Big numbers (serious question)

During my work years I had a 'rule of thirds' - 1/3 of my income went to savings, 1/3 to taxes and 1/3 to me to spend. Add to that always maxing out my 401K and getting the full company match. This was a while ago so my numbers are lower, but I started my career at 28 with zero savings and had made my first million 15 years later with an average salary around $70K over that time.

So with salaries now about double what I made I don't think it at all improbable that folks are amassing $2-3M by their md-40s.
Yeah, in fact, I'm sitting here thinking why WOULDN'T folks with those salaries of twice what I retired with now have $2 - 3M??

So for those of us on this side of the "argument", it's sort of a no-brainer that folks could and would save that kind of money. We're sorta surprised - the opposite way of OP - that people DON'T have $2 -3M in their late 40s. Heh, heh, go figure! :facepalm: :cool:

I guess, for us, it's just expected and "normal." It's a whole other way of thinking. It's FIRE thinking. Again, YMMV.
 
I see that OP never did introduce him/herself and hasn't taken the time to respond to any of the comments here since their "one and done" initial post. 🙄
Troll, maybe?

Well, s/he sure got us going, so that's on us. :blush: :cool:
 
This guy sure got what he wanted. Never reposted and got 4 pages/77 responses of people trying to convince him. I'll make it 78! haven't hit 2-3MM, and I wasn't low income, but I had to start over from year 2000 due to bankruptcy of MC and divorce kept me from contributing max. If those had not happened, I would have been well over the above!

Flieger
 
Compounding definitely takes off in later years, as your balance gets bigger. For instance, so far this year, investments are up around $535K. In contrast, in the beginning, it took me about 12 years just to get to $535K, total!

Of course, once you get a big balance, a bad year or two late in the run can be pretty brutal, too.
And that's why the key is to diversify - especially after the accumulation phase. Give up the potential for amazing returns for the stability of average returns, almost no matter what happens.

Yeah, I know, preaching to the choir.
 
My husband and I were never big earners, probably about 140k combined at the highest. We were LBYM people by nature. My husband took a buyout (588k) from a union job instead of the pension at 48yrs old (30 years served) but most importantly guaranteed great health insurance covered 100% as part of the package.
This was in 2010 and we invested it (95% equities) with the 401k which was only about 200k, and didn't touch it for the most part until he was 59 1/2. He did work some more until 2019 and then hung it up for good.
Our investable accounts are north of 2.2M and net worth is just over 3.1M. Regular people can and do build large nest eggs and retire early.
Our kids will have the option to do the same as we taught them all what we wish we knew when we were just starting out. And my first grandson is already invested, I opened his UGMA account the day his SS # came at only a couple of weeks old. The best gift we can give them all is the knowledge of investing.
 
80 posts and no one has brought up marrying into money!

"He found himself in the unenviable position of having to choose between getting a job or marrying money"

Or am I the only one who thinks that way?
 
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80 posts and no one has brought up marrying into money!

"He found himself in the unenviable position of having to choose between getting a job or marrying money"

Or am I the only one who thinks that way?
Honestly, it never once occurred to me - here in this discussion or in real life. Even better than marrying money is to choose rich parents. ;) :cool:
 
Here is an example. I am a cop of 23 years and I have a NW of 3m+ and some of my buddies who started at the same time as me have maybe 100-500k NW. Roughly half of my NW is real estate and half is investments. No inheritance. My wife doesn't work either. Never made high salary but made steady investments and some real estate flips. It's about being intentional with saving and investing and living below means.
 
It's not a terrible question, but one that could be figured out in Excel pretty quickly if so desired. I just did it myself - Hypothetical person makes 50k / year at 21 years old, works until 45 with 5% raises yearly, saving 50% of that annually and making 8% in the market.

At the end of that time period their salary would be $166k (i.e. less than $200k), they would be 45 (in their 40s) and they would have $3M.

Obviously this is incredibly simplistic and doesn't take into account 100 factors, but it does show what others have said in this thread and throughout this site - LBYM and allow money to compound over time.
 
It's not a terrible question, but one that could be figured out in Excel pretty quickly if so desired. I just did it myself - Hypothetical person makes 50k / year at 21 years old, works until 45 with 5% raises yearly, saving 50% of that annually and making 8% in the market.

At the end of that time period their salary would be $166k (i.e. less than $200k), they would be 45 (in their 40s) and they would have $3M.

Obviously this is incredibly simplistic and doesn't take into account 100 factors, but it does show what others have said in this thread and throughout this site - LBYM and allow money to compound over time.

Yes, very simplistic

But powerful if you choose to act on it. I did this exact exercise in 1999 at age 25 and realized I could have a net worth of a million plus if I simply saved and invested diligently.

I did. So did my then future wife.

Salaries increased, so did savings. At 51 our net is 5 million plus. No secret and nothing fancy. Just stayed on program for almost 30 years.
 
But the more amazing thing is how that sum literally explodes from the late 40s to the late 50s. Compounding really takes off during those years, especially if they've been saving and investing consistently. Even if the growth seemed slow at first, with a solid portfolio and good market returns, the wealth starts multiplying quickly. Those last 10 years before full retirement can really be game-changing!
THIS is exactly my experience. To the OP, I was a late starter on investing, but made up for it with a relatively high income starting in my 30's. I've been the primary bread winner, while DW handled everything I couldn't because I was grinding hard in those years, constantly on the road and/or burning the midnight oil.

By 40's I was certainly in that $2-3M asset range mainly owing to putting max in 401K with heavy tilt towards equities, LBYM especially in terms of not spending any bonuses or windfalls, and good fortune with respect to stock options and RSU's. Also, buying first home proved to be a significant boost.

From there, things really took off, assets are a multiple of that figure now. Recently retired at ~60. I was FI by 50 but chose to continue working, both for lifestyle and enjoyment. But, at some point as someone earlier put it, my BS bucket filled up, it became clear that I was going to get pushed out eventually so preferred going on my own terms, not theirs.
 
We are in this club. Late starters (32, now 49), but with decent salary. Rental real estate has helped boost the NW.
$3.9 NW, $3.6 w/o primary residence.
$2.6 invested assets.
Last year was first year with $200k W2 salary.
Rental real estate income on top of that from 12 units plus short term rental income.
 
The market has indeed been powerful.

I haven't worked or "saved" in almost 20 years now, yet I'm twice as wealthy as the day I retired despite some heavy (8-10%) withdrawal years. I suspect it's only going to continue that trend as age will dampen my spending as time marches on.
 
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On second thought, between SS and Medicare for DW and myself we've reduced our pre-tax withdrawals by $100,000 each year. HC alone was whacking for almost $30k annually.

No wonder my portfolio has grown a lot more than usual of late! :facepalm:
 
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The market has indeed been powerful.

I haven't worked or "saved" in almost 20 years now, yet I'm twice as wealthy as the day I retired despite some heavy (8-10%) withdrawal years. I suspect it's only going to continue that trend as age will dampen my spending as time marches on.

That means you turned $1M into $3,311,922 while withdrawing 9%, which implies you are earning 15.2% annually on your investments.

Very impressive.
🥂
 
I have a feeling Urfe is no longer listening, but here's our story. We got married in 81 and had $536 of wedding money. At one year we had saved $6,000 of our $18,000 gross. That is when I realized we could get way ahead, even though not high earners. Over the next 37 years we earned an average $43,000 a year with an earning range of $18,000 to $79,000. I don't have an exact savings number but I think it was between $350k to $400k over the 37 years. We have the $2M to $3M and would have even more if we had not made very large gifts to our two kids. So it is quite possible, even on way less than $200k income. Also we did invest in no-load index funds for most of those years, can't get there without having growth of your savings.
 
In 1992, when I was 33 years old, we had a net worth of just about zero, having spent all of our money on graduate school for her and law school for me. Fortunately, we had no debt. It took us 15 years to get $1M in the portfolio (at the peak of the S&P 500 in October 2007, it was soon much less than that) and another 12 years after that to retire.
 
The market has indeed been powerful.

I haven't worked or "saved" in almost 20 years now, yet I'm twice as wealthy as the day I retired despite some heavy (8-10%) withdrawal years. I suspect it's only going to continue that trend as age will dampen my spending as time marches on.
I always adjust my net worth against inflation as over 20 years it really cuts into spending power.
 
And that's why the key is to diversify - especially after the accumulation phase. Give up the potential for amazing returns for the stability of average returns, almost no matter what happens.

Yeah, I know, preaching to the choir.
Maybe I'm an exception, but I didn't diversify. By the time I was ~55 (and still in the accumulation phase) I went 100% into fixed income for the next 10 to 12 years. Then I played with day trading a few years :nonono: then went back to fixed income. Even so, I'll likely die with millions still in the bank.
 
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It's not a terrible question, but one that could be figured out in Excel pretty quickly if so desired. I just did it myself - Hypothetical person makes 50k / year at 21 years old, works until 45 with 5% raises yearly, saving 50% of that annually and making 8% in the market.

At the end of that time period their salary would be $166k (i.e. less than $200k), they would be 45 (in their 40s) and they would have $3M.

Obviously this is incredibly simplistic and doesn't take into account 100 factors, but it does show what others have said in this thread and throughout this site - LBYM and allow money to compound over time.
I hear you, but don't think a 50% savings rate is realistic (at least for the first 5-10 years). That timeframe is some of the most costly in my opinion, and you are not going to get out of SS, etc. JMHO. Otherwise, I agree with the simplistic assumptions.

Flieger
 
I always adjust my net worth against inflation as over 20 years it really cuts into spending power.
A good point. I went back and my inflation adjusted NW (not counting real estate) is still 2X+ from when I RE'd.

I"m not sure if this makes sense, but as noted above, my withdrawal rate has been cut by $100K thanks to SS and Medicare kicking in. Utilizing some unique "math gymnastics", in a way, my 'spending power' has improved by that amount (?). It still costs more to buy something but my ability to buy it has improved. I sort of got a $100K raise.
 
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We retired the first time in 2002, we were 48 and 43 respectively. We did go back to work part time for about 6 years before retiring completely after a ~3 year sabbatical of cruising around the Caribbean in a 45' Cat.

Our nest egg has grown 6 fold in that time as of 2022. We do NOT invest in stocks only fixed income CDs and MYGAs. I do not think that is too bad as we are now in the top 3% from a Net worth perspective. That does not include home appreciation. That makes for a very comfortable income for us along with our Social Security.
 
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A good point. I went back and my inflation adjusted NW (not counting real estate) is still 2X+ from when I RE'd.

I"m not sure if this makes sense, but as noted above, my withdrawal rate has been cut by $100K thanks to SS and Medicare kicking in. Utilizing some unique "math gymnastics", in a way, my 'spending power' has improved by that amount (?). It still costs more to buy something but my ability to buy it has improved. I sort of got a $100K raise.
Wow, that’s impressive! We’re 30% ahead of inflation after 25 years retired which is still great, but not 100%!

Yes, you got a $100K raise.
 
Here is an example. I am a cop of 23 years and I have a NW of 3m+ and some of my buddies who started at the same time as me have maybe 100-500k NW. Roughly half of my NW is real estate and half is investments. No inheritance. My wife doesn't work either. Never made high salary but made steady investments and some real estate flips. It's about being intentional with saving and investing and living below means.
Bolded by me.
That is the key. Our savings came out of our checks first, before it even hit our checking account, Out of sight, out of mind.
LBYM budgeting, It is the Need VS Want mind set, a very important distinction.
I rarely went out for lunch, carried my meals every day from home, brought my own coffee (no Starbucks stops on the way). People scoff at Suzie Orman, but she is correct in the little things add up over time category. Like she says, Live below your means, but with in your needs.
DH and I never made over $100K until just before retirement. Saving every paycheck for 30+ years adds up.

Someone on this forum once wrote that they asked themselves two questions before purchasing:
Is it truly necessary?
Do I really want it?
Good Questions.
 
I would question why you stopped working at 40 with 2M-4M. Most of these folks have salaries greater than 200K, so why not work until 50 and double their money?
Hows that working out for Shannen Doherty?
 
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