My First $1 Million: Retired Airline Pilot, 63, Atlanta
"Getting wealthy has one tried-and-true formula: Invest in broad stock index mutual funds and ETFs and hold them for the long term."
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 63-year-old single and retired airline pilot. He lives in Atlanta.
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.
To hear more about My First $1 Million, you can check out this podcast with bestselling author and tax attorney Toby Mathis:
The Basics
How did you make your first $1 million?
I saved 20% to 30% of my income, using traditional 401(k), traditional IRA and, later, Roth IRA (when I qualified) retirement accounts, as well as a personal investment account, and invested in the Vanguard Total Stock Market Index Fund.
It took 15 years to accumulate my first $1 million.
What are you doing with the money?
I kept the first million in the Vanguard Total Stock Market Index Fund. As I continued to save, I saw the need for more portfolio-generated income to live off of.
I wanted income with a high probability of lasting forever and with income increases exceeding inflation.
So, I added the ETFs VYM and, later, SCHD for income. I also added QQQM for potentially more long-term growth.
The Fun Stuff
Did you do anything to celebrate?
No.
What is the best part of making $1 million?
I can afford to get my car repaired if it breaks down, medical procedures should I need them and legal representation should I be accused of a crime.
But most of all, I can do what I want to do instead of what a boss tells me to do.
Did your life change?
It showed me that hard work and commitment do pay off.
Does anyone know you're a millionaire?
I only told my dad. I don't tell others because I don't want to be treated differently, and people who have made poor choices were already constantly asking for money and making snide remarks simply because I was in what many think of as a high-paying job as an airline pilot.
Did you retire early?
Yes, I retired early, as my investment portfolio is currently around $10 million.
The 3.8% Medicare surcharge tax on investment income, the IRMAA Medicare surcharges for high earners, the new age-65 tax deduction with income limits and some politicians wanting to eliminate Social Security benefits for high earners have disincentivized me to work.
Looking Back
Anything you would do differently?
Skip owning the individual stocks I owned early on in my investing career. I would also branch out into ETFs earlier, as they offer more index choices to invest in at even lower costs than mutual funds.
What advice would you give to your younger self?
That the daily, monthly and even yearly ups and downs of the stock market are not really a risk at all when you are consistently buying shares with an infinite time horizon and no plans to ever sell a single share of a mutual fund or ETF.
One day, you will simply stop reinvesting the dividends into more shares and have the quarterly dividends paid into your money market account.
Then, you have your money market account make automatic transfers to your checking account on the first of every month as your income for life.
Did you read any books that helped you on your journey?
The Intelligent Investor (by Benjamin Graham) and One Up on Wall Street (by Peter Lynch).
Did you work with a financial adviser?
No. I found that financial advisers just wanted to put me in more stable investments with lower returns and wanted to charge me for what I could do for free.
Did anyone help you early on?
No. I was always interested in investing and wanted to talk about investing with people to try to educate myself. But the topic always seemed to go nowhere in conversations.
Others were either uninterested in the subject, or possibly they were afraid that in discussing it, they would expose how little they knew about investing.
Looking Ahead
Plans for your next $1 million?
Invest it as I did the prior millions.
Any advice for others trying to make their first $1 million?
Most people will not become the CEO of a Fortune 500 company or invent something that makes them rich overnight.
The average person goes to work for eight hours, comes home and complains about their job for eight hours, goes to sleep for eight hours and then gets up the next day and repeats the same process.
If you want to become wealthy, once you get off work (for the day), your mind must go to work on how you are going to build your own wealth.
Luckily, it is simpler than you ever imagined. It may not be easy because there are sacrifices to be made. But getting wealthy has one tried-and-true formula: Invest in broad stock index mutual funds and ETFs and hold them for the long term.
Use these types of accounts and in this order:
- First, take advantage of Roth retirement accounts and Roth IRAs when available.
- Second, take advantage of traditional retirement accounts and IRAs when you cannot use a Roth account.
- Third, use a personal account for investments above the limits of or when the two previously mentioned retirement accounts are unavailable.
Do you have an estate plan?
Yes. I have a simple estate plan where my retirement accounts have named beneficiaries, and my personal accounts have pay-on-death clauses with designated beneficiaries.
I also have a will to handle items that cannot be handled by pay-on-death clauses.
What do you wish you'd known …
Before you retired? To start Roth IRA conversions earlier.
When you first started saving? That I could save more and have just as much fun.
When you first started investing? That the risk-to-reward relationship between individual stocks and mutual funds or ETFs favors the mutual funds and ETFs over the long haul.
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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