Why so many 40-something millionaires?

[Andre1969]

Quote:

Originally Posted by Gerbil Wheel So it is just a predominance of 40-something millionaires asking these questions or what?

My guess is simply that for most people who are accumulating wealth, the 40's is simply when the $1M mark gets hit. When you're in your 20's, you're just getting out of college, usually, starting off in a low-paying job, paying off student loans, etc. Perhaps having kids, buying your first new car, first house, etc. Most people probably aren't putting much away into savings and retirement.

And for those that are, the 30's are when they finally start to make some progress, and 40's is when they finally hit the $1M mark.

At least, that's drawing from my own experience, more or less. I didn't graduate college until I was 23, bought a condo at 24, got married at 25, divorced at 26. Didn't get really serious about investing until 28. Before that, it was mainly paying down bills from the bad marriage. At that time, I had about $20K saved up. By the time I turned 30, it was up to $66K. Broke $100K when I was 33. Came close to $500K when I was 38 (topped out around $469K), but then the "great recession" hit. But, a year and a half later, I did finally top the $500K barrier.

When I turned 40, I was up to around $570K. And now, a year and a few months later, I'm hovering around $660K. So, at some point in my 40's, I'm presuming I'll break the $1M barrier.

But, as others have said, $1M ain't what it used to be. For instance, $1M in 1998, which is when I got serious about investing, would be the equivalent of $1.4M today.

As for how I got where I am? Well, I usually worked a second job in the evenings, and after the divorce, ramped that up. Also rented out my condo and moved in with my grandmother to save money. And since then, I've always had roommates, which helps alot. Oh, and the usual, live-below-your means type of stuff.

[Alan]

I couldn't resist, I had to go back and look. I was 40 in 1995 and only 2 years into saving for retirement. ER savings were $37k, house equity ~$90k.

It took 11 years to accumulate $1MM, including selling the house in 2004 and investing the proceeds. I also was contributing to a private pension plan so wasn't relying solely on savings to RE. When I did RE 4 years later and starting drawing the non-COLA pensions I reckoned they were worth just over $1MM.

[FinanceDude]

Seems that LYBM and not having kids were a constant theme in this thread. I have kids and no regrets, will be FI in about 3 years so not upset. I think ER is in the eye of the beholder as far as age.........

[calmloki]

I lied to myself with vigor and purpose: put low values on the places and didn't adjust those values for years. Didn't get started on buying rentals until we were in our mid thirties. Ten years into the rental foray Quicken shows us taking a $200,000 jump from $185k net worth the year before - looks like maybe we grudgingly put some value on the places. Five years later there is another revaluing shown in Quicken and we are now over the 1/2 million mark - the next year Quicken shows us over the mark, but we are into our fifties.

Looks like we willfully ignored any increase in property value for the next five years, then whoops!, another milestone is passed. That made me greedy for positive feedback and we started using the tax man's Real Market Value to set the values of our places each year so we started showing annual increases. Thanks to paying the places off really fast, saving rental income with vigor, and moving into private money lending our net worth hasn't had a down year since then, even though property values have dropped.

[Aiming_4_55]

For me, I reached $1M total net worth in my mid-late 30's. I define net worth by adding up cash, taxable/non-taxable investments, and real estate (primary/rental), then subtracting all liabilities. I am bouncing at the $1M mark in taxable/non-taxable investments.

It was not one silver bullet for my net worth, never did great with salary, bonus, options, investments, but a kick from real estate, about $200k. Salary over $100k only within the last few years, I'm 42 now.

I think the primary force for me was:
- graduating from university with no major loans even tho I self funded
- being gainfully employed since graduation, low salary of $22.5k in 1990
- respectable to good savings rate in taxable and non-taxable accounts
- living within a budget (yes I partied, dated, and vacationed while single)
- LBYM when I could

Other background
- Married when I was 31
- Stay at home wife with 2 young kids
- major unexpected cost of starting my family about $100k, not including lost work time/pay, no regrets.

Again, $1M is not everything as I'm glad family has good health, reasonable stress, and good times to balance what we call life.

[ziggy29]

I'm 45 and through fairly aggressive investing and hefty contributions to retirement plans since I was in my early 20s, I'm getting fairly close to that. Not there yet, but hopefully by the time I'm 50.

And as has been said, a million ain't what it used to be. It's maybe $30K a year with a fairly conservative withdrawal strategy on a 50/50 or 60/40 asset allocation, but not really "living the high life" as many people associate with being a "millionaire."

[FIREd]

Reached the first mil in my mid-30s (started working post graduate school at age 27). Income in the 6-figures pretty much from day one, nice pay raises along the way, a smidgen of stock options, living on the frugal side in a low COL area, decent market returns over the past 10 years, no debt beside a smallish mortgage.

[FUEGO]

I'll add another echo to the room. I married wisely, saved smartly, invested prudently in low cost tax efficient manners. Focused on the long term. On track to hit the magic $1 million mark well before age 40. And without an all-star income (combined, we cracked six figures a few years ago). I have a couple of kids, but figure they don't really cost that much, and may even save me money.

[FinanceDude]

Quote:

Originally Posted by FUEGO I have a couple of kids, but figure they don't really cost that much, and may even save me money.

Uh..........no...........unless you never let them do sports, take dance lessons, etc.........

[Amethyst]

I'd agree that it's a stretch to say young-uns save you money (How do you manage that, Fuego? Rent 'em out to empty nesters? )

Amethyst

Quote:

Originally Posted by FinanceDude Uh..........no...........unless you never let them do sports, take dance lessons, etc.........

[FUEGO]

Quote:

Originally Posted by FinanceDude Uh..........no...........unless you never let them do sports, take dance lessons, etc.........

I made that statement very tongue in cheek of course!

But let's just say that different parents have different opinions of what constitutes "things they have to pay for".

And for those things that you do pay for, there are the $50 versions and the $500 versions (dance classes, sports teams, summer camps, swimming lessons/pool memberships).

We get close to $2000 in tax savings per kid. That goes a long way toward our kid expenses. I have never split out kid-related expenses separately from our other household expenses (is it even possible?), but the kid related tax savings represent about 17% of our basic expenses. And a majority of our expenses are fixed (ie wouldn't change significantly due to changes in household size).

And due to some social welfare programs being tied to household size, sometimes having more kids qualifies you for certain programs you otherwise wouldn't qualify for. Not currently benefiting us, but this will probably work to our financial advantage during FIRE or semi-FIRE or if DW or I cuts back hours etc.

Beyond that, there are changes in lifestyle I have noticed since we had kids. Less dining out for a number of reasons. Less free time to need to fill with expensive pastimes. Many kid-oriented activities are free or cheap Off the cuff: playing outside, playing with friends, parent groups, school activities, museums, zoos, fireworks displays, riding bikes, playing at playground/parks, hiking, nature walks, libraries, reading, learning, internet games, watching tv/movies, swimming. And that was just this past weekend!

Philosophically, I think some of the best things you can do for your kids don't cost anything other than your time and attention.

Take note our kids are still young (both will be in elementary school this fall), and so I could be in for a very rude awakening (and I have budgeted for this to a certain degree). But we also live in a moderate income area ("gentrifying area") so our kids don't see lots of spoiled rich kids surrounding them all day (another benefit of living in a moderate cost neighborhood and going to schools with a high proportion of low income students).

[FinanceDude]

Quote:

Originally Posted by FUEGO Beyond that, there are changes in lifestyle I have noticed since we had kids. Less dining out for a number of reasons. Less free time to need to fill with expensive pastimes. Many kid-oriented activities are free or cheap Off the cuff: playing outside, playing with friends, parent groups, school activities, museums, zoos, fireworks displays, riding bikes, playing at playground/parks, hiking, nature walks, libraries, reading, learning, internet games, watching tv/movies, swimming. And that was just this past weekend!

Its just beginning......

Quote:

Philosophically, I think some of the best things you can do for your kids don't cost anything other than your time and attention.

I agree, and we do the same.

Quote:

Take note our kids are still young (both will be in elementary school this fall), and so I could be in for a very rude awakening (and I have budgeted for this to a certain degree). But we also live in a moderate income area ("gentrifying area") so our kids don't see lots of spoiled rich kids surrounding them all day (another benefit of living in a moderate cost neighborhood and going to schools with a high proportion of low income students).

My kids are middle and elementary school, and it started getting more expensive when they turned out to be good in sports, and wanted to play them..........YMMV..........

[FUEGO]

Quote:

Originally Posted by FinanceDude My kids are middle and elementary school, and it started getting more expensive when they turned out to be good in sports, and wanted to play them..........YMMV..........

So far I think we are safe from that "concern" (if sports ability is inherited or adopted from parents). Of course we also haven't pushed them much in that direction either. For better or worse, we are very apathetic to organized sports in our house. Not that there is anything wrong with watching them or playing them, we just don't spend hardly any time doing either of those activities.

As with any expenditures, we would make an evaluation of what an activity costs and what benefits it would bring, and whether there are similar activities or parallel service delivery options that provide a better value proposition.

We are lucky to have a great local parks and rec program (that our miniscule property taxes support), and there are so many programs, classes, camps, and athletic options available to youths and adults for almost nothing. Like my oldest daughter's summer camp that costs $20 a week.

[bbbamI]

Quote:

Originally Posted by Gerbil Wheel (snip)Seems like a lot of the "can I retire?" threads on ER/Bogleheads-type sites read something like..."we're 40 and have $1 million in invested assets...can we/when can we retire?" When I see those types of threads I just close them and move on...something psychological about feeling behind I guess ...but I suppose trying to keep up with the savers is better than trying to keep up with the spenders...

There are several ways folks can be successful at a young age as many forum members have pointed out on this thread.

But there's another reason...this is the internet and you are discussing topics with a group of strangers. Tread carefully.

[LOL!]

Quote:

Originally Posted by FinanceDude Its just beginning...... I agree, and we do the same. My kids are middle and elementary school, and it started getting more expensive when they turned out to be good in sports, and wanted to play them..........YMMV..........

Yep, our mileage did vary. Our kids did music lessons, art lessons, sports, and more sports. AAU sports, private coaches, traveling teams, sports camps, tech camps, sailing camps, debate camps, whatever. It turns out that in our area they are so prevalent that it does not cost that much.

Also a summer vacation to grandma's can tack on a camp the week before, so one can go to a place like Coach K's Duke Basketball camp without the travel costs because you were going to RTP anyways.

And then your kid gets a shoe contract, so at least the shoes are free.

In all this spending on kids, most of the parents were trying to keep the costs down, but some were profligate. Do you really need to play in that tournament in Hawaii? Well, only if you go to Hawaii each year anyways. If you aren't sending your kids to private school, then you might have some money for these things.

[Rustward]

Quote:

Originally Posted by bbbamI There are several ways folks can be successful at a young age as many forum members have pointed out on this thread. But there's another reason...this is the internet and you are discussing topics with a group of strangers. Tread carefully.

+1

[haha]

In certain cities many young people have quite a bit more than $1mm, from stock options in tech companies.

Ha

[MrEd]

A million isn't very much these days.

A couple of comments posted on the thread along these lines.

According to the Federal Reserve ~6% of the population are millionaires excluding home value. That means ~94% are not.

Now that is a significant meaningful number.

A yield of 5% in the bond market means that you make 50,000$ before getting out of bed every year.

I made my money through equity investing. Lucky-maybe? Smart-maybe?

But lucky or smart it is the same result.

[DoraM]

Not there yet, but could have been if I had discovered this site about 15 years ago.

We are 40 and 41 with about 700K invested and now saving around 90K additional each year. Should hit 1M by 45, which will be a bit late by this board's standards, but we bought a lot of stupid stuff in our late 20s early 30s. Now LBYM extreme (no cable or cell phone!).

[W2R]

I'm not 40... I'm almost older than Methuselah (I'm 63) and in real life, I look my age and more. Sometimes I even feel my age and more.

I wasn't a millionaire in my 40's. Guess I am a little behind the curve on this one. Do I care? Nahhh..... I'm having too much fun.