSAs, Roths, and taxable freedom funds, then let only the remainder hit checking so spending grows intentionally, not by accident.
Goal migration and milestone planning make it personal. Tying each dollar to dated goals (work-optional age, college year, vacation home timeline) and reviewing them quarterly keeps your plan aligned with a changing life and tax landscape.

Key Moments

00:00 – The 10-year wake-up call: Why many six-figure earners reach their peak income with far less wealth than they expected.
00:15 – The real risk of “no plan”: How high earners waste their prime years without realizing it until it’s too late.
00:37 – Meet Dan & Tailored Wealth: How Dan helps executives and business owners optimize wealth, cut taxes, and align money with life.
00:56 – Framework Step #1: Strategic tax architecture. Where your money lives, what it holds, and when you can access it.
01:15 – Reducing tax drag now. Maxing pre-tax space, HSAs, and Roth routes so more of your money compounds for you.
02:08 – Asset location done right. Putting the right assets in the right accounts to boost after-tax returns without more risk.
02:35 – Building liquidity and flexibility. Freedom funds, tax-smart withdrawals, and cash buffers for early retirement or sabbaticals.
03:16 – Case study: VP with locked-up assets. How restructuring accounts and using mega backdoor Roth opened up seven years of flexibility.
03:57 – Framework Step #2: Lifestyle gap & automated surplus. Why savings rate—not salary—is the lever that changes everything.
04:16 – The “savings windfall” system. Exact ordering for routing contributions, surplus, and lifestyle spending.
04:40 – Case study: Software executive at 650k. Going from a 10% savings rate to ~35% without feeling deprived.
05:05 – Framework Step #3: Goal migration & milestones. Tying money to specific dates, dollar amounts, and funding sources.
05:27 – Turning a vision board into a plan. Early retirement and sabbatical example with dates, targets, and real flexibility.
05:56 – Pulling it together. Three-part recap: tax architecture, lifestyle gap, and goal-based tracking.
06:34 – Teaser: The “One Big Beautiful Bill.” Why the next episode covers the coming tax shakeup and what high earners need to know.

Episode Summary

In this episode, Dan Pascone tackles a problem almost every high earner underestimates: it’s completely possible to earn multiple six figures, hit record bonuses, and still arrive at your 40s or 50s wondering where all the wealth went. Taxes took a bite, lifestyle quietly crept up, and the years that should have been your biggest compounding opportunity passed without a clear strategy. Dan reframes your 30s, 40s, and 50s as “prime earning years” where every decision either accelerates your freedom or locks you deeper into a lifestyle that requires constant income.

He lays out a three-part framework. First, build strategic tax architecture—deciding where your money lives, what it holds, and when you can access it. That includes maxing tax-advantaged accounts, using HSAs and Roth strategies when appropriate, structuring asset location so tax-inefficient investments sit in tax-deferred accounts, and building a freedom fund for pre–59½ flexibility. Second, create a deliberate lifestyle gap and automate surplus deployment. Instead of letting raises and bonuses disappear into “nicer everything,” Dan describes a process that routes money first to retirement plans, HSAs, and Roths, then to a taxable account with your target allocation, and only then to checking.

The final step is goal migration and milestone planning—tying each bucket to specific dates and outcomes, like “work-optional at 55,” “college in 2038,” or “vacation home by 2029.” With quarterly reviews, your plan adapts as taxes, income, and markets change. Throughout, Dan shares real client examples where restructuring tax architecture and savings systems shaved years off retirement timelines and reduced projected lifetime taxes by six or seven figures. The core message: a six-figure salary is just raw material. The right blueprint can turn it into durable freedom; the wrong one leaves you wondering what happened to your peak years.

Full Episode Transcript

DAN: It’s 10 years from now. You’ve crushed it in your career, hit record bonuses, and your income is at its peak. But your accounts tell a different story. Your income came in, the taxes went out, your lifestyle crept up, and the wealth you thought you’d had by now just isn’t there.

DAN: Most high earners will waste their peak earning years and not even know until it’s too late. That’s the risk of not having a plan. And it’s a risk that I see executives and business owners taking all the time. In this video, I’ll give you the three-step framework that our clients use to cut taxes, grow their wealth faster, and buy the freedom to work only when they choose.

DAN: I’m Dan Pasone, founder of Tailored Wealth, and we help busy professionals to optimize wealth, reduce taxes, and align their money with their life goals, especially during those prime earning years where every decision you make compounds in your favor or against you. So, let’s dive in. Point number one is strategic tax architecture.

DAN: Think of this as where your money lives, what it holds, and when you can access it. When we engineer your tax architecture correctly, it’s like raising the floor and lowering the ceiling at the same time. Your returns have more room to grow and taxes have less room to take. Step number one is to reduce the tax drag now.

DAN: And we do that by maxing out every tax-advantaged space available. For 2025, that’s 23,500 into your 401k or 403b, plus an additional 7,000 if you’re over 50. With employer contributions and the after-tax option, you can hit 70,000 in these accounts in a single year. Your HSA is another hidden gem because it’s tax-deductible, has tax-free growth, and tax-free withdrawals for qualified medical expenses.

DAN: The limits are 4,300 for individuals, 8,550 for families, plus 1,000 catch-up at age 55. Even if your income is too high for Roth contributions, you can use the backdoor Roth option, or if your plan allows, the mega backdoor Roth to move tens of thousands into tax-free growth vehicles. Step number two is to place the right assets in the right accounts.

DAN: This is called asset location, and it’s overlooked by most investors. Place tax-inefficient assets like taxable bonds, REITs, and high-turnover funds into tax-deferred accounts and keep tax-efficient assets like low-turnover ETFs and index funds in taxable accounts. Done right, this can add roughly 30 basis points to your after-tax return every year without taking on any additional risk.

DAN: Step three is to build liquidity and portability. Don’t lock all of your wealth up until age 59 and a half. Create a freedom fund in taxable accounts for early retirement, sabbaticals, or geographic moves. Create a withdrawal strategy that optimizes your withdrawals from your taxable, tax-deferred, and Roth accounts.

DAN: And consider Roth conversions in those lower income years. And if you’re retiring before Medicare, manage income to preserve ACA subsidies. This can mean thousands in savings in annual premiums. Hold one to two years of spending in cash or short-term bonds so you don’t have to sell growth assets in a downturn.

DAN: I worked with a VP in the healthcare industry who had all of her assets in retirement accounts. Great for tax deferral. Terrible for flexibility. By shifting her asset location, using a freedom fund and implementing a mega backdoor Roth, we cut her projected retirement savings by over 400,000 and gave her the option to retire seven years earlier than planned.

DAN: And here’s the thing, everything we did for her, you can do too if you have the right blueprint. We put together free guides, checklists, and strategies for high earners at yourtailoredwealth.com. It’s a central hub that we use for clients to save six or seven figures over the course of a lifetime so you can start using them today.

DAN: The link is in the description. Point number two is lifestyle gap and automated surplus deployment. Your biggest advantage as a high earner isn’t your income. It’s your savings rate during your peak earning years. Target a 25 to 40% gross savings rate. The actual number matters less than the consistency. And automation helps to make that happen.

DAN: Here’s what I call the savings windfall. Contribute to your 401k, HSA, and Roth accounts. Then auto-transfer the surplus into a taxable account with your target allocation. Only then let the rest hit checking or a high-yield savings account. Raises and bonuses—capture at least 80% until your savings targets are met.

DAN: A software executive that I work with was making 650k after taxes but only saving about 10%. The rest disappeared into lifestyle creep. By automating his savings rate to 35% and capturing his bonuses and putting them in savings, he went from saving 65k a year to over 225k without feeling deprived. Point number three is goal migration and milestone planning.

DAN: This is where your money gets personal. Every dollar in your plan should be tied to a specific dated goal with a funding source and review cadence. Let’s take a look at some examples. Work optional at age 55 utilizing taxable accounts and a Roth ladder. College in 2038 using a 529 plan. Vacation home in 2029 using a taxable savings bucket.

DAN: Quarterly reviews keep you ahead of changes in income, tax laws or markets so you can adjust proactively, not reactively. One of our clients had early retirement on her vision board for many years. But when we tied that to an exact date, dollar target, and funding plan, she could actually see the path ahead. Within three years, she was ahead of schedule, and we built in enough flexibility that she could take a six-month sabbatical without derailing her long-term plan.

DAN: If you want to maximize your long-term wealth during your peak earning years, number one, engineer your tax architecture, reduce drag, place assets smartly, and stay liquid. Number two, create and automate a lifestyle gap so that your wealth grows by default. And number three, tie your money to specific goals and track them relentlessly.

DAN: This isn’t about cutting lattes. It’s about building a financial engine that runs efficiently, grows consistently, and adapts with your life. Now, building long-term wealth is one thing, but keeping it in a shifting tax landscape is another. Right now, we’re in the middle of one of the biggest tax shakeups in a generation.

DAN: And if you don’t know the rules and how they apply to you, you could unnecessarily hand over a large portion of your wealth to the IRS. In the next video, I’ll walk you through the one big beautiful bill. What’s changing, who it helps, and the moves that high earners need to make immediately to come out ahead. Click here to watch it now because the longer you wait, the more opportunities will slip.

Resources & Citations

IRS – 2025 401(k), 403(b), and 457 Contribution Limits – Official elective deferral and catch-up limits that align with the figures Dan cites for 2025.
IRS Revenue Procedure 2024-25 – 2025 HSA Limits – Confirms the HSA contribution limits for self-only and family coverage, plus catch-up amounts.
Vanguard – Asset Location Can Lead to Lower Taxes – Overview of how placing assets in the right accounts can improve lifetime after-tax returns.
HumbleDollar – Asset Location Decisions – Summarizes Vanguard research showing that thoughtful asset location can add 5–30 basis points in annual after-tax return.
Episode Page – Here’s Why Your 6-Figure Salary Won’t Make You Rich – Canonical Tailored Wealth page with consultation call-to-action.
Tailored Wealth – Strategic Financial Planning – Learn more about Life-Driven Planning and Life Driven Investing (LDI) for peak earners.
Making Sense of Your Money – Content Hub – Free guides, checklists, and strategies for high earners looking to save six or seven figures over a lifetime.

Frequently Asked Questions

Why isn’t a six-figure salary enough to make me rich on its own?

A six-figure salary is powerful, but it’s only raw material. Without a plan, taxes, lifestyle creep, and scattered accounts can absorb most of that income. Wealth comes from what you keep and how you deploy it—your savings rate, tax architecture, and investment strategy—not just what you earn in any given year.

What does “strategic tax architecture” actually mean in practice?

Strategic tax architecture is the intentional design of where your money lives (taxable, tax-deferred, and tax-free accounts), what each account holds, and when you’ll tap each bucket. Practically, that might look like maxing retirement plans and HSAs where appropriate, using Roth strategies when available, and building a taxable “freedom fund” for pre-retirement flexibility—all coordinated under one plan.

What is a good savings rate for high earners in their peak earning years?

Many high earners underestimate what’s possible. For people in their true peak years, a 25–40% gross savings rate is often achievable, especially if you automate contributions and capture most raises and bonuses for savings before they hit your checking account. The exact number depends on your goals and timeline, but the key is making it consistent and automated.

How does asset location help me build wealth faster without taking more risk?

Asset location is about putting the right investments in the right accounts for tax efficiency. For example, tax-inefficient assets such as taxable bonds or REITs often fit better in tax-deferred accounts, while tax-efficient index ETFs can work well in taxable accounts. Research suggests that thoughtful asset location can add meaningful after-tax return over time without changing your overall risk level.

What’s a “freedom fund,” and why do I need one if I’m already maxing my 401(k)?

A freedom fund is a taxable investment account earmarked for flexibility—early retirement, a sabbatical, career changes, or geographic shifts—before traditional retirement ages. Tax-deferred accounts are great for long-term growth, but they can be restrictive. A freedom fund gives you options earlier in life, so you’re not “rich on paper” but trapped in a job you’ve outgrown.

How often should I review my plan if my income, taxes, or goals are changing?

Quarterly reviews are a useful rhythm for most executives and business owners. That’s frequent enough to adjust to changes in income, tax laws, markets, and personal goals, but not so frequent that you’re reacting emotionally to every piece of news. The goal is proactive adjustments, not constant tinkering.

Disclaimer

The information in this video and on this page is for educational and informational purposes only and is not intended as, and should not be construed as, individualized tax, legal, or investment advice. Tax laws, contribution limits, and regulations may change, and certain strategies may not be appropriate or available for every viewer.

Before implementing any strategy related to retirement plans, HSAs, Roth accounts, asset location, or withdrawal planning, you should consult with your own qualified financial professional, tax advisor, and, where applicable, legal counsel to evaluate your specific situation, eligibility, and risks.

Related Episodes & Resources

Next Steps

If you’re in your peak earning years and don’t have a clear tax and savings blueprint, every month you wait is a missed compounding opportunity.

See what’s possible with your income: Visit Tailored Wealth to learn how a Wealth Clarity Consultation can help you map out your tax architecture, savings rate, and work-optional timeline.
Turn insight into action: Subscribe to Making Sense of Your Money for checklists, guides, and future episodes that keep your plan aligned with a changing tax and market environment.