My First $1 Million: Risk Management Consultant, 55, Marlborough, Mass.

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 get some amazing details from a single 55-year-old risk management consultant in Marlborough, Mass. He's originally from Butler County, Ohio.

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.)

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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.

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?

My story is proof that one can recover from financial mistakes and that anyone with discipline can become a millionaire. I did not hit any home runs but was consistent.

I made poor financial decisions in my 20s, spent a few years recovering from them, bought a house at 32, made good decisions in my 30s, followed by great financial decisions in my 40s, and now in my 50s, I don't have to worry about saving for retirement.

Starting late means one needs to contribute more money to offset the shorter timeframe. I contributed the 401(k) max for nine years, which made a huge difference.

When you start, the bulk of the money is what you contribute. A 20% gain on $50,000 is $10,000. However, the same 20% gain on $500,000 is $100,000, and my account has seen multiple years of 20% gains.

Aside from a few quarterly gaps, I have a record of my 25-year investing history so I know exactly what happened and when. I have six retirement accounts and four HSAs (health savings accounts), so it is a little hard to generalize, but I made my money by consistently investing for the long term.

Another strategy was that whenever I refinanced my mortgage as a result of a lower interest rate, I kept paying the same amount. This allowed me to pay off what was originally a 30-year loan in 20 years.

Historically, I check the performance of the funds when I do my taxes in February and make any changes. My main 401(k) contributions total $263,000 on an account that reached $1.2 million.

As of now, my retirement accounts total about $1.4 million with another $50,000 in HSAs, which are invested to pay for long-term medical needs as I fund medical expenses with my current income. I also have another $160,000 in after-tax investment accounts.

What are you doing with the money?

Continuing to invest while trying to hedge against downside risk. My total 401(k) return for the first decade was under 22%, or 2% per year. This second decade was very different at 246%, or 12% per year.

While I still have 15 more years until I will tap retirement funds, I want to see them continue to grow.

My current retirement savings are Roth, as I am concerned about future tax bills, and (my contributions) are just enough to receive the employer match, as one should take that free money.

With my house paid off, I have the luxury of paying for my wants in cash, including doing home upgrades. I will be purchasing a retirement condo, likely in cash, over the next five years.

THE FUN STUFF

Did you do anything to celebrate?

The first time I realized I was a millionaire was on New Year's Day 2022. In reality, with my other investments and home equity, I made it years before. However, it was a great feeling to see $1 million in an account.

To celebrate, I told one person, but that was it. Holding a $600,000 rollover check this year (just knowing I had enough to get that check, even though I wasn't cashing it) was a tremendous feeling as well.

What is the best part of making $1 million?

There are several things. Never needing to make another retirement contribution. Changing my outlook on life. Being able to purchase my wants in cash. Paying people to do work that I do not have the expertise, desire or time to do — grocery shopping is an example.

Live Nation loves me; I buy premium, including floor and first-row seats. If the cheapest ticket is $200 and a great seat is $400, I'm getting the great seat.

I pay for airline seat upgrades; if the cost is less than $50 per hour, I am buying it. I have flown first class six times over the past two years while being reimbursed for only coach. Comfort is important; I am worth it.

Did your life change?

Yes, and yet, no. No in that I am still working, even though I do not need to work. I really like my consulting job, work from home so I have no commute, like my clients and like and respect my boss while earning a very good salary.

I will continue to work as long as things are good, since working enhances my financial position (salary and health insurance), which allows me to purchase my wants in cash.

Any need is purchased immediately. Any want is evaluated using payback periods, opportunity costs and the one-paycheck rule — if something costs less than one net paycheck, then I buy it.

Clearly, I can't spend my paycheck every day but realistically have no issue. At the same time, I could stop working tomorrow and be just fine for the rest of my life if something changed.

Numerous people over the past few years have commented that there is something different about me, which they follow up by stating, "You don't need to work, do you?"

I don't, which has completely changed my attitude and outlook on life.

Does anyone know you're a millionaire?

Yes, some people know, possibly more than 20, especially when including business relationships. I don't talk about it, but things like having to fill out an accredited investor form for private stock at my employer expanded the circle. Significantly more people know I could stop working today and be just fine for the rest of my life.

Quite a few know I own artwork by masters like Dalí, Goya, Renoir and Miró, but they probably don't understand the cost of those pieces. Only a handful know my true picture, which is a net worth north of $2.3 million with the only debt being short term at a rate of 0%.

I don't advertise my wealth or bring it up, since most people have significantly less.

Any plans to retire early?

No, but when I separated from my employer of 23 years in January 2018, I took stock of my financial position and realized I had the luxury of time to figure out what I wanted. I was in Florida, speaking with a retiree that spring, and his advice really helped.

He told my brother and me stories about his life and had some great insights. My brother left the room to go the bathroom, and he asked me a pointed question because he could tell I was nervous.

I wasn't sure what I wanted to do and had calculated I had about 18 months of ready funds to sustain me. He told me I would figure it out and said I actually had a lot more time. If I had enough for 18 months at my current monthly burn rate, then once I slashed spending, I could go a lot longer.

I simply needed to figure out what I was willing to give up to extend the time. I asked him what if that was not the case. He laughed and said that then I was screwed, which he quickly followed up by saying, "But I'm not wrong."

He was correct. I made the hard choices, slashed my spending over time to about $2,000 per month and lasted over four years before being approached by a headhunter with what ended up being a dream job.

Did your time off teach you anything about what to expect in retirement?

Having stepped away for four years, I have a pretty good idea of what to expect the second time around. The days run together when one is not working, and it can affect one's identity.

It is important to understand how you will spend your time (which could be volunteer activities or hobbies) and develop some structure in your life. It is also key to understand your (financial) burn rate and whether it is sustainable over time.

LOOKING BACK

Anything you would do differently?

There are a few things. The biggest (is I would have joined) my employer's pension plan in 1995. The company was British-owned, so the pension scheme was U.K.-based, the returns were terrible, and one had to stay there five years to get anything aside from contributions.

At the time, I had a spending problem, was not sure if the industry was for me and thus did not join. In 1998, my employer was acquired by a U.S. Fortune 200 company. When the deal was announced, I could not join the plan. Upon closing, I lost pension service time since I was not a participant.

I ended up staying 23 total years at the firm, finishing as a senior vice president. I tried unsuccessfully for years to negotiate a buyback of service time, but that initial choice cost me thousands.

Another is (I would have trusted) my instincts on certain stocks. I predicted both ImClone's problems and AIG's a year before either occurred. While short sales are very risky with the potential for unlimited losses, I could have made serious money on both.

Luckily, my motto is "live life with few regrets," so I don't dwell on what might have been.

What advice would you give to your younger self?

I got my first real office job in 1994 and was making about $30,000. I promptly went out and bought a new $30,000 sports car because that's what people do. The car was beautiful, fun to drive, and I could barely afford the payment, so I was car-poor. I had credit card debt, student loans and was not saving.

It took me a little over three years to realize I was on the road to a bad financial place since my net worth was negative.

Do not let other people define what success means for you. If everyone else is doing something, do the opposite. Live below your means, and in time, you will be far ahead and thus able to enjoy the fruits of your labor.

Did you read any financial books that helped you on your journey?

Only my financial textbooks in college. However, I have spent 30 years reading financial columns, including Charlie Munger's advice, though I was relaying the $100,000 adage at least five years before I read that Charlie gave out the same advice.

Did you work with a financial adviser?

Only when my net worth exceeded $2 million. I have a master's degree in international finance (though I do not work in that field), so I did not feel the need.

I designed a diversified portfolio in my 401(k), which performed well, and I, in fact, advised colleagues on the better choices that were available. I avoided financial advisers because I saw no need to pay them 1% of my account balance while ignoring their main suggestion, which was to reduce risk by lowering the percentage of my employer's stock in the 401(k) account.

I was taking more risk but expected it to pay off in the long run, which it did as the company outperformed the markets for almost 20 years.

I came to a different decision about a financial adviser earlier this year after a cold call, which led to a series of meetings. Even on the day I pivoted by deciding to hire them, I woke up wondering what (advice, product, service, etc.) they would provide that I couldn't do myself and would find valuable.

That afternoon, Equitable told me about a hybrid approach where two separate non-Equitable fund managers would direct 50% of my account, thus providing downside protection while historically capturing most gains. The other 50% would be in a series of index funds that also had downside protection.

The account management fee would only be charged against the managed account and not on index funds.

I moved about 50% ($600,000) of the main 401(k) to them. I liked the idea of being able to compare the performance of the two.

This also reduced my exposure to the former employer stock from about 25% of my net worth to about 10%.

Did anyone help you early on?

Yes, there were two people. The first was a 65-year-old mentor who told me, "Regardless of the direction your life takes, you will always be sorry. If you get married, you will wonder if it would have been better to stay single or vice versa. The lesson is don't second-guess your choices. Things happen for a reason when we don't understand them. Move on and don't be consumed by regret."

The second happened in 1998 when four of my friends bought their first houses and told me I should as well. I had a good job with a decent income (around $50,000) but knew my financial picture was not great.

I spoke with a mortgage broker, and his response was eye-opening. He told me I had a good income with a big spending problem and would not qualify for a mortgage. He reinforced what I already knew, and his honesty changed my life.

Just as I spent years getting into the hole, it took me years to dig out. I sold the car I couldn't afford, leased something much cheaper and paid off all my debt over time.

I then started saving for a house and had enough of a down payment to purchase my first home in October 2002 when I was making about $60,000.

What are some of the best investing decisions you've ever made?

The first is rolling over half my 401(k) to Equitable on March 30, thus being in cash when the Trump tariff panic hit. I executed the change on March 30 because I was concerned about volatility due to the tariffs that week.

The half that was not rolled over dropped $57,000 during those few days. The other half was in cash and was reinvested on April 8, just in time for the rebound on April 9, when it went up $45,000.

While the rollover made sense for long-term reasons, the timing resulted in a swing of over $100,000.

Since then, the 401(k) has recovered to be down only $13,000, while Equitable is up $140,000.

I will never have better timing.

The second (best investing decision) was during the bear market of 2007-2009 at the height of the financial panic when everyone was running for cover.

I knew I had 27 more years of growth and that I had no idea when the bottom would come. Using the idea of doing the opposite of everyone else, I increased my 401(k) contributions in 2007 and 2008 but was still a few thousand short of the max.

Q4 of 2008 was particularly ugly as my account lost 27%. I responded by increasing to the max of $16,500.

Q1 2009 dropped another 11%, but I did not blink. I contributed the annual max for the next nine years.

During 2010 through 2012, I had multiple coworkers approach me to say they were thinking of getting back into the market and wanted my opinion, which was, "Wow, you waited this long?"

By then, my balance was up $150,000 with about half being contributions and the rest gains. When I separated from my employer in 2018, my balance had grown to $580,000 with total contributions of only $263,000.

With about two decades before I would need to tap the account and average returns, it was unlikely I would need to contribute additional funds for retirement.

LOOKING AHEAD

Plans for your next $1 million?

Presuming you mean getting from $1 million to $2 million, then this already happened. With 15 more years before I will access any retirement accounts, I suspect I will end up with a net worth somewhere between $4 million and $5 million by age 70.

I am using the Equitable accounts to capture upside while protecting against downside.

Once I decide to stop working, and presuming the option still exists, I will do backdoor Roth conversions to reduce future RMDs (required minimum distributions).

I will also look at a net unrealized appreciation for the balance of my former employer's stock.

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

This is very simple, as I have been telling younger coworkers for over 15 years that the key is to get the first $100,000 by age 34. Do whatever it takes, including living at home (with your parents).

While a Roth can be useful, it is better to have $100,000 in a 401(k) than $80,000 in a Roth. That first $100,000, as Charlie Munger said, is the most difficult but most important.

With average returns (which admittedly does not always happen) in the stock market, money should double every 10 years as indicated by the rule of 72. $100,000 at 34 is $200,000 at 44, $400,000 at 54 and $800,000 at 64.

If one doesn't touch the money until age 69, a person doesn't even need to make additional contributions after 34 to end up with $1 million.

If one reaches $100,000 before age 34, they are ahead; if after, they are behind.

However, being behind can be overcome — because I did it, though it requires discipline, good decisions and some luck.

Don't listen to any "expert" who says a person can save 5% of salary and have a good retirement. While it varies based on when one starts, the true number is between 15% and 20%, including any employer match.

I was north of 25% for years without considering my mortgage.

Do you have an estate plan?

Yes, though it needs some tweaks. As a single person who never had children, it is both more simple and more difficult. Only one person gets a vote, but I need to handle everything.

I have about $430,000 in long-term care insurance, though I will pay the premium until either I need it or reach age 100. In the event I never use it, the premium will outweigh the benefit by about $35,000.

Of course, that means I never needed it, thus having my health, which is priceless.

I also buy accident and critical illness insurance for the same reason.

I am still considering a trust for my real estate. My will endows three scholarships (at my high school right now) and leaves 10% of my estate to charity, as I want to leave a legacy.

The remaining 90% will go to my three siblings or their children.

Given my financial position and wants, I doubt I will spend my money and expect to leave at least $1 million with no debt other than what was incurred in the last month of my life.

What do you wish you'd known …

When you first started saving? I don't have too many deep thoughts here because if you are only saving and not investing, then you will never be financially secure. However, it is important to have a three- to six-month emergency fund in cash.

When I first bought my house, I had very little at the end of the month. This meant I had to use credit cards again when an emergency happened. It took two years before I built up a reserve again.

Before I bought, a colleague told me buying the first house is like grabbing the bottom rung of a ladder over a pit and hanging on for dear life. Over time, you climb a little higher (with salary increases), and your position is much more secure.

When you first started investing? How to properly recognize the impact of new business models. Colleagues asked me in 2005 about buying Google post-IPO; I told them I wasn't sure how they would make money and was not buying the stock. Clearly wrong.

When you first started working with a financial professional? Since I first engaged one after investing for 25 years and have been with one for only a few months, I don't have great insight.

I checked them out at FINRA and evaluated multiple advisers for some time before engaging one.

I liked the fact that Equitable used a consultative approach, was looking at products from others and only charged a fee on actively managed portions while offering advice on everything.

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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