Confessions of an Average Joe: ‘I’ve Saved $60K for Retirement—on a $40K Salary’

Penny Wrenn

average retirementIn the LearnVest Personal Stories series, everyday people share the details of their money lives, discussing the individual choices they’ve made and how it’s impacted their financial journey.

People like Danny Kofke, a 38-year-old special education teacher in Georgia who says that anyone can squirrel away a $1 million nest egg for retirement—regardless of income. So we asked Kofke to divulge how he’s managed to sock away $60,000 thus far while supporting a family of four on a $41,000 annual salary.

Want to know my money secret? It’s simple: Trick yourself. Put money aside by pretending that you don’t have it in the first place.

That’s what my wife, Tracy, and I do while raising our daughters Ava, 9, and Ella, 6. And even though we live on my moderate teacher’s salary of $41,000, we’ve managed to save $250 per month since 2002, allowing us to amass about $60,000 for retirement. We’re well on our way to cashing out as millionaires by 65.

Investing in Ourselves

We’re not like those couples for whom money remains a taboo topic. We’re very open and honest about our finances. We discuss our hopes and our dreams—and then go for it.

I met Tracy, who is four years older, in 1999, when I was working as a student teacher and she was teaching first grade. Our courtship was fast: We started dating in August. We got engaged in December … and we got married in June.

We spent our first two years as newlyweds working as teachers at an international school in Poland. Any other couple might have gone into debt living abroad, but not us. Despite the fact that we were living on a combined $45,000 income, we consistently set aside $800 each month, which we used to kick-start our retirement savings, save for a down payment for a house and give my grandmother back the $10,000 we borrowed to pay for our wedding.

We’re planners. We like to set a goal and then work to accomplish it. Take our plan to live off just my teaching salary, so Tracey could be a stay-at-home mom.

RELATED: Hello, a Stay-at-Home Mom IS a Working Mom

  • JJ

    Hey Learnvest – I would LOVE to see this man’s monthly budget if he’s willing to share. I’d like to see the actual nitty gritty breakdown of what he’s doing, what his monthly output is and how this family does it.

    • Sunshinegirl

      So would I. I have about the same salary as he, and my medical insurance for my family alone costs me about $400 a month. I’d be interested to see how he manages to save that amount and what his expenses are. I suppose if we got rid of those pesky iPhones, that in itself would save $200 a month. Sigh…

      • Newgirl

        Wow you really need to shop for a new cell provider and evaluate whether everyone really needs their own phone or could do some sort of sharing

        • Sunshinegirl

          Call it being lazy, which makes it even more terrible. For me, switching to a share plan will make me lose my grandfathered unlimited plan. I begrudgingly want to let it go, but in the interest of saving, I definitely should.

          • Ian

            Consider calling your provider for a discounted plan if you do not use many minutes or see if you qualify for an employer discount. My wife and I both have iPhones; mine has grandfathered unlimited data and hers has 2GB. We each pay $5/mo for 250 texts.

            We are on an unadvertised budget voice plan, $50 for 550 minutes per month which is always enough considering in-network, weekend, and night calls. Additionally, we have a 22% employer discount ($17 off monthly) which brings the total to $121/mo after taxes and fees which seems outstanding for Verizon.

            It seems that this past month Verizon has eliminated all unshared plans; not even an option anymore on the web site. The only way I can match the price I’m paying now is to share 500MB of data between the two phones which is ludicrous.

          • Sunshinegirl

            Well that rules me out with the minutes since my 15-year old is on the plan with me. Just last month, she talked over 6000 minutes which was unbelievable. We actually could probably get a cheaper texting plan thanks to iMessage because I rarely text, and all of her friends have iPhones, so that’s a plus. I could at least check into that. Maybe if I threaten to leave, they’ll give me some incentives!!

          • ms.b214

            I guess I’m old (late 40s) but if my 6000 minutes on my cell was costing the entire family, the day that bill came in would have been the day my phone “disappeared.” Or well, my paycheck. til the end ot TIME.

          • Sunshinegirl

            Believe me, I certainly want to make her phone disappear at times!

          • Heather Harrell

            Straight talk! $45 unlimited everything, and if your iphones have sim cards you can keep them!

          • Sunshinegirl

            This, in theory, actually sounded appealing until my brother did this. The faux unlimited plan that Straight Talk advertises is non-existent, and from the research that I did on the switch, this seems to be true. Between the data caps, horrible customer service, and spotty voice service (used AT&Ts towers), he ran back to Verizon with flying arms.

          • Heather Harrell

            I’m sorry he had this bad luck, we’ve had straight talk for 7 years with no problems.

          • Elena Varela

            I too have closed out of my accounts. No cable, pay as you go phone plan. Limited eating out and taking lunch to work. I find cutting the little corners have helped alot. I guess it depends on what is important to people

          • justme

            you can get a new iphone or samsung at virigin mobile (you pay up front for the phone, but the overall cost is less than your average contract plan) cost for 4gb data+unlimted talk/text per month is $40. they use the sprint network I think. so may want to check out their coverage map to see what kind of coverage they have in your area.

      • budgetgirl

        As teachers, they probably have great (read: cheap) health insurance plans available.

  • caboodle

    This doesn’t add up. He has only saved 60k by 38, he expects to have a million by retirement, and he expects to retire in his 50s? Something has to give on 40k a year. I’m not saying he’s doing a bad job, but I don’t think his goals will line up unless his wife works full time from now until retirement instead of staying home with the kids.

    • Nuna

      I agree… I am 25 and have about half that for just one person (granted I make a little bit more and I am super aggressive (no Kids)). Perhaps they have a pension to rely on as well? 2 people for 1 million dollars to last them the next 35 years or so once they hit mid fifties sounds very risky. I would be searching out additional income through real estate properties that cash flow a decent amount.. or something. Still- they have more saved than most.

    • Joe W.

      Yes I believe the title is misleading – they mean they’ll be worth $1M, not have $1M in a retirement account. I mean, they aren’t even contributing now.

      $250 a month does not lead to $1M. 35 years at 7% would be $400kish.

    • LeeLee

      Yeah, the math is definitely off. They said that he’d cash out at $1M at 65, but that’s not going to be possible unless he severely ramps up retirement savings and his house can sell for hundreds of thousands of dollars.

    • Sarah

      It’s definitely misleading. Public school teachers have pensions, which have traditionally been very generous. (They’re becoming less generous for new teachers, but that wouldn’t affect this family.)

      It also helps that they had almost no living expenses when they were working in Poland… and on a significantly higher income than indicated in the title… especially when you factor in inflation since 2000. Kind of a big deal.

      • Sarah

        Oh, and they made over $100,000 profit from selling their home at the height of the housing boom.

        • katiclops

          And they bought a house for $90K…$90K!!! I live in a place where the average home price is $560K, and $350K for a condo…and no living costs? Extremely misleading title and article. I am saving more aggressively than they are now ($600/month for retirement, $400 emergencies $300 for student loans) and I received zero tips from this article. You would have to skip a $3 daily coffee for 100 years to make the equivalent of receiving $100K from a house sale.

    • LearnVestJacqui

      Hi all,

      Thank you for reaching out!

      To clarify, the Kofkes have invested $250 per month in various retirement accounts (a Roth IRA and a 403(b)) for the past 11 years, amassing a $60,000 nest egg. Continuing on this path, at a historical 10% return, would bring them to over $1 million by the time Danny is 65. Additionally, the Kofkes have been socking away additional money (including almost all of Tracy’s salary from the job she accepted in August) for the future, though they haven’t decided how they’ll invest it yet.

      I hope this clears up your questions!

      • Marie

        I was really skeptical of the math in the article and I feel like assuming 10% return is really, really optimistic. Even LearnVest suggests you calculate using a more realistic 7-8%:

        I applaud so much of what this family is doing but I am actually worried for them if they think they can retire in their 50s with their current rate of savings.

      • Catherine

        Yes, the 10% return rate seems very optimistic. Also, by the time they hit 65, inflation will have rendered 1 million a significantly less monumental number than it is now. Also, presumably as they approach 65 they will shift money into more stable but less lucrative investments (bonds and the like). Granted, if they continue to bank all of Tracy’s salary and get Hope scholarships for the kids, they’ll be in good shape regardless. Sounds to me like this is a family living within their means (commendable) but that LearnVest is spinning it in a way that strains credulity.

        Also, to the naysayers, saving this kind of nest egg is NOT impossible. I had a little under $60k in savings/investments by the time I was 30 and for most of my 20s was earning $20-$30k/year. It’s doable for most people, you just have to make it a priority.

        • KatMoss

          The one-year average return my husband & I are both seeing is currently 18%+ on both our company Roth 401k’s and an IRA. It appears that a 10% return can be a reality!

          • Catherine

            When you say “one year average”, do you mean the average return for this past 12 months (2012-2013)? Because the stock market has been on fire this year and that is NOT typical. Or have you been seeing that rate of return every year for the past 20 years? If so, my hat’s off to you and you’re doing great! Most long-term planning advice I have seen suggests that stocks average more like a 5-7% return after you account for inflation. Remember also that these return rates are for stocks/equities, which are typically more risky investments. As this couple gets older, they should be shifting more of their assets to safer investments (say, bonds) which have a lower rate of return (but are more secure, nice when you may need the money in the near future).

            Short version: 10% short-term returns are totally a reality, but pretending they’re going to be sustainable is unwise.

        • NicoleW4240

          Thanks for clarification, Catherine. The LearnVest title is certainly click-bait, I agree theyll be in good shape but certainly not $1M.

          I agree its doable, i saved $250/mo. on top of my 6% 401k contributions on my first job out of college (22) paying $37.5K. Ive managed to switch jobs and add-value to the companies I’ve been a part of and now, at just over 28, have $54K in 403B + Roth, ~$25K in home equity and about to invest ~$25K in a house flip.

          Even being in good shape at a young age, I lay awake at night worried. Wanting to have a kid at 35, potentially solo, i will incur more costs than the average 2-parent household due to child care. And ideally, id be able to take a few years off in the beginning.

          Ive tried to stop looking at saving from a long-scope due to the anxiety i experience striving for $2M by 67. But stories like this help reduce my anxiety, knowing i have almost as much saved as a family older than myself.


      he said that he will retire by 65. It’s in the beginning of the article…

      People just need to really cut off on a lot of other expenses, it is really possible to do what this guy did on a teacher salary — my boyfriend is a teacher himself and he’s doing it, all while buying houses to rent out ( passive income)!

      People need to get creative and YES, plan EVERY LAST PENNY spent and to be spent…

      -Maria Alexandra

  • BetseeM

    An insider couponer tip to save even more! Pay for an annual subscription ($20-30) instead of picking a paper up every Sunday ($1-3). :-)

  • guest

    they didn’t pay for rent or a car. pretty key.

    • sam_the_cat

      Yeah, I feel like that’s the case with every Money Mic person featured who manages to save a large amount on a small salary! It’s so simple — just live for free so you can save all of the money that would be going towards rent!

    • Emily

      No- they pay a mortgage instead

  • Milasmatic

    I just loved the final part! Congratulations!

  • Amber

    Thanks for sharing! Good article. It’s nice to read about people that aren’t so materialistic and realize that their are other things more important in life than what kind of car you drive.

  • Dblue

    I’m confused. If he was saving $250/month ($3000/year) for roughly 10 years, that would be about $30k in savings, not $60k. Factor in a little interest and it might be slightly
    more but not double. Am I missing something?

  • Lara

    I grew up with a lot of people who have this ‘simple life’ mentality of having a modest job, 2 kids, and an RV – but of course, this lifestyle does not appeal to everyone. For me personally, what matters are experiences and quality of life because that is how I was raised: travel, great food (home cooked or restaurant is expensive either way), quality clothing and comfort of higher-end things. The kids in this family will likely growing up with their parents’ values, which is great! I just think everyone values different things and it is difficult to say that this article is actually helpful to someone who is trying to save for retirement without knowing what kind of lifestyle they lead and wish to have.

  • Stefanie @ brokeandbeau

    Setting up automatic direct deposit from the employer into a checking and then setting up automatic deposit from there into savings and retirement accounts is crucial. As Danny says here, trick yourself. Leave only enough money in your checking as you need to cover expenses, that way you’re not tempted to overspend.

    • Christine J

      That is exactly what I do — trick myself! Get it out of there (the checking account, that is!)

  • CMA

    Kudos on this family for saving a large amount every month!!! Despite how much it actually is, the one thing they dont have which many of Americans do is a large amount of student loans. I just started paying my grad school loans. I pay about $400-600 a month, which will become close to $800-$1000 in the next five years. Combined, my partner and I have $130k in student loans. It’s very difficult to save more than the minimum for retirement when people have such large student loan debt. If I didnt have so much debt, I would definitely save all of it for retirement and a rainy day!

  • mara

    I loved this! I want to see more stories like this in Learnvest. Stories that value family, simple living, and saving without having to be in extravagant salaries.


    he said that he will retire by 65. It’s in the beginning of the article…

    People just need to really cut off a lot of other expenses (live WITHIN their means!). If you really think an unlimited plan for your 15-year-old is a necessity/NEED, you should thoroughly review your ‘priorities’ then (and parenting skills).

    It IS possible to do what this guy did on a teacher salary — my boyfriend is a teacher himself and he’s doing it, all while slowly buying houses to rent out ( passive income)!

    Also, we hired a financial adviser (just 2% fee ANNUALLY of our total portfolio to manage it very efficiently). By investing most of our $ in stocks, we protect ourselves from inflation — and protect ourselves from losing ridiculous amount of money by having a very conservative strategy as well.

    We only buy SOLID companies that have seen continual growth year by year in the past 50 years (plus ONLY those that pay dividends, which we reinvest in our portfolio).

    People need to get creative and YES, plan EVERY LAST PENNY spent and to be spent. I never go one single paycheck without revising/updating my financial spreadsheet!

    -Maria Alexandra

    • Scondor

      a 2% annual fee would be considered very inefficient by most. Find a mutual fund that invests like you do, maybe something like VEIPX, for 0.3% annual fee. Over 30+ years you will see increased earnings of over 50%! Good luck – finding the right mutual fund can be very tedious but very profitable.


    PS: also, he said millionaires: that could be anywhere from 1 million to 999 millions ;) read between the lines, people!

  • Catie

    Such a great article!

  • Gars

    From one old guy to the young people here:

    Do yourself a favor and educate yourself about retirement and investing. People laughed at me 30 years ago when I spent so much time engaged in this endeavor. I see their point. You have so little money, what difference does the rate of return really matter?

    Gaining experience with small amounts of money teaches you the same lessons as making errors with large amounts of money, but it costs you a lot less.

    When you get to managing your retirement nest egg, you’ve already lived through many market downturns and experienced many sales pitches. Hopefully you’ve figured out a sane and sound method of acquiring wealth and preserving it.

    Ain’t no magic here. Earn as much as you can. Spend as little as you can. Invest the rest.

    This does two things. It teaches you to live a reasonable lifestyle and helps you fund that lifestyle.

    Now for some hard advice.

    Read John Bogle’s book, Bogle on Mutual funds. That will teach you about investment classes.Like Vanguard.

    Look at Richard Ferri’s books on asset allocation and exchange traded funds.

    Look at books and a web site by Henry Hebeler for realistic retirement planning.

    Look at a piece of retirement planning software called Silver by Moneytree software. 30 day free trial. $250 to buy if you call them and ask for a personal license.

    And the grand daddy of them all: If it sounds too good to be true……. run.

  • smbirch

    Awesome story! I particularly love the idea of banking one spouse’s salary, and living on less. I’m also glad you brought out that you do have some “fun money” that you use to enjoy with your family.

  • justmyopinion

    With two parents in the household and one able to stay-at-home–even if it’s only until the young ones are old enough to go to the local elementary school–you have an absolutely huge savings. And with school teacher who do not work during the summer months…that’s another incredible savings. Even though the dad works part-time in the summer his wife (also a teacher) apparently does not. You can’t realistically compare this family to others where at least one parent does not have summers off from work or with single-parent headed households where there is not a very high salary available. Kudos for their savings abilities but for many families childcare is not an option, and the costs of childcare and summer camp in this country are astronomical.

    • Demi Leathers

      Thank you!

  • Demi Leathers

    It is very easy to save that type of money when you do not have the bills/debt that most Americans have. Most Americans are not going to live abroad and have grandparents that will or have the means to loan you 10′s of thousands of dollars at a time. I am a single parent of 3, minimum financial assistance, set to graduate in the spring of 2015 with a Business degree in Accounting, car note, rent, gas, electric, water, phone bill, health/dental insurance for myself and my kids totaling more than $300 per month, and have a retirement plan that comes out of my check. etc making barely $32,000 annually yet that’s what my employer says I make with benefits and so forth…let me see his budget and then he can talk to me…other than that I am rooting for him and his family because for most its difficult to save ANYTHING!

  • Gars

    Check out

    Good solid advice.

  • Mina Smith

    I make $41,000 a year. Between my rent, my student loans, medical bills, utilities, health insurance, my cell phone (which is about 70$ a month), my internet (which I am required to have at home for BOTH my jobs), my car payment (which is $100 a month, as low as you can get), and my one credit card that has nothing but emergency car repair costs on it, I have less than $800 month left over total. This article is complete nonsense. After my bills, which includes nothing extraneous, no magazines, subscriptions, TV, or anything except for Netflix ($9 a month) and my gym membership maybe ($25 a month) and after tolls, gas, and saving a measly $50 a month, I have $300 a month left for food, clothing, emergencies, visiting family, and entertainment. Which is usually not enough to even buy clothes at Goodwill. Which is not enough to save money for a house which would save me from the rising costs of rent. This article is still living pre-2008 and is completely and utterly inaccessible to most people my age.