Nearly 4 years ago, I submitted a post to this sub imploring people to think about the financial ramifications before touching their retirement savings. I urged people to consider the power of compounding and the wonders it can produce if allowed to work its magic. Also within that post, I mentioned that I strived to become a 401k millionaire someday, and this week, thanks to years of consistent savings and a long bull market, that goal has come to fruition, at the ripe age of 45. The following table shows my annual out of pocket contributions, and below that I will share my story.
| Year | Employee 401k contribution |
|---|---|
| 1995 | 2,800 |
| 1996 | 6,100 |
| 1997 | 8,800 |
| 1998 | 9,900 |
| 1999 | 10,000 |
| 2000 | 10,500 |
| 2001 | 10,100 |
| 2002 | 10,300 |
| 2003 | 12,000 |
| 2004 | 13,000 |
| 2005 | 14,000 |
| 2006 | 15,000 |
| 2007 | 15,500 |
| 2008 | 15,500 |
| 2009 | 16,500 |
| 2010 | 16,500 |
| 2011 | 16,500 |
| 2012 | 17,000 |
| 2013 | 17,500 |
| 2014 | 17,500 |
| 2015 | 18,000 |
| 2016 | 18,000 |
| 2017 | 17,000 |
| Total | 308,000 |
First, I want to iterate that I do recognize how fortunate and privileged I am to be able to achieve this milestone. I am extremely lucky to have been born without any major disabilities or health issues, and I am very grateful to be able to participate in a society where the opportunities and resources to achieve personal successes exist. Furthermore, I believe I was lucky to have been born into extreme poverty, for it ignited a fire within me to do everything within my power to escape my circumstances. I refused to allow my situation to define me, and I focused my time & energy on the things within my influence to improve my life.
Because I grew up in poverty, I've held a job in some form or fashion since I was 10 years old. The ones I worked in my youth were tedious and low paying, but they taught me to not be afraid of hard work. They also motivated me to find better & higher paying jobs, and to that end I pursued getting my education since I lacked any special gifts or talents for earning a lot of money easily. My youth was not like that of most people I know. It was comprised entirely of school, work, and study. There was little time for leisure, and even during school breaks I would borrow books for the subsequent semester to get a jumpstart on the material. Thankfully the effort paid off, and I was able to do well enough in school to qualify for some scholarships for college. I went to the cheapest institution I could find, and when choosing a major, I decided to pursue engineering as it suited my strengths in math & science and offered careers with higher earning potential, as opposed to one that simply followed my passion (art).
Upon graduating college (with around $10k in student loans), I landed my first professional job, which paid a handsome annual salary of $28k. I continued living intentionally and aligned my actions to my values & priorities. As Dave Ramsey is known for saying, "live like no one else now, so later you can live like no one else". I was accustomed to living in poverty, so I knew how to survive on a lean budget. Achieving a financially stable and secure life was more important and rewarding to me than stuff I could accumulate or luxurious experiences I could buy, which allowed me to avoid the YOLO mentality and FOMO mindset. Also, as a Gen X-er, I started my career in an era of disappearing pensions and the advent of outsourcing/offshoring. I watched good paying, stable jobs disappear overnight, and loyal, long term employees left suddenly without the incomes and secure retirements they had come to expect. That motivated me to treat my income like lottery winnings, and maximize my savings rate to ensure that I never had to worry about relying on a job for survival or face the prospect of being in poverty again.
I wasn't the most knowledgeable investor, and didn't learn about low cost passive index funds until my late 30s. However, I was fortunate to work for a company early on in my career that explained the power of compounding and the benefits of tax advantaged savings, which encouraged me to participate in my 401k program. I knew I had a long investing time horizon, which helped me to develop a high risk tolerance and feel comfortable with putting most of my contributions into equities. I ignored short term market volatility (which many of my coworkers had trouble handling during the 2000 and 2008 recessions, to their unfortunate detriment), and as I gained work experience & skills I strategically job hopped to pursue higher income opportunities. I looked for jobs with solid 401k benefits, such as low fees and generous employer matching, so that I could continue to take advantage of that savings vehicle.
Achieving any long term goal requires consistency and discipline, and the ability to break it down and attack it one small bite at a time--while keeping an eye on the larger prize. It's no different for finances, and each of us has to decide if it's worth making some trade offs today in order to have a brighter and more abundant tomorrow. I've had some people tell me that it's important to enjoy the present, as there is no guarantee that there will be a tomorrow. However, the reality is that tomorrow will likely come for most of us, so it's prudent to plan for it.
Submitted December 20, 2017 at 01:48PM by Subject_Beef http://ift.tt/2Dgpe5Z
