retirement

How to Stash $1 Million+ in Savings

Dane Lacey, 49, a radiologist from San Diego, has saved nearly $1.4 million for retirement in eight years by living below his means. Did you always have a goal to front-load your savings? Yes.

Dane Lacey, 49, a radiologist from San Diego, has saved nearly $1.4 million for retirement in eight years by living below his means.

Did you always have a goal to front-load your savings? Yes. I want to retire when I am still young enough to travel, hike and body surf. It was a race for me to put a large amount away so that I could enjoy it. I knew that if I got it in early, it could grow.

You've been in practice for 14 years. Why the big push for the past eight? During the tech bubble, I put every cent into Cisco and other tech stocks. Within two years, I had accumulated $300,000, while I was living on about $35,000 a year. I went on vacation and came back to find that my $300,000 was worth $10,000 because the bubble had burst. So I started over at age 41.

How did you make it happen? As a resident physician, you get paid about $26,000 a year for four years. Then when you're in practice, you start making big money. My first job paid $220,000 a year, so I had all this money coming in, but I didn't feel like I needed that much. I live in a small bungalow and drive a Chrysler PT Cruiser. I decided to live on what I was making before and just pay myself a little bit more each year. It would seem like a pay raise but still allow me to put a lot away for retirement.

In at least two of the past eight years, you contributed more than $250,000 to retirement savings. How did you do that? Until recently I worked as a navy contractor, and I was basically self-employed, so I was able to save more money in tax-deferred retirement accounts than the average employee. In addition to funding my 401(k) account, I established a traditional defined-benefit pension plan for my business, which allowed me to contribute as much as $240,000 in one year. I used any excess money to pay down my mortgage or to add to personal savings and my IRA.

How do you manage your money? I used to keep all my money with a Merrill Lynch manager, who invested it in mutual funds. The approach was diversified, but he wasn't as aggressive as I wanted to be. Three years ago, I diversified my money managers as well, and I split the money in the defined-benefit plan in half. My guy at Merrill Lynch invests in mutual funds with half of the money, and I have a guy at Schwab who invests in stocks with the other half. It has given me peace of mind that I'm not basing my future on one person's decisions or one company's philosophy.

How did you learn to be so disciplined? My parents were very good with money and taught my brothers and me to be responsible. At age 14, we were required to get a job and budget our money. We budgeted for clothing, college, and room and board (which went into a college account), and we kept 20%. My family instilled good financial sense in me -- your salary is for day-to-day expenses, and anything to play with, you work extra for. I don't borrow, except for my mortgage, and I pay my credit cards off every month.

What is your best advice for savers? Save first and pay yourself later. If you pay yourself first and then try to save, your standard of living will always adjust up to what you're making, and you're not going to have money left to put in savings. Figure out a goal and what you need to save for that, and then keep the rest.

Now that you've saved so much, what's next? Although I want to have the money to retire locked up by age 50, the savings habit is so ingrained in me that I'll probably just keep saving the way I have been and look at retiring early and getting out of the rat race. I plan on having a second career in retirement, something to get up to do every day, but without the responsibilities of being a physician. I'd be happy living a more comfortable lifestyle, although not a rich one. Still, I've always said that when I turn 50, I'll buy a doctor's car -- a BMW or a Mercedes.

Read more stories of financial success:

How to Build a $1 Million BusinessHow to Erase $70,000 in DebtHow to Pay for College on Your Own

Most Popular

4 Big Retirement Blunders (and How to Avoid Them)
retirement

4 Big Retirement Blunders (and How to Avoid Them)

It’s too bad, but financial advisers see these four mistakes all the time. Don’t fall into the same traps.
October 6, 2021
The 25 Cheapest U.S. Cities to Live In
places to live

The 25 Cheapest U.S. Cities to Live In

Take a look at our list of American cities with the lowest costs of living. Is one of the cheapest cities in the U.S. right for you?
October 13, 2021
The Best Vanguard Funds for 401(k) Retirement Savers
mutual funds

The Best Vanguard Funds for 401(k) Retirement Savers

Vanguard funds account for roughly a third of the 100 most popular 401(k) retirement products. We rank Vanguard's best actively managed funds, includi…
October 8, 2021

Recommended

How Congress Could Expand Medicare Benefits to Cover Dental, Hearing and Vision
Medicare

How Congress Could Expand Medicare Benefits to Cover Dental, Hearing and Vision

Democrats have included the proposal for the new benefits in their budget reconciliation bill. They also want to allow Medicare to negotiate lower dru…
October 21, 2021
Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
October 20, 2021
11 Costly Medicare Mistakes You Should Avoid Making
Medicare

11 Costly Medicare Mistakes You Should Avoid Making

If you don't make the right choices, you could end up with high Medicare premiums and big out-of-pocket costs.
October 20, 2021
10 Year-End Moves to Lower Your 2021 Tax Bill
taxes

10 Year-End Moves to Lower Your 2021 Tax Bill

What you do between now and the end of the year can have a significant impact on how much tax you have to pay next April.
October 19, 2021