From Military Reservist to Multimillionaire: The Financial Journey of a 62-Year-Old Veteran

7 Real Stories of Real People Building Wealth (20s, 30s, 40s, 50s, 60s)

Jun 12, 2024

Exploring the Hidden Aspects of Wealth

Welcome to this week's newsletter, where we show you real numbers from real people and get a glimpse into their personal finances. This week’s stories examine the habits and strategies of individuals at different stages of their financial journeys. From someone in their 20s achieving their first $100K of net worth, someone in their 30s achieving their first $1 million in net worth, all the way to a couple in their 60s who've amassed $5.3 million in net worth, we share insights about how they achieved their financial goals. Learn from their experiences and apply these lessons to your own personal finance journey.

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In their 20s:

$103,110 net worth - A 28 year-old earning $130K/year as a software engineer is also running a consulting LLC and has a desire to create a SaaS side-hustle and retire early. His accumulated net worth is 69th percentile for his age group. His net worth consists of 47% in retirement accounts, 38% in checkings/HYSA, and 15% in taxable brokerage (individual stocks). “I am maxing out my Roth IRA and am contributing to my employers’ 401k up to the 3% match in a Fidelity S&P500 fund”

TAKE-AWAY: The first $100K is the hardest to save because it requires significant discipline and a consistent saving and investing habit. In the early stages, you might not see substantial growth due to compounding, which can be discouraging. However, as your savings and investments grow, so does the power of compounding!

In their 30s:

$402,000 net worth - A 34-year-old female artist from NYC earns $112K/annually. Her accumulated net worth is 86th percentile for her age group. Her net worth consists of 54% in retirement accounts, 30% in home equity, and 14% in cash/HYSA/CDs. "I got a credit card just to build credit, contributed to the 401k match, opened an IRA, read The Simple Path to Wealth, and the rest is history."

TAKE-AWAY: This is a good example of obtaining a well-paying job, diligent savings, and various investments including a 401k, an IRA, and a brokerage account and it highlights the importance of credit building and making informed decisions like reading personal finance books.

$1,020,000 net worth - A 35 year-old with a base pay of $192,500 with a variable bonus between $30k and $50k. They just crossed the $1M net worth threshold and their accumulated net worth is 92nd percentile for their age group. Their net worth consists of 32% in retirement accounts, 30% taxable brokerage, 34% in crypto, and 3% in cash. They are only spending ~$55k/year which allows them to max out their 401k, Roth IRA, and HSA every year. “I know that I couldn't up and retire tomorrow, but I'm starting to think about how close the possibility is.”

TAKE-AWAY: Maintaining a low spending rate and high savings rate lets your net worth accumulate faster. This can create future optionality such as an early retirement.

$1,200,000 net worth - A 38-year-old single female who accumulated her wealth through W2 employment income, without any inheritances or lottery winnings. Her accumulated net worth is 93rd percentile for her age group. She has held various roles in the same company for over 15 years, recently resigning from her position as a "Senior Director" to take an indefinite sabbatical. Her money management strategy includes avoiding lifestyle inflation while growing her income, automating savings, and keeping fixed expenses low (<$40k a year). Her net worth consists of 55% in taxable brokerage, 38% in retirement accounts, 23% in home equity (duplex), and 2.5% in cash. She invests primarily in index funds and owns a duplex, which provides rental income. She lives in a modest house, drives a used car, and spends very little on material items. Over the years, she maxed out her 401k, HSA, and performed a backdoor Roth IRA conversion. “Beware of lifestyle inflation!! Don’t let your spending grow at the same rate as your income growth.”

TAKE-AWAY: Don't let lifestyle inflation consume your earnings as they grow. Automate your savings to ensure consistent growth and remember that money is a tool, not a goal in itself. Be mindful of your spending and keep fixed expenses low creates future optionality.

In their 40s:

$1,725,000 net worth - Early 40s and didn’t attend college. His accumulated net worth is 94th percentile for his age group. His net worth consists of 40% in home equity, 32% in retirement accounts (401k, IRAs, HSA), 26% in taxable brokerage and 1.5% in cash. Coming from humble beginnings, he has remained frugal and cautious with his finances. Despite living in a high cost of living area and being the single provider for a family of four, they've maintained a flat cost of living since 2010. “I've always kept my cost of living relatively flat from ~2010. And from that I do max out my 401k, roths, big chuck into ESPP, big chunk into HSA. Then whatever remaining goes into the cash rainy day fund that's in another bank account.”

TAKE-AWAY: The importance of disciplined saving and strategic investing. Even with a modest lifestyle, one can accumulate significant wealth by consistently investing in diverse assets like stocks, 401k, IRAs, and HSA.

In their 50s:

$2,327,966 net worth - A 58 year-old that retired in December 2017 (age 51). His net worth at retirement in Dec2017 was $1.76 million. 15 years of monthly details on NetworthShare.com starting at a $509K net worth in 2009. He has an accumulated net worth that is 87th percentile for his age group. The composition of his net worth is 43% taxable brokerage, 31% home equity, 16% retirement accounts, and 3% cash. He recently answered this question: What was your Stock vs. Bonds vs. Cash position when you retired back in 2017? “Initially it was something like 60/40. I had a number of single stocks mixed in with ETFs. I should have got rid of the single stocks well before retiring, however eventually, and after some mishaps, I went entirely into indexes about three to four years ago. I now try to keep it at 75 percent stocks, 20 percent bonds and 5 percent cash distributions from retirement plans.”

TAKE-AWAY: Consistent saving and investing over a long period of time can lead to substantial growth in net worth (see graph below that demonstrates his financial journey from age 43 to age 58).

In their 60s:

$5,300,000 net worth - a 62-year-old former military reservist and pharmaceutical representative, shares his financial journey on a podcast interview. Over the course of his career, he and his wife, also in pharmaceutical sales, accumulated a net worth of $5.3 million which is 94th percentile for their age group. They achieved this through consistent contributions to their retirement accounts, flipping houses, and maintaining a debt-free lifestyle. They prioritized financial literacy, leading to successful investment strategies and the ability to cash flow their three daughters' college educations. In this interview he highlights the importance of understanding compound interest and the power of investing early, attributing much of his financial success to these principles. “At a young age is your best time to be as aggressive as you possibly can because the power of compounding really takes a hold of itself after 10 to 15 years of continuous investing.”

TAKE-AWAY: Key takeaways include the importance of starting early, consistent investing, and leveraging time in the market rather than timing the market.