My First $1 Million: Federal Civil Servant and Analyst, 55, Hawaii

Welcome to Kiplinger's My First $1 Million series, in which we hear from people who have made $1 million. They're sharing how they did it and what they're doing with it. This time, we hear from a 55-year-old married federal civil servant and analyst who lives in Hawaii.

See our earlier profiles, including a writer in New England, a literacy interventionist in Colorado, a semiretired entrepreneur in Nashville and an events industry CEO in Northern New Jersey. (See all of the profiles here.)

Each profile features one person or couple, who will always be completely anonymous to readers, answering questions to help our readers learn from their experience.

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These features are intended to provide a window into how different people build their savings — they're not intended to provide financial advice.

THE BASICS

How did you make your first $1 million?

It grew from DRIPs (dividend reinvestment plans). Remember those?

I started in my teens, and we invested in our retirement accounts monthly since our early 20s, maxing out IRAs by our mid-20s and maxing out 401(k)s by our early 30s.

Our investments hit the magic number when we were 40, and net worth a couple years after that.

What are you doing with the money?

I'm keeping it right where it is, invested largely in low-fee index funds or dividend-reinvestment programs.

THE FUN STUFF

Did you do anything to celebrate?

I think we said cheers to our Quicken account with a beer.

Does anyone know you're a millionaire?

Just one family member, who is even better positioned. We're both a bit embarrassed by it, I think, when others haven't been as fortunate.

We were raised to pay attention to our finances, but you didn't brag about it (or complain about it if things didn't go well).

It is likely other relatives have hit this mark, but it isn't something we discuss. It is often demonstrated through generosity, sometimes through personal spending, but never talked about.

Also, I talk openly about finances with one coworker of a similar age, as we're both in the same position and face the same concerns.

What is the best part of making $1 million?

There is a sense of security. Even though the number itself is largely symbolic, that kind of basis can potentially provide an income (or future growth) that could mean nearly indefinite security.

Did your life change?

Not day-to-day, no, but we definitely have a greater sense of security.

Any plans to retire early?

With the benefit of multiple pensions, passive income streams and our more traditional investments, we will be retiring in our mid- to late-50s.

LOOKING BACK

Anything you would do differently?

I would have taken advantage of a Roth 401(k) as soon as it was available. We converted our traditional IRAs to Roth IRAs as soon as that was an option in the late '90s, but we only started investing in Roth 401(k)s instead of our traditional accounts three years ago.

We didn't appreciate the future tax burden — that when RMDs (required minimum distributions) start well into our retirement, combined with our military and government pensions, we'll have a higher taxable income than we ever did while working.

A good problem to have, some might say, but it could have been managed much better.

I would also have opened an IRA when I first wanted to when I was 16, but I was talked out of it.

Did you work with a financial adviser?

We used a fee-based financial adviser twice for sanity checks on our planning and progress when we were 10 and five years out from our projected retirements.

He was an independent adviser I met at a retirement planning seminar at work.

Kiplinger Personal Finance magazine has been my financial adviser since 1993. Before that, my dad would give me The Kiplinger Letter when he was through with it, highlighting sections he thought especially relevant to him, helping me learn what to look for and think critically about it.

James Glassman (Kiplinger and The Washington Post), Kimberly Lankford (Kiplinger), Michelle Singletary (The Washington Post) and so many more at Kiplinger ...

Did anyone help you early on?

My mom and dad always encouraged saving. From my first passbook savings account to my first mutual fund, they got me into (saving and investing) when I was 13 because I liked to read the stock prices in the newspaper right after the comics.

They were always showing just the right level of interest and support.

LOOKING AHEAD

Plans for your next $1 million?

To have it come from growth in Roth accounts!

Any advice for others trying to make their first $1 million?

Slow and steady wins the race. Let dollar-cost averaging do the work for you, manage some of the risk. Make regular investments, directly from your paycheck when possible.

Live within your means early, and as income rises (wages and investment income), try to treat it as only investment funds, not funds for increasing your standard of living at the moment.

Take a retirement planning course early in your career, then again at midcareer and again as you approach your final working years. Situations and laws change.

We were relatively lucky with our set-it-and-forget-it approach.

I think that making investing a habit very early on makes it difficult not to be successful.

Do you have an estate plan?

Yes. I learned the importance of estate planning from my parents ... and Kiplinger.

What do you wish you'd known when you first started saving?

I wish I hadn't assumed I'd be in a lower tax bracket or that tax rates would be lower in retirement. We protected a lot of income from really low taxes for a couple decades and now have to scramble to plan Roth conversions.

If you have made $1 million or more and would like to be anonymously featured in a future My First $1 Million profile, please fill out and submit this Google Form or send an email to MyFirstMillion@futurenet.com to receive the questions. We welcome all stories that add up to $1 million or more in your accounts, although we will use discretion in which stories we choose to publish, to ensure we share a diversity of experiences. We also might want to verify that you really do have $1 million. Your answers may be edited for clarity.

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