Yes, You Can Retire a Millionaire — Even If You Start Small
Yes, You Can Retire a Millionaire — Even If You Start Small
If you’ve ever Googled how to retire a millionaire, you’ve probably seen lofty, perhaps unrealistic, advice: max out 401(k)s, invest thousands of dollars each month and buy a series of rental properties. Then spend days in the Riviera managing it all in just an hour each week. It certainly sounds good, but it’s not really a viable plan for most (and many make their money selling you seminars on their junk, not their actual investments).
At The Prudent Speculator, our experience shows that the real formula for retiring wealthy is far more practical, if a bit boring: start early, save consistently, invest wisely and exercise plenty of patience.
Why Most Americans Fall Short of a Million-Dollar Retirement
According to Federal Reserve data, the average retirement account balance is $255,000, and over half of Americans don’t have a retirement account at all. That’s not all due to lack of opportunity. Sometimes it’s due to a lack of time and habit.
For those wondering how to retire a millionaire without a high salary, the most powerful asset isn’t money. The most powerful asset is time.
How to Retire a Millionaire — Even on Modest Contributions
Here’s the math that changes the game:
$250/month invested over 40 years = $1.0M (at 8.4%)
$250/month for 20 years = ~$200,000
One could even stop putting in money towards the end of the time series and still end up with $1 million (a $250 contribution in Year 39 is worth $271 in Year 40. $250 in Year 1 is worth $6,297 in Year 40). In many cases, saving less money for longer is better than saving huge amounts in later life stages.
This material is intended for educational purposes only and is provided solely on the basis that it will not constitute investment advice.
Waiting just 10 years could cost you half your future wealth
Whether you’re starting with $25 or $500, the biggest factor is when, not how much. That’s the heart of how to retire a millionaire on a any budget.
Leverage Employer Retirement Plans — They’re Free Money
Many employers match contributions to 401(k), 403(b), or 457 plans. That’s not just a perk — it’s a guaranteed return.
A 3% match on a $35,000 salary = $1,050/year in free money. Add your own 3% and you’re doubling every dollar saved. Over time, that employer match can add tends of thousands to your retirement fund including investment growth.
If you’re serious about how to retire a millionaire, taking full advantage of matching contributions is a must.
This material is intended for educational purposes only and is provided solely on the basis that it will not constitute investment advice.
Automate and Start Early: The Latte Rule Actually Works
Don’t dismiss the classic “skip your latte” advice just yet: redirecting $20/month from small habits turns into $72,210 in 40 years.
Starting at age 25 means investing just $3,467 per year.
Waiting until age 55? You’d need $67,729 per year to catch up.
The lesson? Compounding is cruel to procrastinators and generous to the early birds.
This material is intended for educational purposes only and is provided solely on the basis that it will not constitute investment advice.
Stocks > Bonds (Over the Long Run)
For those with decades until retirement, equities remain unmatched in building long-term wealth:
According to data from Professors Eugene Fama and Kenneth French, Value stocks have returned 13.0%, Small Caps 11.7% since 1927.
Bonds and T-bills lag far behind, returning 3% to 5% annually.
Historical data shows 100% of 12-year equity holding periods were profitable since 1926.
So if you’re figuring out how to retire a millionaire through investing, equities should be at the core of your strategy.
5 Simple Steps to Retire a Millionaire
1) Start as early as possible. Time is the strongest lever.
2) Invest consistently. Small amounts add up.
3) Max out employer matches. Never skip free money.
4) Stay invested in equities. Let compounding do the work.
5) Don’t panic in downturns. Be patient, not perfect.
Conclusion: Patience Pays More Than Perfection
Charlie Munger once said the first $100,000 is the hardest. He was right. The biggest challenge in retiring a millionaire isn’t the money, it’s the mindset.
At The Prudent Speculator, we’ve seen firsthand how disciplined, Value-focused investing builds real wealth over time.
If you’ve ever wondered how to retire a millionaire without a high income, know this: You don’t need to beat the market. You just need to be in it (and stay in it!).
Want a personalized plan for your million-dollar retirement?
Our team can help you. Contact Jason R. Clark, CFA at jclark@kovitz.com to start building your future today.
Important information
Figure 1: Contributions take place on a monthly basis. The portfolio s comprised of 50% Russell 3000 TR index, 20% MSCI AC World ex U.S. USD NR index, 10% Bloomberg Global Aggregate TR index, 10% Dow Jones U.S. Real Estate TR index, 10% S&P GSCI TR index. The
annualized return of the portfolio was 8.4% between 12.31.1991 and 08.31.2023, which is used as the return for the retirement portfolio. One cannot invest directly in an index. SOURCE: Kovitz using data from Bloomberg Finance L.P.
Figure 2: 40 years of investment growth assuming an 8.4% per annum return. Contribution values vary and are based on salary growth of 3%. Source: Kovitz using data from Bloomberg Finance L.P.
Figure 3: Annual contributions required to reach $1 million in savings by 65 years old, grouped by age. Assumed annual rate of return is 8.4%. Source: Kovitz using data from Bloomberg Finance L.P.
