Welcome to Kiplinger's My First $1 Million series, in which we hear from people who have made $1 million. They're sharing how they did it and what they're doing with it.
This time, we hear from a retired and married 58-year-old former aerospace senior manager who lives in Denver.
See our earlier profiles, including a writer in New England, a literacy interventionist in Colorado, a semiretired entrepreneur in Nashville and an events industry CEO in Northern New Jersey. (See all of the profiles here.)
Each profile features one person or couple, who will always be completely anonymous to readers, answering questions to help our readers learn from their experience.
These features are intended to provide a window into how different people build their savings — they're not intended to provide financial advice.
The Basics
How did you make your first $1 million?
I maxed out my 401(k) since day one of employment. The power of investing and compounding did the heavy lifting after $100,000.
Have always lived well below means. Paid off first house quickly (within six years), which set us up for debt-free living by 30.
My wife has been fully on board with the strategy since we met.
What are you doing with the money?
The first million was not accessible because it was in a retirement account. The second million was not accessible because it was home equity. The third million is accessible because it was made through savings/investments outside of our retirement accounts.
We pay cash for everything, including cars, so I guess what we did with it was stay out of debt and live stress-free.
We have not significantly increased our lifestyle, but we do live well (travel, nice house, good cars, hobbies, etc.).
The Fun Stuff
Did you do anything to celebrate?
Nope. I didn't even realize it until we probably had about $2 million. Once I saw how much we had, I realized we could think about early retirement. That was a big deal.
It sounds odd that we wouldn't even know, but our finances were spread across five or more brokerages, and I hadn't integrated them to add them together.
Also, when the markets were way down, showing big losses on quarterly statements, I stopped looking. I didn't change anything, but I didn't look for many years.
My early goal was to get to $100,000. I do remember getting to that milestone and feeling that we would be OK.
That money was outside of our retirement accounts, so I did monitor that money.
What is the best part of making $1 million?
I sleep well. That's by far the main benefit. We can help our kids — that is another great benefit.
Did your life change?
It hasn't changed our standard of living. The main way it has changed our lives is that we pay cash for everything, including cars. Being debt-free and staying debt-free is probably the biggest change.
Does anyone know you're a millionaire?
Only my wife knows how much we have and where it is. When I retired early, several friends and colleagues were curious, so I have discussed generalities about how we were able to do it.
Frankly, $1 million is irrelevant in terms of what matters. What really matters is how much income your investments can provide.
Having a million-dollar house paid off is nice, but that alone is not going to let you retire.
We used $1 million of our assets to buy an annuity that will pay a fixed income until we are both dead. The annuity plus pensions — and eventually Social Security — easily provides a large enough income floor to live comfortably.
Our remaining investments (several million) will let me sleep well. We will use the income from those investments for travel and, eventually, long-term care, if needed.
Did you retire early?
I retired last year at 57, and my wife will retire next year at 55.
Looking Back
Anything you would do differently?
I would have invested more aggressively when younger and would have invested in Roth vs traditional qualified accounts.
What advice would you give to your younger self?
Making $1 million was never a goal, but maybe it should have been. I simply wanted to be debt-free and never worry about money.
I should have been more deliberate about goals. And I should have invested my time in learning about investing.
Did you work with a financial adviser?
I did have a financial adviser for about 10 years early in my career. Once I learned about index funds and Vanguard, I stopped using him and moved everything into Vanguard.
My experience with the adviser was not good. He was not transparent about how he was compensated. I learned later that he was "churning" my accounts to keep his income flowing.
Firing him was maybe the smartest thing I have done with regard to our finances.
I have since learned enough to self-manage and am much more comfortable and confident in our financial future.
Once we got serious about early retirement, I did go to a few financial advisers (fee-only) to verify that we could retire.
I also used Boldin (New Retirement) software to create a comprehensive retirement plan. It's great software, and I would encourage any DIY investor to use it (or something comparable).
Did anyone help you early on?
Nope. I wish there had been someone. I learned late and entirely on my own.
Looking Ahead
Plans for your next $1 million?
We are going to spend the interest and dividends on fun stuff, mostly travel. We will also be helping family with the money.
Any advice for others trying to make their first $1 million?
The Millionaire Next Door book (by Thomas Stanley and William Danko ) will teach you how to live like a millionaire. That book was instrumental early in my adult life.
I would also recommend The Simple Path to Wealth (by JL Collins) for investment advice.
- Live below your means
- Invest the rest
- Give it time
I think that is the only foolproof way to get there.
There are other ways, but they are much, much lower-probability and involve speculation or luck.
Use Roth (accounts) as much as possible to avoid tax issues later in life.
Do you have an estate plan?
I have been learning about the details of estate planning. We have some work to do there.
The biggest item in terms of estate planning for us was making sure our investments have beneficiaries. That alone addresses about 70%.
We will not be creating a trust. We can deal with everything without it.
What do you wish you'd known …
Before you retired? Tax planning and "safe withdrawal rate" strategies.
When you first started saving? To put the savings in a brokerage fund vs a savings account. As our savings increased, I wasn't putting that money to work.
When you first started investing? The power of index funds and the impact of fees.
When you first started working with a financial professional? How to pick a good financial adviser. High schools should teach investment principles.
If you have made $1 million or more and would like to be anonymously featured in a future My First $1 Million profile, please fill out and submit this Google Form or send an email to MyFirstMillion@futurenet.com to receive the questions. We welcome all stories that add up to $1 million or more in your accounts, although we will use discretion in which stories we choose to publish, to ensure we share a diversity of experiences. We also might want to verify that you really do have $1 million. Your answers may be edited for clarity.
