Welcome to Kiplinger’s My First $1 Million series, in which we hear from people who have made $1 million.
This time, we hear from a 68-year-old married retiree in Wisconsin. He retired as a senior reactor operator/control room supervisor at a nuclear power plant, and he and his wife, both born and raised in suburban Chicago, have been married for 48 years.
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.)
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Profit and prosper with the best of expert advice – straight to your e-mail.
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 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?
I worked 13 years as a self-employed carpenter, raising young children and buying our first house. At age 32, we had $0 saved for retirement. When I began working for a public utility, I needed to wait one year to start investing in a 401(k).
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Once I started my 401(k) investments in 1990, I made sure to invest enough to obtain the full company match (typically around 4%) and then increased my contribution 1% per year until I reached the maximum contribution limit.
I made sure that I monitored and adjusted my contributions carefully so that I didn’t hit the maximum limit until the last pay period of the year, to ensure that I maximized the company match.
Starting in 2000, I started contributing to Roth IRAs for both myself and my wife.
We made our first $1 million around 2012, so it took approximately 22 years.
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Initially, I invested whenever my earnings reached the Social Security earnings maximum. I calculated what I would have paid in Social Security taxes and split that amount between the two Roth IRAs, making a deposit every pay period.
Eventually, we just focused on maximizing our Roth IRA contributions every year, adjusting, as needed, if I met the maximum earnings threshold for Roth contributions.
We also contributed to some post-tax investments when there was money available.
What are you doing with the money?
We didn’t do anything particularly special with the money. My wife was able to stop working in 2005 since our children were self-sufficient by that time, and we seemed to be on track with our savings plan even before we hit $1 million.
I kept working and investing in my 401(k) and our Roth IRAs, anticipating our future retirement plans.
The Fun Stuff
Did you do anything to celebrate?
No, we just kept the process moving forward.
What is the best part of making $1 million?
It’s not enough to support outrageously large spending habits, but we can live a very enjoyable life, including a few luxuries, without having to worry about running out of money in the near future.
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Did your life change?
Not really. Most people we are acquainted with would be surprised to know that we have established a comfortable nest egg.
Did you retire early?
I retired at 62, which was my planned retirement timeframe for about five years.
Thirty years in a high-stress, perfection-demanding industry on rotating shift was enough for me, physically and mentally.
I have been retired for 6½ years and don’t have a single regret about my retirement timing.
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Looking Back
Anything you would do differently?
I would have invested more diligently and deliberately in our post-tax investments (not tax-advantaged) during the years when we were limited in our ability to make Roth IRA contributions due to our income level.
We have intentionally not withdrawn from our Roth IRA accounts since I retired at age 62. These Roth IRAs are designated for future long-term care expenses for my wife, if needed. I am covered by a long-term care policy that we bought when I retired. Purchasing a similar policy for my wife proved to be cost-prohibitive.
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Post-retirement, I have completed Roth conversions when it made sense from a tax perspective, without hitting the next tax bracket.
We did not start to collect Social Security until our FRAs (full retirement ages). We had to pay taxes on our rollover IRA withdrawals, albeit at a lower rate than I had paid when I was working.
It would have been better from a tax perspective to have paid the lower capital gains rate if these withdrawals had been from post-tax investments.
What would you tell your younger self about making $1 million?
It can and will happen if you establish a process and trust that process.
Did you work with a financial adviser?
We have worked with three different advisers over the past 26 years.
We left the first adviser when they tried to sell us a high-commission product.
We left the second adviser when they couldn’t give us a simple explanation of how much we were paying them for their services.
We have been with our last adviser (a fee-only fiduciary) for the past seven years.
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I like to be informed about how our money is invested, but I couldn’t stomach having to make the investment decisions myself, so the fee that we pay is well worth my peace of mind.
Right now, we use the Chicago Illinois Client Team of Fairport Wealth to manage our investments. The RIA for Fairport Wealth is Hightower Advisors.
Did anyone help you early on?
In general, I worked with numerous people over a 30-year period who were very fiscally responsible and didn’t mind sharing their thoughts on investing and retirement planning.
Although these were mostly informal discussions and rarely, if ever, included actual dollar values, it made it possible for me to ask simple questions and learn how like-minded people approached monetary planning.
Looking Ahead
Plans for your next $1 million?
No different or special plans. We are almost at our next $1 million, even after withdrawing approximately 6.5% a year from our retirement funding.
Now that we are both collecting Social Security, our future withdrawals will be closer to 4.5%.
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This should allow us to have a stable income flow in the future without significant depletion of our assets.
Any advice for others trying to make their first $1 million?
Find someone knowledgeable and trustworthy (like a fiduciary financial adviser) to whom you are comfortable being fiscally accountable. Be open and honest with them, listen to their recommendations and implement what you can, even if it seems like it might be difficult.
Learn to be tolerant of moderate risk, if you can be comfortable with some of the inevitable ups and downs in your account values.
Stick with it and resist the temptation to stop contributing to tax-advantaged plans.
Don’t forget to make contributions to post-tax accounts, as well.
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Eventually, retirement fund growth is exponential, not arithmetic. Trust the process, and you will be pleasantly surprised by the results the longer your money remains invested.
Do you have an estate plan?
Yes, we have established a revocable trust with my wife and me as trustees. Our estate is fairly simple, but one of our two children lives out-of-country, and our attorney recommended a revocable trust as the simplest way to handle things in that circumstance.
What do you wish you’d known …
When you first started working with a financial professional? The first two advisers we utilized didn’t provide a tangible, comprehensive annual financial plan. Mostly, we talked in generic terms.
Our current adviser provides us with a comprehensive annual financial plan that predicts results out to age 95.
Although obviously subject to many factors that can change the predicted results, it gives an indication of how we are doing on an updated year-to-year basis and lets us know if adjustments need to be made to maintain or raise the probability of success to an acceptable level.
Before you retired? I didn’t appreciate the importance of budgeting and tracking spending. When I was working, I was happy as long as the bills were paid and there was a positive checkbook balance.
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Since I retired, I use careful budgeting and tracking (via spreadsheets) as a way to plan for future spending (four or so years out) and required withdrawals to support this planned spending.
This helps me to have better tax planning and can help predict long-term retirement and investment success.
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.
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