I’m going to start this post (part of a series of posts about retirement milestones), with the assumption that most early retirees in the developed world will reach millionaire status as a matter of course in achieving financial independence. I know the FIRE community is filled with a good number of frugal-living devotees, but I think building toward a $1 million dollar net worth would represent most folks’ planning for 30-40 year retirement (live on $40K/year).
That being my assumption, I think getting into the millionaire ring is still a very significant milestone. According to the Global Rich List, a million dollars in net worth puts you in the world’s top 0.56% of individuals. The kind that makes you think you are in some exclusive club with the Rockefellers, Vanderbilts, JP Morgan, and Howard Hughes. You’re not, of course – those people made their millions when being a millionaire meant a lot more (they would be billionaires today), but still you get to carry the same title and pretend you will see them at their place in Newport next summer.
For us, the millionaire milestone came the year we turned 40. I was a pretty avid tracker of net worth by that point, so when the number hit six-digits, I knew it. It didn’t seem like we had moved onto easy street, since most of that wealth was illiquid in our 401k savings or tied up in our house (with a significant mortgage). All the same, I marked down the date and we celebrated by going to dinner with my parents at a very nice restaurant and picking up the bill. It was a moment worth commemorating and I’m happy we did.
Even in today’s post-gold standard inflationary world, being a millionaire seems to be something special. I authored a post earlier this week about the sources of wealth that make people millionaires, and I would highly recommend the book The Millionaire Next Door, which gives a lot of insight into the relatively ‘ordinary’ lifestyles of millionaires.
For early retirement, more important than $1 million in total net worth is $1 million in invested assets (less your mortgage). This is your nest egg for the future – assuming that you aren’t going to sell your house and live in a cardboard box. It probably took us another two years to reach this number, although our financials grew pretty quickly. While more ultimately more important, I couldn’t recollect now exactly when we got to $1 million in invested assets, but that is clearly the basis for our goal of FIRE (financially independent & retired early) before 50.
Fortunately, our success has continued (and without getting into specifics), more financial milestones followed. They came quicker and were usually carried in by the winds of a strong stock market, paying off our house, increasingly aggressive savings rates, and steady promotions at work. I think it’s fun to track financial milestones, and when times are good, and I still enjoy updating our numbers to see if we’ve cleared another goal. It has also humbled me to see how blessed we are and encouraged us to build our charitable “One More Year Fund“.
How do you track & commemorate your financial milestones, like reaching millionaire status?
Image Credit: Pixabay; Marble House, Newport RI