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 married 68-year-old retired project manager in media who lives in Southern Maryland. He reports that his last salary was $98,950.
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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.
To learn what these millionaires have taught us, check out the articles 5 Key Insights We Learned From 50 Millionaires and 5 Things 50 Millionaires Wish They’d Known Before They Retired.
And to hear more about My First $1 Million, you can check out this podcast with bestselling author and tax attorney Toby Mathis:
The Basics
How did you make your first $1 million?
Dogged persistence. We saved more than we spent, spent less than we made and gave more than we got.
We were in our early 40s when our net worth crossed $1 million.
We have always fully funded our IRAs, and we began aggressively funding our 401(k)s when they first became available.
What are you doing with the money?
When our children were in elementary school, we started to invest in SFD (single-family dwelling) rental real estate. At the time, we thought we would begin divesting when our children began college, selling properties as necessary to fund those expenses.
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Turns out that by the time college came around, our portfolio was throwing off so much free cash flow that we didn’t need to sell anything!
The Fun Stuff
Did you do anything to celebrate?
Nope. That’s just a number.
What is the best part of making $1 million?
One million is just a number — doesn’t mean a thing by itself.
Did your life change?
Our asset level allows my wife and me to weather the idiocy of whatever the current administration is, regardless of political party.
When the White House does something stupid and markets crash, I simply use that as an opportunity to do Roth conversions.
(Image credit: Getty Images)
We were early devotees of Roth IRAs, but for many years, our income level did not allow IRA contributions. Nevertheless, I was an early advocate of backdoor conversions.
Does anyone know you’re a millionaire?
Our two adult children are well aware and fully informed of our finances. That’s both a learning experience for them and their spouses and an essential element of our estate plan.
We threw our rental real estate into an LLC many years ago, and we diligently gift our children’s trusts interest in the LLC to the maximum allowable.
Did you retire early?
My wife retired in her mid-50s to start providing daycare to our grandchildren. My plan was to retire about 10 years later — my original plan was to retire in mid-March of 2020 (remember COVID?).
Our assets are such that we can easily be up or down in a day what we used to make in a year. That alone blows my mind!
(Image credit: Getty Images)
Anyway, we were down almost $1 million after COVID hit, so I decided to push my retirement, which I hadn’t yet communicated to my employer.
Ultimately, I delayed one year until I pulled the trigger — at that time, I was 63.
Looking Back
Anything you would do differently?
Nope, our aggressive investment philosophy has served us incredibly well, and we’ve always been self-directed.
Early in my career, I was between jobs during the spring, and we couldn’t afford to make our IRA contributions, so we borrowed the amount — it was $1,500 each so we could fund our accounts for that year. We borrowed the funds in April and paid the loan off in September.
Early on, our IRAs were exclusively in bank CDs. In our 50s, we began shifting that philosophy to equity holdings.
After nearly three decades, I was laid off with a pension, and I had maybe a dozen options for the pension funds. Everything from “leave it alone” to “taking it.” I chose to roll over the funds into a self-directed IRA with Schwab.
Then I moved it entirely into positions in Apple, Google and Amazon.
What advice would you give to your younger self?
Going all the way back to my teenage years, I’ve mapped out and recorded all relevant personal financial details. Until Excel came along, that was literally on accounting columnar pads. I can tell to the penny what I’ve invested, made, saved and spent, not to mention taxes, etc.
(Image credit: Getty Images)
That diligence has enabled me to easily model the impact of different strategies.
If I were to give advice, I’d encourage people to exercise similar diligence in recordkeeping.
Realizing a number of years ago that our liquid assets exceeded the combined lifetime income we had earned blew my mind. That alone convinced me that our retirement would be comfortable.
Think about it — we’ve got in savings, retirement accounts, trading accounts, etc., as much money as we’ve earned in our entire lifetimes!
So, I figure if it took me 40 years to earn X, and I have that same X in the bank, then rough logic would say I’ve got enough to live on for the next 40 years. Give or take.
(Image credit: Getty Images)
Do your own taxes! There is absolutely no reason why an adult early in their career can’t do their own taxes, and the earlier you begin doing so, the more comfortable you will be with the numbers.
I still do my own personal taxes today. I use a CPA for our estate, LLC and trust taxes quite simply because they require complex knowledge of the tax code which I do not possess.
Did you work with a financial adviser?
No, we are entirely self-taught and self-directed. A couple of years prior to my planned retirement, I engaged Edelman to review our portfolio/plans and was flattered when the consultant told me he couldn’t honestly recommend any changes to either.
The biggest surprise was his analysis indicated that we already had enough to fully fund our retirement at that point. That alone provided my wife with a heightened sense of comfort, even though I had separately arrived at the same conclusion.
(Image credit: Getty Images)
We have all of our accounts with Schwab, and they’ve been a good partner. I opened my first Schwab account almost 50 years ago.
Did anyone help you early on?
My father was very influential. Upon his advice, I bought my first equities position (AT&T) when I was in the eighth grade.
Looking Ahead
Plans for your next $1 million?
We’re typically up about a million a year — of course, there are down years. But I can track and trend all the way back to college, and our annual average return has been about 11%, and that factors in down years as well.
When I look at down years, I have learned to take a deep breath, because when I look at a down year and then include the year before and the year following, we’re still up about 8%.
Any advice for others trying to make their first $1 million?
I read recommendations that you should invest in your 401(k) at least as much as you can to receive the company match. I think that advice is foolish — if you’re not at the maximum allowable contribution, you should establish a strategy to get there.
Whatever you are saving, contributing, investing, up it. Even if it’s only an increase of 1% a year, up it until you hit the maximum allowable.
(Image credit: Getty Images)
When 401(k)s were first introduced, we couldn’t afford the maximum contribution, so we followed the above strategy to slowly but surely get to the maximum allowable.
We also embraced an approach where typically any salary increase we got, we poured it into savings. I always have assumed that Social Security would not be available when I retired due to federal and congressional incompetence.
For that reason, all of my forecasts have never layered in the income that we are due from Social Security.
Do you have an estate plan?
Yes, we have established trusts for our children which we fund annually with interest in our LLC. Maryland allows something called a life estate with powers, so we’ve titled our main house into a life estate naming our daughters’ trusts as the owners.
We envision our home to remain in the family after our deaths.
(Image credit: Getty Images)
We’ve also acquired perpetual insurance for our homes. For a one-time payment, we’re insured in perpetuity. These premiums are fully refundable, and for that reason, we carry the deposits as assets on our balance sheets.
What do you wish you’d known when you first started investing?
My first equity position was AT&T, which I bought when I was in the eighth grade.
When I graduated from college, I took out a $3,000 personal loan (which I paid off within a year) and purchased shares in a variety of local electric providers. Some of those holdings are still in my portfolio.
My entire life, I have been a proponent of dividend reinvestment plans. When I retired, I shifted the holdings in my trading account away from DRIPs and began using that dividend income to live off of.
Anything you’d like to add?
The success I’ve enjoyed is relatively easy to accomplish. All it takes is dogged persistence!
It absolutely boggles my mind that I can be up or down in a day what I used to make in an entire year!
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 [email protected] 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.
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