Yahoo Finance I Want To Retire a Millionaire: Here’s What My Monthly Savings and Investments Look Like
Retiring as a millionaire has long been the dream, but costs keep rising and a million dollars doesn’t go quite as far as it used to. According to the BLS, the average annual expenditure across all American households was $72,967 in 2022 — a 9% increase from 2021.
Experts suggest having anywhere from 70% to 90% of your pre-retirement income set aside in savings per year you plan to spend in retirement. For someone who earns the average income and plans to spend 20 years in retirement, they’ll need between $1,021,540 and $1,313,400 to retire comfortably and maintain a similar standard of living to what they had before.
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Considering this, the dream of retiring as a millionaire might actually be a necessity in many cases. The good news is while it might seem difficult to achieve, it’s very doable with a bit of planning.
GOBankingRates spoke with Jonathan Geserick, managing attorney and owner of Texas Probate Pros, about his plans to retire a millionaire. Here’s an overview of how much he saves and invests each month, as well as how close he is to making that dream a reality.
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The Path To Becoming a Millionaire Starts Early
There’s a reason why financial experts often advise saving and investing early. The sooner you get started, the more you can benefit from time and compound interest. If you invested in stocks, you get the added bonus of watching those increase over time.
Like many people who become millionaires, Geserick’s path started early. In fact, he’s already achieved his initial goal.
“I am currently the founding attorney at Texas Probate Pros, but I only started that after I became a millionaire because I now have the freedom to try new things and work for myself,” he said.
Here’s how he got started.
“To become a millionaire, it was pretty simple. I stared saving money when I got my first real job at 21 years old. Since then, I always saved at least 20% of my salary in my 401(k) — often split between a traditional 401k and a Roth 401(k),” he said.
Retirement accounts have their contribution limits, which change every year. For 2024, the annual contribution limit for a 401(k) is $23,000. It’s the same for Roth 401(k) plans, though limits increase if you’re older than 50. The contribution limit for these retirement accounts is aggregate, meaning you can only contribute $23,000 across both plans.
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Each retirement plan has its own advantages. Roth 401(k) contributions, for example, are made with after-tax dollars. 401(k) contributions are made with before-tax dollars.
“I also, most years, maxed out Roth IRA contribution limits,” Geserick continued.
Roth IRA contributions are made with after-tax dollars. Unlike 401(k)s and Roth 401(k)s, they also have annual income limits — currently $153,000 for an individual or $228,000 for married couples. The maximum annual contribution is $6,500 or $1,000 for those over the age of 49.
While Geserick didn’t disclose his salary throughout his 20s and 30s, investing 20% or more of his income in these retirement accounts was key to getting him on track to becoming a millionaire.
Benefits of Health Savings Accounts
Health savings accounts (HSAs) are a type of savings account designed for qualified medical expenses only. Any contributions are made on a pre-tax basis and can be used for things like deductibles, coinsurance, copayments, and certain other medical expenses.
An HSA makes it easier to afford medical care. Not only that, but these plans can sometimes earn interest, which isn’t taxable. You also won’t have to pay taxes on qualified distributions — that is, those used to cover qualified medical expenses. You can get an HSA through a credit union, bank, or any other financial institution that offers them.
You’ll need to meet certain requirements to get an HSA — like not being enrolled in Medicare — but these accounts can be incredibly advantageous.
“I learned late about how powerful HSAs are, but after I understood the benefits, I began saving as much as I could in those as well,” said Geserick.
Like 401(k)s, HSAs have contribution limits. These depend largely on the individual’s age, when they become eligible for such an account, and the type of coverage they get.
What’s little known about HSAs is that they can be used as another way to build wealth and save for retirement. Once you turn 65, you can use the funds in that account for any reason — medical or otherwise. You will need to pay income taxes on any non-medical expenses, though.
Still, if the goal is to become a millionaire, maximizing your contributions to not only traditional retirement accounts but also HSAs can go a long way toward getting you there.
Looking Ahead to the Future
Just because Geserick’s has already reached that first major milestone of becoming a millionaire doesn’t mean he’s stopping any time soon. He’s got bigger financial goals and the time to achieve them.
“My retirement goal is $4 million. I’m almost halfway there, but the money I have should grow to $4M before I turn 60 (I’m 47 now),” he said. “So ultimately I don’t feel like I have to save any more (though I’m not going to have lifestyle creep, so I will save in the next few years).”
As for the future, he intends to retire before the typical retirement age of 62.
“Ultimately, I would like to fully retire before I’m 60,” he said, “but in the meantime, I’m taking a step away from the corporate world to try and fulfill my dream of self-employment.”
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