How I Saved More Than $1 Million for Retirement


$1 million retirement Save more than $1 million for retirement? Are you kidding? That goal seems so daunting.

Only 46% of workers have even tried to calculate how much money they will need to retire comfortably, according to the 2013 Employee Benefit Research Institute Retirement Confidence Survey. “Most people aren’t saving, and they aren’t saving enough,” says Ruth Helman, co-author of the EBRI survey.

A strong stock market in the past two years has helped retirement accounts, but most investors have a long way to go to reach the $1 million mark. The average 401(k) account balance is $255,000 for participants age 55 and older who have been with their current employer for 10 years, according to Fidelity Investments, one of the largest retirement plan administrators.

The National Retirement Risk Index, put out by the Center for Retirement Research, finds that 53% of U.S. households are at risk of not having enough savings to maintain their living standards in retirement. “You have to make a choice,” says Anthony Webb, a senior economist at the Center for Retirement Research. “Work a lot, lot longer or save a lot, lot more.”

But reaching $1 million is not impossible, even for ordinary investors. LearnVest spoke to three everyday millionaires who grew their nest eggs through thrift and investment savvy. We asked them how they did it and what advice they would give to investors looking to follow in their footsteps.

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Laurie Itkin, 44, La Jolla, Calif.

How Much She’s Saved: $1.1 million in a 401(k) plan, traditional and Roth IRAs, and a brokerage account.

How She Did It: I lived below my means; that’s the number-one reason I’ve been successful.

I created a $1 million portfolio by the time I was 40. I started investing in the stock market in 1993 when I was 24 years old, with $1,600 my grandmother left me. You have to learn by doing with investing. I started reading The Wall Street Journal every day, like my grandfather.

I always maxed out my 401(k). I put 60% into emerging markets and 40% into growth stocks, meaning stocks that have more volatility than the S&P 500. It was higher risk but offered potentially more returns. I didn’t spend one penny of my bonus, sending it straight to my retirement accounts.

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  • mara

    Neil, game a lot of hope. When I read the other two profiles I got afraid of being already behind because they started much younger than I did. So far I have saved for my cars and contribute to my 401K..hope to increase my contributions with salary increases (if and when they happen). I feel like I am still struggling getting things in order but I am making slow progress…One day I want to be one of those regular people that made it to retirement with 1 million+ …I hope I can :)

  • Camika Lopez

    it sounds like the main message Iwe keep hearing is ” Live below your means”. I’ve also heard your income is your most powerful wealth building tool ( Thanks D. Ramsey). I believe that with the combination of no debt, living below your means and saving a good portion of your income there should be no reason you shouldn’t have so money saved. Of course not sure what advice I would give if some unforeseen emergency wipes out your assets…but I’m sure LV will gives us that advice another day. :)

  • lskn

    I think saving for retirement is important, but so is having fun in life and making memories with the one you love while you both are still young and healthy enough to enjoy it. I balance putting money aside for the future with enjoying traveling with my husband in the now. My parents have a big pile of money and pensions because they were thrifty to the extreme, but they are too old to do much but sit around the house and don’t enjoy their retirement.

    • finishedby45 at wordpress

      My grandmother was like that. She was always so disappointed that she never got to see the pacific, never got to go to Hawaii. When she died, how much was she sitting on at the ripe old age of 91? $1.3 million. She definitely could’ve squeezed a $3,000-5,000 trip to hawaii out of that and not even noticed.

  • Joane Mcclean

    Very interesting articles. I really find it difficult as a 29 year old to live below my means. I stash money away for my 401k and I have been since my early 20′s. I make an average woman’s salary. It’s so hard to save money, when I barely have any money for anything else. One of these days! Thank you for the inspiring articles!

  • Jmezme

    This is a pretty useless article for an averge Joe. A 30 year old lobbyist making over $100k, an attorney, and a research chemist? How about a bus driver, a librarian, or a teacher? It’s easy to live below your means and save for retirement when you are making over $100k a year. How about for us $50k and below?

    • John

      Too high, try lower, like Walmart cashier, Burger King flipper, target associate

  • EricaLWalker80 .

    Great article. But hard to feel that this is realistic. All the advise is awesome. Start saving as early as you can, live below your means, research the market, etc. But all three of these people make/made significantly more than I do (currently in the 30s). What do you do when you don’t make anywhere near $100,000 a year?

    • Reggie

      Don’t give up!

    • Susannah

      Home equity is probably one of the best things you can do. Mortgages still aren’t that hard to get, and most of the time the house will go up in value, and you won’t be paying much more than rent. I think for people not making much it is a good way to build up savings. There is some risk, but it’s not too bad considering that you’re going to be paying rent if you aren’t paying a mortgage. You will have the advantage of being able to do a reverse mortgage in the future, also, if you do this. Hope social security sticks around and don’t retire until you’re 70 (do what you need to do to prepare yourself to have a job until you are that age, it is tough for sure in today’s climate).

      There aren’t any magic bullets. (And there won’t be too many articles aimed towards you since you aren’t the target market for financial advisors. Not being mean, but that is why most of these target people with incomes >100k.)

      This was a good article:

  • Downatfragglerock

    For all the people saying what about advice for an average joe, I make less than 50k a year and have a retirement fund, 5 months expenses saved and still get to travel every year. I live below my means and make extra money on the side. By the way, this all happened in the last 3 years. I got laid off twice during the recession and by the time I got a job in 2010, I had less than 1k in my account. My journey has been amazing and I’m grateful I learnt my lessons in 2008/2009.

  • Elizabeth

    It’s important to save for retirement, but like the other commenter said, it’s also important to live your life. This reminds me of Chekhov’s “Gooseberries.”

  • Nope

    So, the jist of this story is a telecom lobbyist in DC was able to save over $1 million for retirement by earning a six figure salary. How is this even remotely related to the average person, when median household income in the US is around $51K? Why are wealthy people so god damned out of touch?

    • midlifemax

      I have spoken with many people about saving and the following are things that they refused to do, which seemed like common sense to me:
      Get a roommate
      Establish an IRA, which In many cases gives you a 50% immediate return from tax savings
      Purchase basic clothing (occasionally) at thrift stores
      Get an occasional extra job and save the money
      Buy a cheap condo instead of “staying liquid.”
      Take the vacation you can afford, rather than “the one I deserve.”
      None of these things require a large income or even postponing children until you can afford it
      (which I also believe in, but don’t advocate)

  • fireforeffect

    To the nay-sayers out there – I spent many years working for wages that were under the national average, and my savings and investments today are near a million. I have the same advice as those people – live below your means, save, invest. The earlier you get the money in, the more time it has to compound. That $2000 I struggled to put in when I was making $6.50 an hour 25 years ago does a lot more for me than the $15,000 I can more easily put in today with my current earnings.

    • Johnnathan Robinson

      Kudos!… Of all the people that complain about not making enough a few simple questions: Do you pay for cable? Do you drink? Smoke? How many times do you eat out? If the answer is “Yes” any of those questions, then think again about your complaints.

      Always pay yourself first. Every check I’ve got since I started working deposits 10% of my gross salary to a retirement fund. We keep our cars for 10 years, we bought a home well below our means, asking for a 30 year mortgage but which we paid in 5 years by giving extra payments.

      My wife and I are worth 1.1 million and we have 20 more years to go before we start thinking about retirement.

      We want to save for any college our kids want to attend, And we started 529 accounts as soon as they were born, The mortgage payments we stop doing when we paid for our home went directly to their accounts. It is money we never get to see and therefore we never get to spend.

      The future is more important for us than the present. Yes… We would like a bigger house, a nicer car, better and more frequent vacations, but they are “wants”, not “needs”. I am very happy to have a wife who shares my financial goals.

  • Brenda Lin

    Good retirement savings tips! It seems the biggest retirement mistakes always involve spending more than you have. Staying fit is obviously the most important as it will keep you healthy, happy, and limit healthcare costs. I would also look at limiting driving/car costs as they are a real killer in this country. You are probably spending way too much on auto insurance, first off…I would look to spend no more than $25 on car insurance (check 4AutoInsuranceQuote). Your gas/fuel costs are probably thru the roof too. For that, check out the GasBuddy app. It usually helps me fill up my gas tank for less than $20. The elderly aren’t usually as high-tech as young people, so chances are they don’t know about these services.