Retiring a Millionaire

By: Mark A Gajowski II

If I could tell you how to retire a millionaire, would you be interested? 

Know it is possible, and in fact quite probable to accumulate a million dollars in your 401k plan if you follow some time proven steps. Granted, a million does not buy as much as it used to, but it is still a MILLION DOLLARS, so I’d say take the shot!

Here are a few tried and true rules when it comes to accumulating wealth. Now none of them are easy, but neither is exercising, having a proper diet, making and keeping friends, reading, and on and on… point is those things that are worth doing are not always the easiest. Best to set your expectations right from the start.

First, since even a small hole can sink a great ship, you MUST know what you spend your money on and control (limit) outflows as much as possible. Trust me, in 20 years of planning experience, clients are always amazed as to where their money goes… If you don’t know, you should.

Second, now that you have good controls on expenses, let’s focus on your savings… you should save at least 10% off the top of every paycheck. You don’t skimp Uncle Sam (naturally) and you are no less important.  It is the old adage of paying yourself first. This also helps and gives you compounding returns if your employer does any type of matching (free money for doing what you would anyway). Trust me, you’d be hard pressed to get a better return on your hard earned dollars.

Third, invest in low cost investments. You are shooting for a 7-10% return per year. Historically, this has been a realistic return for a long-term (10+ year) investment.  Of course, past-performance is not an indicator of future returns, and investing involves risk, including possible loss of principal. 

Fourth, to mitigate risk and increase possible return, consider working with a CFP® professional, or someone whom has advanced certifications and subscribes to a fiduciary standard (others before self) in investing that you do not. Alternatively, you can become educated on investing, but like anything, you must have discipline to watch, review and make the unemotional decisions, which is hard when it’s YOUR money. 

Fifth, stay the course. The 8th wonder of the world, according to Albert Einstein, “…is the power of compound growth (money growing on itself)”. Furthered by Warren Buffett, “she who understands it receives it, she who doesn’t, pays it.”

For some real world numbers, assuming you start at 30 years old, and save $500 per month at an 8% return, you would be a millionaire by age 65! Keep in mind, this does not factor in market swings up and down (which could hurt), nor does it factor in increases in savings per year (which would help). It also does not assume any matching made on your behalf by your employer. 

If you start later, no worries, you just have to save more. Start earlier, save less, over a longer period of time. Remember, it’s time in the market that counts – not market timing. Start today!

Now some may never get to a million (and may not need to), others will surpass and accumulate much more. I do not doubt, however, that all will end up much richer and more financially secure by following a good pattern of working, saving and investing. Wash, rinse, repeat – as the saying goes.

Trust this was an easy read on some simple methods to start today to drastically improve your tomorrows.

Thanks for reading and I wish you continued health and success!