Last updated: September 30, 2025
Why Your 6-Figure Salary Won’t Make You Rich (Unless You Do This)
Big income without structure leads to the same destination: taxes eat returns, lifestyle creep eats cash flow, and your assets get trapped where you can’t use them. Here’s the framework we use with executives and business leaders to convert income into durable wealth and optionality.
The 3-Part Framework to Turn Income Into Wealth
1) Engineer Strategic Tax Architecture
Think of this as a blueprint for where money lives, how it grows, and when you can access it. Done right, it reduces tax drag and increases long-term compounding.
Step 1: Reduce the Tax Drag Now
- 401(k)/403(b): Contribute up to $23,500 (2025); add $7,000 catch-up at age 50+. With employer and after-tax features, total plan funding can exceed $70,000 per year.
- HSA: Triple tax advantage, deductible in, tax-free growth, tax-free qualified withdrawals. 2025 limits: $4,300 individual / $8,550 family (+$1,000 catch-up at 55+).
- Roth strategies: Backdoor or Mega Backdoor Roth to move tens of thousands into tax-free growth (subject to plan rules and eligibility).
Step 2: Optimize Asset Location
- Tax-inefficient assets (bonds, REITs, high-turnover funds) → tax-deferred accounts.
- Tax-efficient assets (index funds, ETFs) → taxable accounts.
Good location can add ~30 bps/year of after-tax return without increasing risk.
Step 3: Build Liquidity & Portability
- Create a freedom fund in taxable accounts for early retirement, sabbaticals, or relocations.
- Hold 1–2 years of cash/short-term bonds to avoid forced selling in downturns.
- Use Roth conversions in low-income years; manage income pre-Medicare to protect ACA subsidies (where applicable).
2) Create a Lifestyle Gap & Automate Surplus Deployment
Your edge isn’t income, it’s savings rate. Target 25–40% of gross saved.
- Max retirement, HSA, Roths, first.
- Auto-transfer surplus to taxable brokerage on payday.
- Spend from what’s left. Capture 80%+ of raises/bonuses before they hit checking.
3) Tie Your Money to Specific Goals & Milestones
Every dollar needs a job. We use goal migration and dated milestones to keep decisions aligned with the life you want.
- Work-optional at 55: fund via taxable + a Roth ladder.
- College by 2038: segregated 529 plan.
- Vacation home by 2029: dedicated savings bucket.
Quarterly reviews keep plans current as income, tax law, and markets shift.
Watch: Structural Wealth Design
Prefer the quick visual? This video walks through structures that help wealth compound faster than you earn.
Key Takeaways
- Tax architecture lowers drag and increases flexibility.
- Automation turns intention into results, savings by default.
- Goal-tied milestones make money serve your life, not the other way around.
- Liquidity buys calm, avoid forced selling and keep optionality high.
FAQs
What’s a realistic savings target for high earners?
Most households can reach 25–40% of gross by automating contributions and capturing raises/bonuses before they hit spending accounts. Start where you are and stair-step up.
How do I avoid lifestyle creep?
Pre-commit: route a fixed share of every raise/bonus to savings. Keep “fun” budgets for experiences so splurges are planned, not guilty.
Should I prioritize taxable flexibility or tax-deferred growth?
Both. Fund retirement accounts to reduce current taxes, and build a taxable “freedom fund” for pre-59½ goals, sabbaticals, and relocations.
Is the Mega Backdoor Roth worth it?
It can be powerful if your plan allows after-tax contributions and in-plan Roth conversions. Suitability depends on cash flow, employer plan features, and your tax bracket.
How often should I review the plan?
Quarterly touchpoints keep contributions, asset location, and liquidity aligned with income changes and markets.
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