Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

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broncocountry25
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Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by broncocountry25 »

My wife and I hit millionaire status this month when I updated our tracking spreadsheet. 31 with a net worth of $1million :D

This is the only place it is normal to say things like that so I wanted to share.

I do have a question. I am feeling a little discouraged oddly enough. It is a great accomplishment but I feel like the hard work was still done for us "down the road". $620k of that is in retirement accounts earmarked for 59.5 and beyond.

This forum loves index funds and retirement accounts and maybe my millennial will be showing but what is the point of having so much money only for 60+?

Even at a 5% return if we just did the ROTH IRA amount each year from here on out 12K. That would be 3.3 million for 60+. I talk to my parents friends now retiring and they are bored and don't even need that much money to do what they do (very modest living).

My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals. Paying off your house, funding college, investing in taxable account for money to fund early retirement, buy rental properties etc?

May just be more of a feeling of change in pace in my own life as I enter my 30's just starting to revaluate the point of working for so many years for a luxury+++ retirement.
Tamalak
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Re: Hit Millionaire Status!

Post by Tamalak »

Congrats! Yeah, personally I cap my retirement accounts at 50% of my total investments. I plan to retire in early 40s so I'll need a lot of brokerage. I keep hearing about some sort of "ladder" technique to use your 401k early without penalty but I've never been able to find details.
whereskyle
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Re: Hit Millionaire Status!

Post by whereskyle »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My wife and I hit millionaire status this month when I updated our tracking spreadsheet. 31 with a net worth of $1million :D

This is the only place it is normal to say things like that so I wanted to share.

I do have a question. I am feeling a little discouraged oddly enough. It is a great accomplishment but I feel like the hard work was still done for us "down the road". $620k of that is in retirement accounts earmarked for 59.5 and beyond.

This forum loves index funds and retirement accounts and maybe my millennial will be showing but what is the point of having so much money only for 60+?

Even at a 5% return if we just did the ROTH IRA amount each year from here on out 12K. That would be 3.3 million for 60+. I talk to my parents friends now retiring and they are bored and don't even need that much money to do what they do (very modest living).

My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals. Paying off your house, funding college, investing in taxable account for money to fund early retirement, buy rental properties etc?

May just be more of a feeling of change in pace in my own life as I enter my 30's just starting to revaluate the point of working for so many years for a luxury+++ retirement.
You can take the 10% hit whenever you want. Nothing making you wait if you want to start using the money now and your doing so by the terms of a common-sense plan. Of course, you'll want to use your taxable first. It is still absolutely the best strategy to max out tax-advantaged space even if you decide to access it early because you won the game.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
mikejuss
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Re: Hit Millionaire Status!

Post by mikejuss »

Congrats!

Do you plan on owning a home, having kids, etc.? If so, your savings rate will probably drop a lot, and you'll be happy you saved so much so early.
Last edited by mikejuss on Wed Apr 21, 2021 11:54 am, edited 2 times in total.
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e5116
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Re: Hit Millionaire Status!

Post by e5116 »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My wife and I hit millionaire status this month when I updated our tracking spreadsheet. 31 with a net worth of $1million :D

This is the only place it is normal to say things like that so I wanted to share.

I do have a question. I am feeling a little discouraged oddly enough. It is a great accomplishment but I feel like the hard work was still done for us "down the road". $620k of that is in retirement accounts earmarked for 59.5 and beyond.

This forum loves index funds and retirement accounts and maybe my millennial will be showing but what is the point of having so much money only for 60+?

Even at a 5% return if we just did the ROTH IRA amount each year from here on out 12K. That would be 3.3 million for 60+. I talk to my parents friends now retiring and they are bored and don't even need that much money to do what they do (very modest living).

My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals. Paying off your house, funding college, investing in taxable account for money to fund early retirement, buy rental properties etc?

May just be more of a feeling of change in pace in my own life as I enter my 30's just starting to revaluate the point of working for so many years for a luxury+++ retirement.
Tamalak wrote: Wed Apr 21, 2021 11:42 am Congrats! Yeah, personally I cap my retirement accounts at 50% of my total investments. I plan to retire in early 40s so I'll need a lot of brokerage. I keep hearing about some sort of "ladder" technique to use your 401k early without penalty but I've never been able to find details.

Here you go!
https://www.madfientist.com/how-to-acce ... nds-early/

tl;dr: There are a lot of strategies to access your retirement accounts early: roth conversion ladder, 72t equal payments, or pay the penalty.

ALL strategies (including paying the penalty) is better than using taxable account based on the assumptions made. Take a look at the figures/charts in the latter part of the article

Conclusions:
The first is that even if you don’t want to mess with things like Roth Conversion Ladders or SEPP distributions, it still makes sense to max out your pre-tax retirement accounts and then just pay the early-withdrawal penalty! The Penalty scenario (Scenario 2a) has over $200,000 more than the Taxable scenario (Scenario 1) by age 60 and will provide an additional decade of elevated income during standard retirement!
OP - I had come to a similar revelation with my retirement accounts being much larger and found the early retirement strategies to ameliorate my concerns with it. (Of course, hopefully laws don't change that prevent those in the future....).

Edit: the other big variable is tax rates. It's impossible to predict what they will be 30+ years from now, but most assume their tax rate will be lower in retirement than during their working years. The figures in the blog assume 25% rate during working and 15% during retirement. If laws change (which we can't speculate on here), the math could certainly change.
Last edited by e5116 on Wed Apr 21, 2021 11:55 am, edited 2 times in total.
Steve747
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Re: Hit Millionaire Status!

Post by Steve747 »

As being one of those in the +60 camp, put plainly more is better than not enough, just enough, or comfortable with some extra.
With your 30+ years to get here, a lot can happen, all sorts of unexpected stuff.
Plan for the worst, hope for the best.

Also, Congrats on the achievement :beer
Firemenot
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Re: Hit Millionaire Status!

Post by Firemenot »

Couple of thoughts — if/when you have children you may find that your thoughts on ideal net worth inflate some. To borrow from Milliionaire Next Door ideology, I don’t want to stunt my children by having them on financial life support well into adulthood. However, it is crazy how much money you can make through salary/investment compounding on the back end. Literally the incremental net worth generated by one extra year working might take your adult child 10-15 years of work to get to.

And congrats! You’ve accomplished the hard part.
Last edited by Firemenot on Wed Apr 21, 2021 11:56 am, edited 2 times in total.
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JoeRetire
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Re: Hit Millionaire Status!

Post by JoeRetire »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My wife and I hit millionaire status this month when I updated our tracking spreadsheet. 31 with a net worth of $1million :D
A nice start.
I do have a question. I am feeling a little discouraged oddly enough. It is a great accomplishment but I feel like the hard work was still done for us "down the road". $620k of that is in retirement accounts earmarked for 59.5 and beyond.

This forum loves index funds and retirement accounts and maybe my millennial will be showing but what is the point of having so much money only for 60+?
You are discouraged that you are allowed to defer taxes until later?
If so, stop putting your money in retirement accounts and start paying more taxes now.
My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals. Paying off your house, funding college, investing in taxable account for money to fund early retirement, buy rental properties etc?
No.
May just be more of a feeling of change in pace in my own life as I enter my 30's just starting to revaluate the point of working for so many years for a luxury+++ retirement.
You should find a way to enjoy every day, not just retirement days.
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coalcracker
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Re: Hit Millionaire Status!

Post by coalcracker »

I am 41, married, 2 young kids. Up until this point we have been mostly pedal-to-the-metal with full time jobs and retirement savings.

This year my wife will downshift to 2 days per week. The decision was a few years coming, but in part driven by hitting $3M in retirement assets and projecting what we will have in 20 years with even modest returns going forward.

I can't remember exactly how much, but we certainly had less than $1M at age 30 and have seen big growth in the past decade. As they say, the first million in the hardest! (this is something I would also only say on BH forum :D )

As to your question, much hinges on how much you think you will "need" in retirement. Compared to age 30, when I did not own a house and had no children, I have a better (but by no means certain) idea what that retirement number might be.
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Tamarind
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Re: Hit Millionaire Status!

Post by Tamarind »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My wife and I hit millionaire status this month when I updated our tracking spreadsheet. 31 with a net worth of $1million :D

[...]

This forum loves index funds and retirement accounts and maybe my millennial will be showing but what is the point of having so much money only for 60+?
Congrats on your milestone!

Fellow millennial here, 34 MFJ about $100k behind you. Keep it up and you can get the coastFIRE bug and scale back on work well before 60. You are on track.

It's ok to turn some of that income to things other than retirement. My wife and I have done little taxable investing to date because we wanted to do a big home renovation to enjoy sooner. But we always max out tax advantaged accounts for retirement first.

In other words, save first, but then take care of your current wants too if you can.
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vitaflo
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Re: Hit Millionaire Status!

Post by vitaflo »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals. Paying off your house, funding college, investing in taxable account for money to fund early retirement, buy rental properties etc?

May just be more of a feeling of change in pace in my own life as I enter my 30's just starting to revaluate the point of working for so many years for a luxury+++ retirement.
After we hit this number we paid off our house for a few reasons....we had the money to, treasuries were returning much less than our mortgage interest, and we were no longer getting a tax benefit from our mortgage because of tax law changes. Would I do it again? Yes. But this is entirely a personal decision.

Otherwise we just kept on working and funding our retirement. I get reevaluating things when you hit certain milestones but I think it's more important to just live your life. I think we spent way too much time hemming and hawing over what we should "do" now that we had significant financial means and wasted a lot of time contemplating actions rather than just living our life.

Worry less about retirement and more about right now. Retirement will come whenever you're ready for it. No sense getting ahead of yourself.
Gardener
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Re: Hit Millionaire Status!

Post by Gardener »

That is awesome. Congrats man!

I hit $1M with wife at 35, then we divorced!

38 now. Think I'm at 600k or so now. Hope to hit it before 40!

Think with that $1M even without future contributions will grow in to.
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Re: Hit Millionaire Status!

Post by Jack FFR1846 »

I completely missed the point where I passed $1MM. I was one of those in the 2nd best category according to Fidelity's survey of their 401k account holders who did the best. The first, of course was account holders who were dead. The second (me) forgot their login info and ignored their accounts. Then one day, I read that costs matter and that one should know what their costs are. I built a spread sheet and it honestly took me a year to locate all the accounts for my wife and me. When I totaled at that point, liquid assets were about $1.5MM and my house and all cars were paid off. I had $1MM of that earmarked for my 2 kids' college. As time went by, the kids went to college, got out, got jobs. I really did random investments....my idea of diversifying was to buy some of every offering in my 401k. I also found because we lived below our means that I had extra money, so at the time, invested in US Savings bonds.

I am quite happy I went the path I did, although I wish I knew to pay attention to cost earlier. I'm glad I paid off the house as it opened up a lot more monthly free cash. Make your own choice about that. Although I'm a big MMM follower, I think it's silly to go full on FIRE at a young age. Downshifting to part time, contracting or lower paying jobs, I get that. I'll do that someday, but I'm too old to be considered "early".
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Sandtrap
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Re: Hit Millionaire Status!

Post by Sandtrap »

Step 2
2 comma club, net.
Paid off home.
Do not include home equity.
No debts.

Onward!
j :D
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stoptothink
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Re: Hit Millionaire Status!

Post by stoptothink »

FWIW, we prioritized paying off the home (which we did nearly a year ago) before opening a taxable account. Now at 39 and 35, with a paid off home and kids 529s fully funded to cover 4yrs at local U, and nearly 95% of our (near 7-figure) portfolio in tax-advantaged accounts, we do regret prioritizing paying off the home over starting taxable investing.
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Re: Hit Millionaire Status!

Post by dboeger1 »

I see a lot of suggestions to invest outside of retirement accounts, but if what's bothering you is the not enjoying it part and you're comfortable with letting your current retirement assets grow until retirement, you may want to consider just spending for enjoyment now, at least more than you have been. You've earned that ability to trade some of your income for lavish vacations, a larger house, a man/woman cave, gym memberships, private schools for kids, charitable donations, etc. Obviously continuing to invest will only make you wealthier in dollar terms, but it's up to you to decide what the money's worth to you. Most people have a number past which they would rather stop working or spend with reckless abandon. It's actually quite abnormal in societal terms to amass millions of dollars and continue the same aggressive savings strategy.
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Re: Hit Millionaire Status!

Post by bogledogle »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My wife and I hit millionaire status this month when I updated our tracking spreadsheet. 31 with a net worth of $1million :D
You seem to be doing a great job on the savings.
I do have a question. I am feeling a little discouraged oddly enough. It is a great accomplishment but I feel like the hard work was still done for us "down the road". $620k of that is in retirement accounts earmarked for 59.5 and beyond.

This forum loves index funds and retirement accounts and maybe my millennial will be showing but what is the point of having so much money only for 60+?
It is important to enjoy your accomplishments on the way to hitting your savings goals. Set your goals based on your lifestyle and keep driving towards it. Don't follow other's plans on how to live your life.
Even at a 5% return if we just did the ROTH IRA amount each year from here on out 12K. That would be 3.3 million for 60+. I talk to my parents friends now retiring and they are bored and don't even need that much money to do what they do (very modest living).
You are probably right assuming you will work all your life, have no health issues that will force you to retire or spend more money that what you have forecasted, have children who are healthy, pay for their college..etc. And you don't seem to have factored in social security.
My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals. Paying off your house, funding college, investing in taxable account for money to fund early retirement, buy rental properties etc?
As long as you meet your savings goals, you should do what you want with the rest of the money. All of the above seem reasonable to me.
May just be more of a feeling of change in pace in my own life as I enter my 30's just starting to revaluate the point of working for so many years for a luxury+++ retirement.
Yes, it is lame to have too much money when you retire that you cannot enjoy. You should enjoy your money on the way to retirement and still have enough to never run out. This will always be a moving goal based on your lifestyle, expenses, savings.
Tamalak
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Re: Hit Millionaire Status!

Post by Tamalak »

e5116 wrote: Wed Apr 21, 2021 11:49 am
Tamalak wrote: Wed Apr 21, 2021 11:42 am Congrats! Yeah, personally I cap my retirement accounts at 50% of my total investments. I plan to retire in early 40s so I'll need a lot of brokerage. I keep hearing about some sort of "ladder" technique to use your 401k early without penalty but I've never been able to find details.

Here you go!
https://www.madfientist.com/how-to-acce ... nds-early/

tl;dr: There are a lot of strategies to access your retirement accounts early: roth conversion ladder, 72t equal payments, or pay the penalty.

ALL strategies (including paying the penalty) is better than using taxable account based on the assumptions made. Take a look at the figures/charts in the latter part of the article

Conclusions:
The first is that even if you don’t want to mess with things like Roth Conversion Ladders or SEPP distributions, it still makes sense to max out your pre-tax retirement accounts and then just pay the early-withdrawal penalty! The Penalty scenario (Scenario 2a) has over $200,000 more than the Taxable scenario (Scenario 1) by age 60 and will provide an additional decade of elevated income during standard retirement!
Thanks a lot. I will consume that article and maybe change my approach!
ponyboy
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Re: Hit Millionaire Status!

Post by ponyboy »

I cant find it but someone did a comparison on best ways to invest/access money before 59.5. Forget the 72t thing or whatever...they ran numbers and investing in 401k now (pre tax) then taking the 10% penalty was still the best way to grow your money. It beat out a roth ira.

Obviously, if you can 72t and not take a penalty, thats the way to go, but if you have no choice, its still better to take the hit and fully fund your 401k.

We're 38/36, and we're over 1.5million now. Im torn on the fact that we're now saving too much. We do spend, vacation, and never feel like we're going without. But, we're thinking about an inground pool in a year or two. CAnt take the money with you when you die!
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Brianmcg321
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Re: Hit Millionaire Status!

Post by Brianmcg321 »

I would set up a taxable account.

Put the company match in your 401k, and start investing the rest in a total market index in your taxable. By the time your 40 you will have a nice tidy sum to upgrade your life with.
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Re: Hit Millionaire Status!

Post by Mullins »

In my making money years, I saved enough of a percentage that I didn't feel guilty indulging myself a few perks from the remaining earnings in the here and now. Gotta enjoy life while you're living, I say. Might not make it to 60. Might be forced to retire earlier. Things can happen.

So, saving for later years has the advantage of having that money when you inevitably get there. When you're 60, your perception will be, "how did I become 60 so fast?" And, you'll thank your younger self for investing. And may wish you invested more!
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rockstar
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Re: Hit Millionaire Status!

Post by rockstar »

I max out my 401K now mainly to push me down a tax bracket. But my investments are split almost 50/50 between tax advantaged and taxable. I like the option of pulling money out of taxable if I want. I haven't yet, but I like the option. I have enough in taxable to pay off my mortgage multiple times, but I expect the money to grow faster than my 2.8% mortgage rate.
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Re: Hit Millionaire Status!

Post by William Million »

I'd put as much as possible into Roth. High net worth retirees have a lot of tax issues.

I don't know about your parents' friends, but I'm in 60s and lovin' spending down net worth. I don't wish I had spent more in my younger years.
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General forum (general question).

The OP has hit a milestone (see: Post your Financial Milestone Announcements Here), but is asking about changing investment strategy when a milestone has been reached. I retitled the thread for clarity.
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by LatentStoic »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am
I do have a question. I am feeling a little discouraged oddly enough. It is a great accomplishment but I feel like the hard work was still done for us "down the road". $620k of that is in retirement accounts earmarked for 59.5 and beyond.

This forum loves index funds and retirement accounts and maybe my millennial will be showing but what is the point of having so much money only for 60+?
Don't worry, life will throw you a curveball or two, that will make you REALLY glad you got a leg up early, so you can handle detours and contingencies that may come well before age 59.5.
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Mathew675
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by Mathew675 »

I agree with the poster earlier who directed you towards the madfientist site. I almost always think if there is room for more tax advantaged accounts then I need to fill that up before doing any after tax investments. That is of course completely dependent on your own situation. I approached this same problem (good problem to have) of seeing too much in after tax vehicles. When I learned about how rollovers can be utilized, and did the math I came to a different conclusion. I know that my current income is higher than what I plan on rolling over every year and add in the tax free growth, it's a no brainer that I need to take advantage of my sheltering opportunities. However, everyone's situation is different. If your withdrawal plans require more funding than would be tax efficient then you need to change your plans.

I do utilize an after tax account for a portion of my investments as it's certainly more functional in case of emergency and some of the rollover processes will need at least a few years accessible before you start actually spending that money.
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broncocountry25
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by broncocountry25 »

Wow! A ton of great responses thank you very much to everyone!

It is a surreal thing for me. I grew up in a split family and money was always a stressor.

Lots to think about. :sharebeer
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by deikel »

you need to start thinking about not overfilling your 401k/IRA space since you are at 620 @ 31 years already, otherwise the 401k/IRA tax advanatged space becomes a less advantaged space later on (nice problem to have)

You can access 401k/IRA for all kinds of things, rule of 72t allows you regular withdrawals prior to official time without penalty, same is true for first time home buyer with some access, some education expenses ect - its not as locked up as you may think.

The first one is the hardest, now on to more of them :-)
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by chicagoan23 »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My wife and I hit millionaire status this month when I updated our tracking spreadsheet. 31 with a net worth of $1million :D

This is the only place it is normal to say things like that so I wanted to share.

I do have a question. I am feeling a little discouraged oddly enough. It is a great accomplishment but I feel like the hard work was still done for us "down the road". $620k of that is in retirement accounts earmarked for 59.5 and beyond.

This forum loves index funds and retirement accounts and maybe my millennial will be showing but what is the point of having so much money only for 60+?

Even at a 5% return if we just did the ROTH IRA amount each year from here on out 12K. That would be 3.3 million for 60+. I talk to my parents friends now retiring and they are bored and don't even need that much money to do what they do (very modest living).

My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals. Paying off your house, funding college, investing in taxable account for money to fund early retirement, buy rental properties etc?

May just be more of a feeling of change in pace in my own life as I enter my 30's just starting to revaluate the point of working for so many years for a luxury+++ retirement.
A few points:

1. Retirement savings are not only for a secure retirement; they are mostly a tax-deferral/avoidance issue. If you are in a high tax bracket now (likely if you acquired $1 million by age 30) then why pass on tax-deferred space? Taxes are likely your largest single expense so I would continue to avoid them as much as possible. It doesn't make sense to fund a taxable account with after-tax dollars and forgo tax-deferred space. Roths are OK but max out as much as you can in tax-advantaged accounts and worry about having too much money later.

2. Buying rental properties, paying off the mortgage, funding educational accounts etc. all have their own issues, some of which may be greater than the risk of having too much money in retirement accounts. I would not want to be a landlord or supervise a management company, a low-rate mortgage is a great hedge against inflation, we don't know what college is going to look like in 20 years, etc.

3. If it would make you happier to ease off on the savings and spend more money now, then go for it. You've earned it at this point. I really don't worry about my spending anymore, knowing that my retirement is secure absent some type of societal collapse.
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txhill
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by txhill »

Congratulations! Rule #1: Keep your wife happy :) If that means splurging a bit with a nice night out (if you're vaccinated!) then go for it.

In terms a strategy shift, I'd only do so if your investable assets are very very heavily weighted toward retirement funds (like over 80:20). If so then maybe consider keeping a bit more in brokerage accounts or something more accessible so you can enjoy life a bit more as you get older (but still aren't close to 60). Regardless, you have a gameplan that seems to be working, so I'd hesitate to deviate from it. Suddenly going into rental properties seems like a bad idea to me, but maybe it's because I am just lazy and don't want to deal with tenants etc.
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by Cousin Eddie »

First off, congrats, you are in a great place that few at your age enjoy. With $380k in non-retirement accounts, I would continue as much as possible contributing towards your retirement accounts. For me, objective #1 is financial independence, and your taxable account can be viewed as the 5 year funding source required before you are able to tap into retirement funds through Roth conversions. With the amount you have in your taxable, you should have enough for 5 years as long as you are somewhat careful with expenses, and it will only provide more cushion as you get older.
aj44
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Re: Hit Millionaire Status!

Post by aj44 »

Gardener wrote: Wed Apr 21, 2021 12:21 pm That is awesome. Congrats man!

I hit $1M with wife at 35, then we divorced!

38 now. Think I'm at 600k or so now. Hope to hit it before 40!

Think with that $1M even without future contributions will grow in to.
The $1M also happened to me at 35 and also ended up divorced a year later though at 40 now I'm knocking on the door of getting it back myself.

My advice to OP is continue to save, there is a 50% chance your total is halved at some point. If you're thinking at 31 that it can't happen to your current relationship we would have that in common.
Last edited by aj44 on Wed Apr 21, 2021 11:04 pm, edited 1 time in total.
02nz
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Re: Hit Millionaire Status!

Post by 02nz »

Tamalak wrote: Wed Apr 21, 2021 11:42 am Congrats! Yeah, personally I cap my retirement accounts at 50% of my total investments. I plan to retire in early 40s so I'll need a lot of brokerage. I keep hearing about some sort of "ladder" technique to use your 401k early without penalty but I've never been able to find details.
Someone else already linked the Roth conversion ladder, but it's worth emphasizing: early retirement is a reason you need MORE, not less, in tax-deferred. "I want to retire early so I should put more into taxable instead of tax-deferred" is one of the most common, and costliest, misconceptions.
gips
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by gips »

we maxed retirement accounts every single year and had enough leftover to eventually fund paying off house. once we hit our fire number, paid off house and college fully funded we doubled our fam vacation budget and bought a lux car for my wife (i’m happy tonrun a $25k car into the ground:

i’d guess those decisions cost us $200k over the years but in retrospect, well worth it. hope that helps.
Starfish
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by Starfish »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My wife and I hit millionaire status this month when I updated our tracking spreadsheet. 31 with a net worth of $1million :D
In what base? I prefer 16. I just index the base with inflation.

PS: congratulations! at 31 I had pretty much nothing.
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Schlabba
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Re: Hit Millionaire Status!

Post by Schlabba »

aj44 wrote: Wed Apr 21, 2021 10:50 pm
Gardener wrote: Wed Apr 21, 2021 12:21 pm That is awesome. Congrats man!

I hit $1M with wife at 35, then we divorced!

38 now. Think I'm at 600k or so now. Hope to hit it before 40!

Think with that $1M even without future contributions will grow in to.
The $1M also happened to me at 35 and also ended up divorced a year later though at 40 now I'm knocking on the door of getting it back myself.

My advice to OP is continue to save, there is a 50% chance your total is halved at some point. If you're thinking at 31 that it can't happen to your current relationship we would have that in common.
Lesson learned here: If you are in the fortunate position to do so, aim for a portfolio that can cover double your expenses. In that case a divorce won’t force you back to work.
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warner25
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by warner25 »

My wife and I hit the $1M mark this month too at ages 32/34. Mostly it seems unreal with the meteoric rise of the stock market. We've gradually started loosening up about spending money over the past few years, and I'm sure that will continue. In dollar terms, we're still saving as much as ever due to pay raises. I'm expecting a pension starting in my 40s (military) but I think that we'll also look at the various ways to tap retirement savings before age 60, like pulling out Roth contributions.
aj44 wrote: Wed Apr 21, 2021 10:50 pm
Gardener wrote: Wed Apr 21, 2021 12:21 pm ...I hit $1M with wife at 35, then we divorced!...
The $1M also happened to me at 35 and also ended up divorced a year later though at 40... If you're thinking at 31 that it can't happen to your current relationship we would have that in common.
Serious and important question for you guys: Are there any actionable lessons to share from your experience, in terms of mitigating this risk? Many couples fight about money, and it seems like any couple would have to work well together to achieve this milestone in their 30s.
invest4
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by invest4 »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am
I do have a question. I am feeling a little discouraged oddly enough. It is a great accomplishment but I feel like the hard work was still done for us "down the road". $620k of that is in retirement accounts earmarked for 59.5 and beyond.

This forum loves index funds and retirement accounts and maybe my millennial will be showing but what is the point of having so much money only for 60+?

Even at a 5% return if we just did the ROTH IRA amount each year from here on out 12K. That would be 3.3 million for 60+. I talk to my parents friends now retiring and they are bored and don't even need that much money to do what they do (very modest living).

My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals. Paying off your house, funding college, investing in taxable account for money to fund early retirement, buy rental properties etc?

May just be more of a feeling of change in pace in my own life as I enter my 30's just starting to revaluate the point of working for so many years for a luxury+++ retirement.
For most people, funds are limited and choices must be made as to what is given priority as far as how you spend and invest your money. In my case, retirement funding has always been the first priority...maxing out pre-tax, then Roth, and HSA (medical 401k). Kids education (529s + cash) next and any excess toward mega back door Roth. House is on the horizon (ideally before retirement), but appreciate the benefits my 30 yr. mortgage at 2.625% provides and will see how things play out in the upcoming years. After we achieved 1M, nothing changed.

Why?

As others have noted, life is indeed uncertain...and that is why you continue to invest. HOWEVER, I absolutely believe one should also live and enjoy life in the present. While we have always lived beneath our means, we have absolutely experienced lifestyle creep (food, vacations, housing, etc.). We fully recognize and accept the tradeoffs in regard to working longer, etc. Only you and your wife can decide what is best for you and your family. You are off to a great start.

Best wishes.
dcabler
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Re: Hit Millionaire Status!

Post by dcabler »

aj44 wrote: Wed Apr 21, 2021 10:50 pm
Gardener wrote: Wed Apr 21, 2021 12:21 pm That is awesome. Congrats man!

I hit $1M with wife at 35, then we divorced!

38 now. Think I'm at 600k or so now. Hope to hit it before 40!

Think with that $1M even without future contributions will grow in to.
The $1M also happened to me at 35 and also ended up divorced a year later though at 40 now I'm knocking on the door of getting it back myself.

My advice to OP is continue to save, there is a 50% chance your total is halved at some point. If you're thinking at 31 that it can't happen to your current relationship we would have that in common.
Yeah, I think a lot of people choose to not think about that. Imagine having a 50% drop in your net worth due to divorce and that coincides with a huge stock market downturn. Oh, and you're older and retired when that happens... ...shudder.....
dan7800
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by dan7800 »

1) Have your favorite beverage, celebrate for a moment.
2) Don't forget how you got there
3) See how you can "improve" (saving more, better diversification, etc...)
WarAdmiral
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by WarAdmiral »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My wife and I hit millionaire status this month when I updated our tracking spreadsheet. 31 with a net worth of $1million :D

This is the only place it is normal to say things like that so I wanted to share.

I do have a question. I am feeling a little discouraged oddly enough. It is a great accomplishment but I feel like the hard work was still done for us "down the road". $620k of that is in retirement accounts earmarked for 59.5 and beyond.

This forum loves index funds and retirement accounts and maybe my millennial will be showing but what is the point of having so much money only for 60+?

Even at a 5% return if we just did the ROTH IRA amount each year from here on out 12K. That would be 3.3 million for 60+. I talk to my parents friends now retiring and they are bored and don't even need that much money to do what they do (very modest living).

My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals. Paying off your house, funding college, investing in taxable account for money to fund early retirement, buy rental properties etc?

May just be more of a feeling of change in pace in my own life as I enter my 30's just starting to revaluate the point of working for so many years for a luxury+++ retirement.
A different perspective. Something to think about.

You are 31. Assuming you started working at 21 in year 2011, you have only seen a massive bull market. Also, you were likely DCAing during the pandemic which helped.

If we experience a lost decade or a sideways market, you will be 41 in year 2031 and your net worth will still be around $1 million.
Tamalak
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Re: Hit Millionaire Status!

Post by Tamalak »

02nz wrote: Wed Apr 21, 2021 11:01 pm
Tamalak wrote: Wed Apr 21, 2021 11:42 am Congrats! Yeah, personally I cap my retirement accounts at 50% of my total investments. I plan to retire in early 40s so I'll need a lot of brokerage. I keep hearing about some sort of "ladder" technique to use your 401k early without penalty but I've never been able to find details.
Someone else already linked the Roth conversion ladder, but it's worth emphasizing: early retirement is a reason you need MORE, not less, in tax-deferred. "I want to retire early so I should put more into taxable instead of tax-deferred" is one of the most common, and costliest, misconceptions.
Yup. After reading that, I'm no longer capping my contributions. Maxing out every year baby :sharebeer
Tamalak
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by Tamalak »

warner25 wrote: Thu Apr 22, 2021 2:26 am
aj44 wrote: Wed Apr 21, 2021 10:50 pm
Gardener wrote: Wed Apr 21, 2021 12:21 pm ...I hit $1M with wife at 35, then we divorced!...
The $1M also happened to me at 35 and also ended up divorced a year later though at 40... If you're thinking at 31 that it can't happen to your current relationship we would have that in common.
Serious and important question for you guys: Are there any actionable lessons to share from your experience, in terms of mitigating this risk?
[OT comment removed by admin LadyGeek]

Edward Jones has nothing on the institution of marriage. It's the only investment in the world with a 5000 point load fee.

OP is at 500k in my tally. Which is still very impressive for his age.
Last edited by Tamalak on Thu Apr 22, 2021 7:42 am, edited 1 time in total.
aj44
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by aj44 »

warner25 wrote: Thu Apr 22, 2021 2:26 am My wife and I hit the $1M mark this month too at ages 32/34. Mostly it seems unreal with the meteoric rise of the stock market. We've gradually started loosening up about spending money over the past few years, and I'm sure that will continue. In dollar terms, we're still saving as much as ever due to pay raises. I'm expecting a pension starting in my 40s (military) but I think that we'll also look at the various ways to tap retirement savings before age 60, like pulling out Roth contributions.
aj44 wrote: Wed Apr 21, 2021 10:50 pm
Gardener wrote: Wed Apr 21, 2021 12:21 pm ...I hit $1M with wife at 35, then we divorced!...
The $1M also happened to me at 35 and also ended up divorced a year later though at 40... If you're thinking at 31 that it can't happen to your current relationship we would have that in common.
Serious and important question for you guys: Are there any actionable lessons to share from your experience, in terms of mitigating this risk? Many couples fight about money, and it seems like any couple would have to work well together to achieve this milestone in their 30s.
Honestly it can happen for so many varying reasons and mine wasn’t at all about money, it was infertility. We both had high incomes and were savers.

What I have always done is keep two sets of projections, one with my significant other and one without, then assessed my savings targets on the one without and I’m sure glad I did. Anything carrying a 50% risk should be planned for.
BlackStrat
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by BlackStrat »

Another way to think about it:
I’m sure your 31-year-old self is thanking your 20 something year-old self for making the decision to invest.
Trust me, when you’re in your 50s or 60s, you’ll be happy that you kept that time of your life in focus with your investments at your current age.
Leaving a legacy for your children may also be welcome; especially considering the possible state of the world at that time
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Watty
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by Watty »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals.
My situation was a lot different but I was in my 50s when the 2008 financial crisis hit which was stressful since I still had a kid at home and if I had been laid off I would have had a very hard time finding a similar job. For a long time it was not at all clear that we were not going to go into something like the great depression in the 1930s. This was really not long after the dot com bust too so there was a lot of financial uncertainty.

I increased my savings to be as much as I could just in case things turned out badly.

The major milestone was when I realized that I had enough that if I really needed to I could sell my house and move to a very low cost of living college town I knew of and buy an inexpensive house and retire in a frugal lifestyle on my savings and Social Security.

That is far from the retirement I would have wanted but I have travelled enough and gotten out of the tourist areas enough to appreciate how even that frugal lifestyle would be better than the majority of people in the world live.

It surprised me but getting to the point where I was pretty confident that I would never be broke and homeless was a major milestone for me.

I then felt comfortable with shifting my "now vs later" balance more toward the "now" side and reduced my 401k contributions to be just enough to get my employer match. I was still saving 6% of my income to get a 3% match but that was lot less than I had been saving. I then started spending more on things like travel.
broncocountry25 wrote: Wed Apr 21, 2021 11:40 am My question is did any of you shift when you hit a certain amount in retirement accounts to aggressively fund other goals. Paying off your house, funding college, investing in taxable account for money to fund early retirement, buy rental properties etc?
I am usually in the "pay off the mortgage" cheerleading camp when people ask the "Should I pay off the mortgage" question but it is really hard to justify paying off a mortgage early if you are not maxing out all your retirement accounts.

Buying a rental property has never appealed to me because;

1) I own a house that I live in so that I already have a lot of real estate exposure. If I bought a rental house that would mean that a huge percentage of my net worth was in real estate. With a mortgage that could even be over 100% of my net worth.

2) A lot of my investments are in stock index funds. Many of the companies in the index funds also own a lot of real estate so that gives me even more exposure to real estate.

3) Even with a property manager I do not want to have to deal with owning rental property when I am 80 years old and living in assisted living. If you buy a rental property be sure that you have several possible exit strategies figured out.

Having some college savings is a great idea but if you have a high net worth when your kids are in college there are lots of ways to pay for college. It sounds like you have a good income so when they are in college you can also cut your retirement savings back and pay a lot of college expenses out of your cash flow especially if they go to a less expensive state university. If you get your house paid off by the time they are in college you can also use that cashflow for college expenses.

You may also have longer to fund their college than you realize since you do not need to have all the college money available the day your oldest kid graduates from high school. You have until your youngest kids is about 22 and a senior in college.

Especially here I think people often overestimate what college will cost. You might want to plan on your kid going to an expensive Ivy League college with no financial aid but that is not very likely. You do not live in the mythical town of Lake Wobegon where all the kids are above average. It might be humbling but realistically there is a 90% chance that your kid will not be in the top 10% of their high school class which will make getting into an expensive exclusive school difficult. Having enough college funds to pay for a good state university is a great, and non-trivial, goal but if you have that in place and they do go to a very expensive college then you may be able to pay for the additional cost from other funds if you have a high net worth then.
Last edited by Watty on Thu Apr 22, 2021 9:10 am, edited 2 times in total.
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broncocountry25
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by broncocountry25 »

Wow this thread got dark with the divorce aspect! I would never have a separate plan for half of our assets in the back of my mind. That sounds like a terrible way to live and you are already putting one foot out of the door. Call me old fashioned but I plan on keeping my relationship and family together to the end.

Anyways I appreciate everyone's input. I will keep investing heavily no matter what $100K+ year for now. The question is just outside of retirement accounts or not, to be determined.

Thanks again to anyone who contributed.
2b2
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by 2b2 »

OP,

Congratulations! Very well done.
You have taken care of today...now simply stay the course and I think you'll find that tomorrow will take care of itself.

2b2
deltaneutral83
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Re: Hit Millionaire Status! [Does anyone shift when they hit a milestone?]

Post by deltaneutral83 »

broncocountry25 wrote: Wed Apr 21, 2021 11:40 am I do have a question. I am feeling a little discouraged oddly enough. It is a great accomplishment but I feel like the hard work was still done for us "down the road". $620k of that is in retirement accounts earmarked for 59.5 and beyond.
Roth contributions can be taken out whenever, earnings stay in, although you wouldn't necessarily want to if you didn't have a need. Conversions into Roth from traditional after 5 years also can be taken out I believe. I've seen a lot of posts where people consider sizeable amounts in their Roths that can come out penalty free before 59.5 as their true emergency fund. You'll be investing in a taxable shortly I bet too where you have flexibility.
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