Believe me we’re at 2 million and we don’t view ourselves as rich. But we see ourselves as not worrying about running out of money while we can’t work.
I mean not worrying about money without a salary is rich. It's funny how wealthy people are almost embarrassed about being rich. Be proud you have that much, esp if it's earned and not given.
My parents are multimillionaires after inheriting money and I had absolutely no idea growing up. My dad had a blue collar job, which he continued long after the inheritance. They live frugally, drive older cars, buy secondhand, and live significantly below their means. However, they give away large donations each year, often flooring people who had no idea they had that amount of money. I only realized they were millionaires after accidentally finding investment account info in my early twenties. Most millionaires are not flashy and that’s why they have significant funds.
That seems extreme to me. It's admirable that they are generous with giving, but wealth should also make YOUR life and the lives of your loved ones more comfortable and enjoyable. A nice family vacation each year or any activity that builds memories, these are wonderful things that wealth can enable, so why not use it for that purpose?
i think of course that whatever choices a family makes are "right" - personal choices. ... and you know since this is a comment section 🤐🤣😏... there will be a BUT .... Did you have the "generational wealth" talk ? ... or the "inheritace talk" ? It would seem that with an amount to 'help with a house' that usually exhausts the bequest. from some studies in fact, "Between 2016 and 2019, the average U.S. inheritance was $46,200 - with a big disparity ... the top 1% ($719,000)....". Raising independent and self-reliant children is the best success ---- those who would not expect a large inheritance -- and whose parents value giving to others. However, it would be interesting to find out how & when those whose assets are not held in a familial private bank start the process, since one generatilns wealth is lost by the 2nd generation 70% of the time and 90% by the third generation.
This is my goal, to be a silent multimillionaire. People on social media boast about their ‘wealth’ they don’t really have and that is not my goal. In 7 years, we will hit our first million 🙏 and will keep investing for another 30 years.
@@dlg5485 She didn't say they didn't take vacations or lived like paupers, she said they lived frugally. I'm likely going to hit 1-2M before I retire, but I'm not going to get there if I take a $10K vacation every summer. We take vacations with the kids, but they are done as cheaply as possible. We don't stay at the Grand Californian if we go to Disneyland for instance. If you spend too much you won't be a millionaire for very long. Look at a lot of lottery winners. Most are bankrupt within a few years.
I'm nearing 60 and like most people, I say that I wished I would have started saving earlier. But with a lot of financial strength I did hit that coveted 100k and recently the 1M mark. What worked for me was to have it taken out of my paycheck before I even saw it. As for being a "Millionaire", yes, we have private chefs. On Monday, Wednesday and Saturday, that private chef is me. On Tues, Thurs, Sun it is my wife. Friday is either eat out or left overs. And just to round out the view of my luxurious lifestyle, I drive a 5 year old RAV4 and my wife drives an 11 year old CRV. Life is good! Thank you Erin for all of your research bringing us these great videos!
That’s my plan too. I’m 42 and I make saving easy by having it automatically taken from my paycheck. I have co-workers who take nice vacations and buy new cars. They eat out for lunch everyday while I brown bag it. I sometimes wonder if I’m making a mistake to be so frugal but when it comes time to retire, I’ll be the one feeling secure while they work at Walmart to subsidize their social security income.
Having retired almost 2 years ago with slightly over $2Mil in our retirement fund I can assure you we don’t have a private chef or fly on charted aircraft. I would say we are somewhat conservative about spending, not overly frugal but conservative. We do live without financial anxiety, which is nice.
My goal...tax free multi-millionaire. I can remember walking with a friend in the early 80's and we passed a house and he said that he bet they were a millionaire. I thought to myself right there that I'd become one someday...and here I am! No matter what our net worth grows to we'll never change our modest lifestyle as it's the best way to live. Funny about millionaires not eating out. I've noticed that you can get rather tired of eating out rather quickly but we never get tired of our great home cooking. Tonight we made a 99 cent/lb roasted chicken with baked potatoes and green beans, all perfectly cooked and the last of the apple pie my wife made earlier this week with a scoop of Breyers vanilla ice cream. What could be better than that?
@@jameschaves5723 Nice! I have certain nights such as "Friday Pizza and Movie Night" with my made from scratch pizza, popcorn during an intermission and 80's music videos on our TV from this platform playing while I make the pizza and during the intermission. There's also "Supper Club Dining at Home" with a "Best of Classical Music" video that has a really nice slideshow of European art, architecture and nature photographs. I've even got a "Soda Shop Dessert Night" complete with a 50's music video with slideshow of soda shops and 50's cars. I find that the music playing quietly in the background and the scenes on the screen really set the mood and round out the experience making it far nicer than even the fanciest of restaurants. Besides, anytime a restaurant plays music it's always up too loud and you can't even hold a conversation. Cheers!
My parents are millionaires (they are age 81 and 77). When my brother and I were very young my parents had 1 car and struggled to made a deal to fix up a beat up apartment so they could get reduced rent. They have always been very frugal and always will be. My Dad is still driving his 20 year old car even though he could buy a brand new one and barely see it on their bank accounts. My Dad worked for IBM from 1971 until 1998 (age 57) and made good money as an electrical engineer, but their money grew because they spent carefully. We went on family trips, but only 1 was extravagant (Europe for weeks). The rest were on the road with a camper, staying in campgrounds. They have travelled quite a bit as their big splurge (Turkey/Japan/Hawaii/Alaska/Fiji... etc.) The house they live in now is right about the median home price for the city they live in (Rochester, Minnesota).
My wife and I have hit the one-year mark of retirement. We are both 65 now. We had set a budget of 110K in our first year and put over 400K away in high-yield accounts as we don't plan to take SS until 67.8 years old. Well, we did three vacations over the year and still only spent 82K. We found that the day-to-day things we like to do are close to free, we do hit the gym 6 days a week but now we walk a lot and we don't find ourselves going out to eat very often as we have plenty of time to prepare great dinners. At this rate, the money in IRAs and Roth accounts might not be touched for a long time.
I suggest you look to see the result of delaying Social Security. During that time, draw down the taxable IRA, and convert to Roth just enough to top off your 10% bracket. (Maybe even go into 12 a bit.) This may help you avoid taxation on your social security benefit and raise that benefit nearly 20% (8% each year delayed to 70, plus inflation)
My 6 year old is obsessed with Lamborghinis and crap like that. I told them they are very expense, he said do you have to be a millionaire to buy one? I told him you could either buy that car or a house. You could either buy that car, or a new truck, new boat and have money to go fishing every weekend. He understood quickly that maybe that fancy car wasn't worth it (he loves bass fishing). He asked me that if I was a millionaire if i would buy one and I said, I will be a millionaire in a few years. I said when I become a millionaire do you know what I will buy, he asked what, i said nothing new or flashy, I'm going to live the same lifestyle. I think so many people have the opportunity to become millionaires, but instead they have thousand dollar car payments. And for those saying a million is nothing, i would like to know how much they have lol. My guess is they do not have a million either. Rule of thumb, the cost of everything doubles every 20ish years. Meaning if they say a million is enough to retire today, in 20 years you will need 2 million or if you retire in 40 years they will say 4 million. Great videos, keep them coming.
My retired friends and I are pretty well-off, but we don't consider ourselves rich.....except for one guy, who is very wealthy. If you are retired and have $2 million, $3 million, $5 million, you can live very nicely. But real wealth nowadays starts at $10 million, at least in these expensive areas. Professional jobs, owning real estate, inheriting a house, steady saving - that's how we got to where we are. The guy who is really wealthy sold his company and invested all the money in tech stocks in 2005.
I retired at 57, 6 years ago. My wife and I saved and invested early allowing me to exit the workforce when I did. She stayed home after our first was born and has not worked since (24+ years). House is paid off, kids college tuitions fully funded, have two late model cars fully paid off, travel extensively and do not forsake anything we need. I actually have more income coming in today than when I was working. We are not special and believe most people can do this with the appropriate level of planning and discipline. The key message I would communicate to others is don't delay retirement if you have the financial wherewithal to do so. Too often I have seen many people delay retirement and then experience health issues which constrain the very things they wanted to do post-retirement. Moreover, the most significant benefit of retirement for me is that I no longer have to deal with people I do not want to. That has proved to be the ultimate blessing.
Our net worth is at $300k and our goal is to hit $500k in 2 years and $1M in 5 years after that. Our goal is to be a multimillionaire to set our children to a better financial future and to donate to less fortunate people. One day it will all happen. This is not a race but a marathon and consistency wins the game all the time. 🙏
People might be confusing million dollar networth with an annual million dollar income. million dollar net worth, as you stated, does not afford one a private chef!
Average Joe here. We were told 30 years ago to try to get to 15% income invested for retirement. With company match we eventually got there in our 401k and moved on through life. Goal was 80% pre-retirement income and we will only exceed that due to a pension and the math of compounding. We are not brilliant investors , nor financial geniuses- we may want for nothing but more importantly we don’t want everything- my average joe advice, get to 20% pre-tax, 100% equities for your first 20 years and go live your live. You will be shocked when you look at your account - don’t over think it!
Erin Talks Truth…be frugal, be smart, be conservative. We are probably in the top 3% as it relates to invested assets and net worth. Be humble…I mow the lawn, no grocery deliveries, no house cleaning service. And, we have a three bedroom rancher built in 1963 - it was a “starter” home and we have made it our lifetime home. But, we have traveled the globe, put two kids through private college with no debt. Discipline and focus - live life on your terms.
I may have retired at 52 six+ years ago but I never reached that goal. More importantly, I am comfortable and not depriving myself of anything in retirement. I shop smart. I've been on 8 cruises in the past 12 months. I have a 14 day cruise coming up next week. It's all about what you spend. Less is more in my case and opinion. Life in retirement is good and no way can anyone take those years I have fully enjoyed myself away from me. Plus, my net worth is higher today than it was when I retired in 2017. Take that inflation!
Is your net worth higher because of the value of your home or because of your investments. If it's investments, could you say how you are investing? Thanks.
My OH asked if they have pro bono financial advisors hahahaaa my guess is no. To the person asking for advice, (I am not a financial advisor), but this quote has served me well, if it sounds to good to be true, it probably is. Learn and teach yourself about the stock market. Longevity is key, as well as diversification. Best stock advice my FIL gave us, is to buy stocks of stuff people need and want. Companies that have been around a long time. Set it and forget it, let it grow. But, diversification in all things. From stocks, to high yield savings, and at home tangible goods aren't a bad idea either IMO. Be frugal. Learn it, live it, know it, is the best advice I can give. To the person that asked if the person's personal assets grew because of the high cost of real estate their house worth has gone up, or stocks. I'd say both probably. The stock market and the real estate market do the same thing. They're like a wave, they go up and they go down. Ride the waves.
Also to add glad the op enjoys cruises, but not something I'd personally spend my money on, but to each their own. We're about being frugal, yet comfortable (needs versus wants) living below our means, to try to grow and hang onto what little we do have. I think a million dollar goal, for most people, especially middle aged is a pipe dream. I'm not saying they shouldn't put back or try, I'm saying it takes time and money to reach those kind of goals for the average person. Of course put away by investing, and try to build up as much as possible until you can't anymore, at least you've done something, which is better than nothing.
Great video. No, we don't have a chef or a maid or even a gardener. Hoping to pull about 60K a year from our money and add it to some pension income as well. This should still allow it to grow over time. Frugal is how you get there and stay there as well. 1M at 47, 2M at 53, and retiring at 55 in 17 months. Critical mass for us was at 47. At that point I saw that our money would outpace our income needs without any additional money invested from us. That was a real moment. It is a great place to be in for sure, but it took 20 years of diligence to get here.
Financial independence was the goal for me along. My wife and I will be retiring within a few months at 55. A million is easy if you start early, I started saving in retirement accounts at age 20, even thought I was only making $5/hr. By the time I was 28 and moved up to a better job I already had $50k. Now with a net worth north of $5 million we know we will be comfortable, but I really don't consider it rich, I will live my current lifestyle but won't have to worry much.
@@rarelycares8416 Exactly. Start early and it will all come together. The freedom is such that you do cease to care about day-to-day things and start to just live the life you want to live.
It's so nice to see people in the same boat as us online. Not too many around locally. Retired at 55 a couple years ago with plenty saved up to maintain our lifestyle. I don't feel like we sacrificed to save but we did save one persons income. This was more to feel secure if one of us lost their job. It was not about goals although the wife did empty our savings early in our life together because she wanted to buy into a mutual fund she had been watching for a while. I wasn't even planning on when I would retire but work became untenable and I had no valid reason to stay on. Financial independence gave me that option and I'd say that's probably the only goal you really should have. The hardest part in the transition is getting yourself to accept spending the money.
I’m 53y/o and a millionaire. I still work and live modestly. In the winter I turn up the heat and in the summer the house is cool. I don’t have to worry about those bills. I drive a 7 year old Honda because it’s very reliable. To me being a millionaire means not worrying about daily expenses. It provides a level of calmness. The key to life is low stress and social interaction. Material objects just provide more headaches.
I'll never turn up the heat or down the A/C, I wasn't raised that way. But living in FL and visiting family up north in July and August probably helps. Although, I don't mind the heat, just hate going into the snow!
I'm 58 years old with over $800k invested. I'm adding to it aggressively with a goal of $1mm at age 60 and $2mm at age 67 (full retirement age). Like many, I wish I was more aggressive in my 30s and 40s. I saved 10% thinking that was enough, but it really should have been more like 15%-20% during those years (1996-2016). I'm now saving about 30%, but playing catch-up to meet goals is tough. And yes, the first $100k is the hardest. It took me from age 22 to age 34 - 12 years - to save the first $100k - and that was with a stock market that went from 3,000 to 10,000 during that time.
If you're debt free, retire early. A million is enough for an individual. I went at 56 while my brother-in-law is still working at 65. No jealousy or regrets here. I give generously to charity and family, so why do I need more?
In my early 30s I set a retirement nestegg goal that I wanted to reach by age 59 1/2. By some miracle (and savings discipline) I actually reached that goal. Then due to the power of compounding (rule of 72), my retirement nestegg actually doubled by age 65, which is when I retired. My point is that you should set your retirement nestegg goal for 7 years before the age that you want to retire, and then let the power of compounding double it.
@@sct4040 Yup. We did have a bull market, but 2022 took me back quite a bit. Still, the net was a double in 6.5 years which means I still averaged about 10% per year (including some minor savings/investments) even with the 17% drop on the S&P in 2022. I will tell you that 2022 threw a wrench in many people's retirement plans.
I set my goal for $4 million excluding the $2 million home and any inheritances. Fingers crossed that I will meet that target with aggressive savings. Putting both kids through college slowed down the progression.
I just finished updating my Net Worth spreadsheet. I saved just over 65% of my net income in 2023. I'm retired, no mortgage, no car payments, no debt. Life is good!
Thank you, Erin! Having crossed off the big goals you touched on and enjoying an early retirement to leverage those "go-go" years, I would say your wisdom on having goals is very important. Pull that money out of your paycheck before you see it and you will be so glad it is there when you need it.
For me the key to “financial Emancipation” was simple, it wasn’t about what I had, “I had nothing” but what I chose to do without. Now, decades laterI am in a really good spot. Learn to do this well and early and I think you’ll be both happier and wealthier. Given that lifestyle why would I change now. It isn’t greed , it’s about protecting the ones you love and yourself. That said, that shift is a “good thing.”
Started at 22, my wife started at 26… 30 years later we’re at 1 million in retirement accounts. She stopped contributing 14 years ago because she now has a pension that will pay her 2 percent times years of service… so she’ll get around 46% of her pay when she retires at 60. Only mistakes we made is not investing more early on and also not putting more towards Roth. We’re trying to build the Roth account now as most of our money’s in a traditional 401k.
About the same time our wealth accelerated with the market, our lifestyle reached a point of realizing the true benefit of a minimalistic lifestyle. At 46 with over $3.5 mil net worth, our lifestyle and happiness hasn't changed since when our net worth was at $500,000. Money solves stress, but truly doesn't bring much more happiness. I truly wish everyone to be able to realize that in their life at one point!
I have $1.6M in invested assets at 44 years old. I don't have a private chef 😂 and I still look at the price before I place my order. I've never flown private or even business/first class. I live well below my means which is how I became a millionaire....
I flew "private" once. A Learjet with a single seat on each side of the aisle, maybe seven rows(?). It was like flying in a toilet paper tube. May be different in a 747.
It's funny how some people perceive what having a million dollars looks like. My wife and I are both 50 and we have about 1.5 million between cash and investments and no mortgage. We like to travel and when we do, we always fly economy and book reasonably priced hotels so we can take more trips. I'm a mortgage broker and I've done mortgages for lots of friends and family so I know what their financial situations are, and I'm always surprised when I see them taking lavish vacations and buying expensive items knowing they can't really afford them.
I'm one of the 2%. I lost my job in August. I still feel like I don't have quite enough to be fully retired. I'm awfully close, but I'm right on the line of possibly not having enough. I think I need to go back to full-time work in 2024, if that's even possible. I found out that I was the only person with my job title that was let go. I was also the oldest. I'm only 52.
Hang in there. It’s got to feel good knowing you could make do with even a part time or consulting-gig situation, or a job you don’t fully love, just to pay the bills for a few more years. As long as your best egg keeps growing and you’re living off of it, it will be enough to retire in in a few years, even if you can’t make more contributions. Also an alternative to consider is doing more-active investments like real estate rentals, since you have more time in your hands. You’re going to make it!!
My critical points with retirement savings were: 1) Initial excitement of how much I was contributing my retirement savings and how fast that contribution was making the balance grow 2) 13-15 years later coming to realize my earnings on my retirement account was "contributing" as much as I was - Basically doubling the amount the account grew since my money was contributing as much as I was. 3) 15-17 years later realizing my account was earning as much as I was earning each year. That's when you know you can replace your income with your investment earnings. How to get young people to just put the retirement money in and don't look at it is hard to do, but 35 years later I'm glad I followed my father's advice and did.
@@gobot4455 Me, too! In addition to my own efforts, they all have Roth IRAs and contribute the max every year (up to their earnings, even if I have to gift them some to top it up). They’re high school and college age and all have jobs so they learn to work and save while their tax rate is near zero. And they’re learning to invest.
@@gobot4455The best way to set them up for success is to start teaching them about the value of saving and investing early. Keep up the great work and here’s hoping for tremendous returns!
Erin, As you know, you don't need to be a millionaire to retire. To be successful in retirement as you were when in your career, you just need to live within your means. Sometimes, you may decide to work to supplement your retirement or just to have something to do. My son hates that I have 2 part time jobs, he wants me to enjoy retirement, which I am. I have a set schedule for 3 days a week and a flexible schedule for 2 half days that I don't even have to go to work. At the flexible job I have 4 people that I work with that are in their 70s. Several in their 60's. It's an easy job that you get to socialize with people for an hour or so then work and get paid for 4 hours. Retirement means different things to different people. Best Wishes
20+ year bar/restaurant owner here - only important because of the typical age of employee...early to mid 20's. I tell my kiddos (employees) if they invest the same amount every month as their car payment, they will probably never have to worry about money. Essentially, if you can't afford double your car payment you shouldn't be buying that vehicle (don't count insurance, maint, etc...just the car payment). Have had kids come back 10 years after leaving my place and say they were able to buy a house - had 20% down payment easily covered because of this simple tip. I use the "car payment" as a barometer because it seems to keep pretty good pace with inflation.
You of course must talk about inflation when you talk about millionaires. I remember being in high school in the early eighties were we had a personal finance class that talked about what to do to become a millionaire in 40 years. I remember arguing at the time that because of inflation being a millionaire in the 2020's would not make you rich. I worked hard to prove her right ... I am now a millionaire (without home equity), and I still feel like I cannot afford to buy coffee at the local shop, so I make it at home and put it in a thermos. The closest thing I have to a personal chef is my 20-something daughter who sometimes makes dinner. That is nice, but I have little choice on ingredients and dinner usually involves kale ... a lot of kale. But goals are important, so we need to come up with catchy name for someone who is worth $10 million. Decamillionaire is accurate, but I doubt it will ever catch on!
Being a millionaire these days only allows a couple to worry less about money. My wife and I are retired. Over the past 30 years, we accumulated with savings, investments and home ownership, close to 2 million dollars. The best way to get there though was having no debt. We live frugally but still enjoy life after her retiring at 58 and me at 60!
I am striving to retire with 3 million at age 60 when my youngest son plans to graduate college. I'm 54 now and have saved and invested since age 23 as well as inherit about a third of what have invested. At 54 I have a net worth of 2.5M. We live on a modest 80k for a family of four which is below the 120 to 160k gross I earn each year. My wife is very smart, very frugal, is an excellent cook and very artistic. Our biggest expenses are food and auto related as we are debt free including house and cars (a 2004 Mach 1 Mustang, a 2006 Jaguar, a 2017 Ford Escape, and a 2012 Toyota Sienna.)
You’re spot on in recommending focusing on the first $100k. Once you do hit that mark, just keep doing what you did to get there year after year; decade after decade.
My wife and I are in our mid 30s and have about 300k in various savings/investment accounts. 1 million is certainly a goal, hopefully before we hit 50, but as you stated… it’s kind of arbitrary. I want to retire a bit early and we don’t want our kids to pay for college like we had to. We make 200k gross, so it’s doable. Being ultra wealthy would be kind of cool, but my wife still shops at goodwill and I drive a 15 year old car; don’t know that we could spend that much anyways.
4m was my goal by 59 1/2 saved. I wanted to be able to live a nice lifestyle while retired all on interest if I put it all in a bond index, not that I would. Plus this was achievable if I was aggressive. Now my goal has changed to be able to leave a large estate behind and I'm hoping, if I live long enough, I can leave behind 100m total. Compound gains are magical.
I suggest having your children pay for some of their tuition. You could be teaching them the wrong thing. Nothing wrong with struggle!! It builds character
I'm 35 and hit the 400k net work milestone this week. 300 of which is in retirement accounts. I more than likely will hit the 7 figure mark in my lifetime, however that's not really the goal. As long as I retire early(ish) and I'm happy that's what matters. 🙏
Another inspiring video. The really great part is that the financial habits you developed on your journey to 1M can continue to carry you to "infinity and beyond". Chances are pretty good by the time you reach 1M, you won't know how to go back to any other way than keeping up with your good financial habits.
That is so true. I'm retired, doing fairly well, and cannot find a reason to splurge on anything. Not that I couldn't, but I'm stuck in frugality. I have very modest needs, and even fewer wants. It's weird doing well after carefully budgeting, like I still don't want to spend, I am grateful that I made it. I'm quite content just providing for my family.
I came to the United States with barely enough money to pay for my first semester of college. I graduated with a degree in Electrical Engineering and worked for the next 28 years while continuously contributing as much as I could to my company’s 401K plans. I retired at 56 and currently have 3.2 million in Roth & Traditional IRA accounts, Taxable Accounts and other savings. We did receive a windfall of 800k 15 years ago from my mother who passed away and invested part of it for our two children’s college education and the rest went into our investments. We have our house paid off and both our cars paid off. We live quite frugally on about 90k a year, and get our health insurance on the ACA. I walk daily and go to the gym 3-4 times a week and we eat at home for supper on most days.
Good balanced message. It’s great to set interim goals of $100,000 and $1m if that motivates you. But really it should be automatic and mostly out of your thoughts early. I’m nearing 60. I used to think $3m was my goal. Despite constantly fighting against lifestyle creep, it happens as you hit your peak earning years. So, expect your goal to increase and save more than your target.
Don’t forget about Dave Ramsey’s way to withdraw.. take the golden eggs, not the goose.. example Average typically 12% return.. I have over 17 years investing his way.. 12% with a withdrawal rate of 8% with 4% going for inflation.. you will be doing great for your whole retirement. Your doing awesome job! Great videos.. Billy #3
Just retired at 65 with 1.95 million in my 403b. At a 4% withdrawal rate that’s about 80 grand a year. Plus pension and SS and my retirement income will be about the same as my working income. It’s not as difficult as you think. I started putting 10% into index funds 30 years ago. Rarely looked at statements and always stayed the course even with huge market down turns. Time is your friend when your young. Don’t panic and you’ll be rewarded in the end.
My goal is a million in invested assets by the time I am 40, I am about half way there and 4 more years. I think I can do it! Thanks for your great videos Erin, always love your approach to finances. Keep it up!
Net worth is a pretty useless measure of financial health or retirement readiness. One "millionaire" might own a million dollar primary residence whereas another "millionaire" might have lucrative commercial real estate generating a juicy 10% return. The guy with the fancy house is losing thousands in maintenance, taxes and insurance where as the other guy is netting $100K a year in income. Sustainable lifestyle is all about cash flow minus expenses - not the value of your assets
Sometimes i get depressed (or is it anxiety?) when i think about how far behind i feel, than i hear about people who saved like 80 dollars and a pack of hot dogs for retirement and i don't feel so far behind anymore.
I'm not quite there without my house, just under it now on investments only - but should hit that this year before my birthday (48 in June). A lot of that is in either after tax accounts (Roth equivalent) or in non-retirement accounts, which at least helps from the tax man's bite. My home equity is about 500kUSD, but I don't count that as I love my house and can't leave it!
Awesome! Even when you don’t count your home as an asset to draw down in retirement, it still counts because it offsets the rent or mortgage you would otherwise heave to pay. And that reduces the amount you need to draw from your 401k/IRA. You’re in a great position!
Goal is 5M invested @ 55. Currently 43. If the “7 year doubling rate” holds good then goal should be met given current investments, give or take a year.
$1,000,000 net worth is still middle class, was my point that saying it takes at least $100,000,000 to be upper class. One gauge is how much power a person with $1,000,000 has. Very little. Your point that the millionaire is closer to the poor than the billionaire is correct. The distance is what makes the distinction. Those with a few million are still ordinary people who have to be careful with their money.
I started late, mostly b/c I was in school way too long. I have been putting in 800/month for the past year. But 2024 I’m going to start doing 1200/month. In hopes of catching up for the last 15 years. 😬.
The thing that should be accounted for is not "how many are there" but "how many get there by age X". For instance, the 75%ile mark for ages 55-75 is over $1M. It declines after that as people spend down, and there are more households at ages below that. The other challenge is that a lot of the reporting on "saved for retirement" only counts retirement accounts like 401k and not investments outside of that - especially things like home equity. (Not worth counting if you want liquid net worth, but probably a big factor in a lot of the older households who just cross the line by a couple hundred thousand.)
It is cool that maxing out just a Roth IRA each year starting at the age of thirty years old will make one a nominal (not inflation-adjusted) millionaire in many macro-economic scenarios. Better would be to take the same amount of money and put it into a Roth 401(k) with an employer match.
I'm still years away from being a millionaire and for me it's just a security thing. I know I will have my pension, government money, extra pension, and a regular investment account to draw money from in well over 3 decades. At my current rate of investment I should hit millionaire status in about a decade by projected returns in my regular investment account. That would be an insane milestone to hit. I would only be in my early 40s and have a lifestyle that I could comfortably keep with or without my job. Of course this is all just projected and we have no idea what the future holds. I could lose everything or fall into a million tomorrow. Only time will tell.
I have managed to amass portfolios of a value a little bit North of a million dollars. I can confirm: I do not have a private chef. I fly economy class. I cannot figure out how to get my hands on a 54 foot sailboat. I'm close to retirement, and that million will, I hope, along with Social Security, (which I'll eventually start collecting), give me an income that will feed and house my wife and me for the balance of our lives. I'm certainly not rich. I'd go with: comfortable.
You hit the point regarding inflation. My thoughts are from 1976. I was 14 and aware of money, and that we were well below average then. And "What cost $1000000 in 1976 would cost $5446168.15 in 2023." This from the West Egg Inflation calculator. So, whatever I thought about "millionaire" then, takes over $5M to match. I retired at age 50, and live in a high cost area. Even though 'millionaire' still means $1M, the implication of that word isn't what it used to be. The related issue - Those who take about "net worth" typically include home value. Owning a $100K home and $900K (back in the 70's) was still 'millionaire' IMHO. Today, those calling themselves millionaires when 2/3 of it is home equity? Makes little sense. In my own approach, 2 numbers - My retirement money, what I can take 4-5%/yr from, vs what I'd leave my kid when I die because my wife's driving is so awful. She can sell the house, the car that still works, etc. Different numbers.
To achieve a goal of 2, 5, or 10 million dollars or more often requires that you earn the one million dollars along the way. It's an important milestone.
yes it is and CAN be achieved by saving modestly and investing aggressively over 40 yrs but its a HECK of a lot easier to have a high paying job at 51 when the kids are done with school and all you have to worry about is saving for retirement, we've probably saved 1.5 over the last 6-7 yrs but you almost have to start a business to make low to mid 6 figures a year, not many w-2 jobs like that out there. Ill also say this - if you have had a great career but not super high paying social security pia will be high and you dont have to save as much vs having a low ss check
One caveat about being a millionaire is that most millionaires have their money tied up in home equity. If I recall, you deliberately don't count home equity toward net worth, so this might not apply to your advice, but for most people, having home equity is useful as a nuclear option, but unless you hit the sell button, that money doesn't spend. So most millionaires are even less rich than we generally acknowledge.
The actual reason why "ordinary" millionaires are not flashy and don't splash out on everything is that it is very hard and time-consuming to earn a million and way too easy to quickly lose it all. You really have to be always disciplined with your finances to be able to, firstly, earn the millionaire status and, secondly, to be able to keep it
The spin I like is that the million invested cranks out 100K, 200k, 250k some years, not including amounts you’re putting in each year. Thinking of it in terms of a safe withdrawal rate of 4 percent, when you’re not withdrawing anything, is using the wrong measuring stick. I know you know this, but folks better stop poo pooing a million invested. 😂 it’s one heckuva money-making machine once you get one.
I'm 44 and just hit 1 million net worth a few months ago and a lot of that is my home. My wife and I want to travel when retired so I'm thinking I need around 3 million. I'd like to retire before age 65 but Healthcare is something that I need to figure out first. Erin have you done a Healthcare video for early retirees to fill the gap before Medicare?
I think $3M is enough too, but not including your home unless you're willing to rent out part of it so it generates income, or even worse, take out a reverse mortgage on it. Not saying the home isn't valuable, just that it doesn't generate that all important cash flow you need to survive. If anything, all it does is suck up your cash flow in taxes, maintenance, and utilities...
Im 55. Don’t have much saved (do have a 401k I’ve contributed into since 2019), but I do have a pension that I’ve been collecting on since 2019. If I live to be 80, it will have been worth close to a million. Also, no debt and my house will be paid for in full in approx 5 yrs. I feel very comfortable because I’m moving to the Philippines in 6 yrs. My pension, social security and investments will put me in the top 1 percent over there.
Where you have it and what you have matters. Early retirees are glad our assets arent all in retirement accts. I held tax efficient investments like RE, growth stocks, index funds/etfs outside retirement and am glad.
One million dollars may not be worth as much 40 years from now. But people in their 20s are making much more than previous generations. The amounts may change but the principles are the same.
Counting my home - I’m sitting at just over 1 million net worth now in my mid 30s. My goal is to get to a liquid million between taxable and retirement assets by 40. Baring a major crash from this point I’m hoping to get there!
I am there and I didn’t get here by blowing my money. In fact, although I can buy (and pay cash) most anything I need; I still shop at thrift stores and Walmart and drive a 20 year old car. Big secret is once you adopt the frugal lifestyle, you do not change. A simple lifestyle is to be the goal.
Erin, I have been watching your shows lately! They are all so good, keep it up❤ This year we are trying to pay down the mortgage, we even have an acronym PTM. At the end of 2023 we might only have a little under $10,000 left and I will be sucking more money into retirement can’t wait.
I hit the $1 million milestone in my 40’s and hope to cross the $3 million threshold in my 50’s. I want to reward myself with. Porsche when I reach that goal. It has always been my dream car. I see a lot of people driving them around which gives me hope of one day owning one. I am assuming that these people are all multimillionaires with a lot of discretionary income. Most likely, I will set a new goal and not be able to justify the purchase. It is nice to dream though. I still have another 15 years to go before retirement.
In 30 years, at 2.5% inflation, $1M will only yield an income of $19K in today’s dollars using the 4% rule. In 30 years, everyone without a pension will need to be millionaires if they want a comfortable retirement not dependent on social security (or what we have in 30 years after our current SS system goes bankrupt). We should all celebrate when we hit $1M, but the vast majority of us should put the champagne down and get back to work after that!
Millionaire status isn't what it used to be. Net worth is important, but changes constantly. Save often, save as much as you can. My grandparents lived through the depression and instilled this in me at an early age. Shiny things are nice, but won't support you in retirement. Live a bit below you means when you first start off and as your net worth increases enjoy your life. Let compounding do the heavy lifting as you reach retirement age, not sacrificing everything so that you can survive.
She's spot on. I'd only add - buy land when you can. It won't get cheaper - meaning the value will always increase. Its really my only regret in investing, but for full transparency I live in a rural area and enjoy the outdoors. Its an investment I could enjoy while its increasing in value.
I hit a million in 2018 and now I’m at 1.5M in my portfolio and my home is worth 1.5M This portfolio is a money-making machine and is growing rapidly If you’re able to have a million invested at or before retirement you’ll sleep well
Those poo-pooers are right. Inflation has eroded the purchasing power of $1M, but they're ignoring a fundamental truth: $1M still has more purchasing power than $10K or an empty wallet. I made a lot of financial mistakes in my youth and I am furiously trying to make up for them, and even though I may not hit $1M, Im still shooting for it.
No matter how much I have, I will NEVER pay to fly first class, business class or even reserve a seat at a cost. Flying is a miserable, cattle like experience with undersized seats and oversized passengers. A free drink, "members" lounges or priority boarding are of little consequence to me.
My first goal is to have $1M invested in the stock market. I have over 1.4M in net worth but that includes my home and other assets. Out of my net worth I have about $650K invested. I should get there in about 3 years
Counting the house we have made it. And that is with a 1963 era, 1,680 square foot house in Southern California. Without the house we are a third of the way there. The issue that I would have with including the house is that we live in it and the money is tied up in the house. Nope not interested in taking a loan out on the house. That is something I won't do. Not a fan of debt.
Hi Erin, great video! Even though $1 million isn’t worth what it used to be, it is definitely better to have $1 million than not. I noticed that there was something on your couch in the first half of your video and then about half way through, it disappeared 😮 P.S. has your baby been introduced to Peanut yet? And have you announced your baby’s name yet? Hope you have a blessed week 😊
Me and my wife live a much better life with a 1/3 of what my wifes parents had when they died. They were just south of 2 mil. They lived like all they had was social security. They took care of everyone in a trust.
Real stat should be pctg of 60+ yr olds. Also, that table you glossed thru has two calculations: a. investable net assets b. investable net assets plus net value of home plus net value of pension benefits
Hey Erin, $1,000,000 in 2023 is the equivalent to $3,147,127 in 1983? Wouldn't it be $1million today would be the same as 3 hundred thousand dollars in 1983. Since inflation is the devaluing of the money supply. Please explain?
Hey Dave! Pretty simple explanation - I say it correctly when I'm talking (ie - $1M in 1983 would be the equivalent to ~$3M today) *but I made a mistake on my slide* (basically inverted things)...whoopsies! Unfortunately, once I upload the video I have no way to correct it without taking it down 😩 You are correct in how you phrase things 😊
Interesting, your comment about withdrawal rate adjustments for inflation. 4% is a fixed amount. Unfortunately you can't adjust for inflation if you want to follow the formula.
In my early 20's my goal was to have $500,000 in stock market and savings investments. Why, this amount? Because, in the early 1980's, I assumed it would be easy to get a minimal annual return of 10 percent which, would yield to me an investment income of $50,000. Now 40 years later well, I did not make it and was only able to build up to $375,000. However, with my two (2) pensions and social security, I should be just fine in retirement. In addition, my net worth is an extra $700,000 higher because, I also have a fully paid for home (smile...smile).
Becoming a millionaire is probably not a realistic goal for me at age 36 with very little invested so far. But 500,000 may be achievable if I increase my investments. Working later and delaying social security will decrease the amount of investments needed in retirement. Managing taxes efficiently will also decrease the amount needed.
The millionaire next door and updated editions are great books. I also like the books by Peter Lynch which were the first I read3 decades ago. I found out that if you are young and pay yourself first, say 10-20% off the top into savings and stocks/bonds even at a low return rate, say 6% annually. Just look at the numbers. The rule of 72 is phenomenal.
I’m 55, and if I live to be 80, my pension will be worth a million. Plus, I will have no debt in about 5 years, to include my house. I do have other investments. The most important thing is, I currently have no health issues (extremely low blood pressure, etc).
