
Today’s entry into the canon of Cubert is a sequel of sorts.
The write-up a few weeks back was premised largely on how I squandered my 20s and early 30s, yet somehow managed to get into a position for early retirement. Wondering how to make a million dollars in 10 years, and maybe even retire early?
Here, today, we’ll generalize things a bit, and describe the math and process behind the Million Dollar Decade.
The setup goes like this. A couple starts at 30 years old each. They’re sitting at negative $100,000 in net worth, thanks to years of simply trying to get by, while saddled with student loans.
Sure, there were maybe some dubious purchases, like a new car or two. Maybe a few trips to Cancun or Bali. But this situation is fairly common and one that just about all of us can relate to.
To make things somewhat more challenging, our couple brought two adorable children into the world, right before mom and dad turned 30. Kids can certainly impact the budget. But as we’ve seen before, there are ways to mitigate the costs while reaping all the rewards of parenthood.
Making a Million Dollars Requires Intentional Saving
Right off the bat, we’ll assume our lovely couple is making $60,000 each, per year. They were cagey enough to ask their parents if they could use their wedding money for a down payment on a house, instead of an extravagant magazine-cover ball.
With $20,000 of their joint savings, plus gifts, they put a down payment on a cozy rambler with two bedrooms and one bathroom. For now, this 800-finished square-foot dwelling is more than enough.
They’ve made some key changes already, canceling a few credit cards and agreeing to pay off the balance each month with the cards they have left. They hang onto their Citi Costco Visa, of course!
Our fine couple gets serious about retirement savings and they each decide to contribute 10% of their pre-tax paychecks into their company-sponsored plan. The plan is okay, offering a match of 100% for the first 3% contributed. After their first year, joint 401K assets stand at $15,600. We’re going to assume the average retirement plan administrative fees of 1%.
Raises and Promotions Accelerate Wealth Building
The first four years are challenging for our couple. They’ve managed to save on childcare by living close to home. Both sets of grandparents can help out when mom goes back to work after two separate maternity leaves.
Still, their respective companies aren’t doing that well, and there are no raises or promotions to be had. Nevertheless, they’re diligently socking away 10% of their pay into their 401Ks.
After these four years, their 401Ks stand at $87,939. This is assuming a 7% return, adjusted for 2% inflation and 1% administrative fees. Not bad. And also during this time, they’ve managed to chip away at their 5% interest student loans.
They’re only able to make the minimum payments, but they’re down to $87,986 remaining. All of a sudden, their net worth is $(47), not factoring in home equity.
Persistence and hard work pay off for Mrs. Case Study. A promotion ratchets her pay by up to $75,000 per year. Mr. Case Study also had a good year and gets an unexpected 5% raise. The company is finally doing better and able to reward its employees. From year 5 through year 10, both can achieve a modest cost of living raise of 2%.
Here’s the punchline
Thanks to habits that allow this family to live on $40,000 per year, our couple can squirrel away significant income during these ten years. Most of the rest of us would be out playing House Hunters and complaining about kitchens without islands, or single-car garages. And arguing over whether to take annual ski trips to Colorado or Wyoming.
401K Savings at year 4: $87,939
401K Savings at year 10: $429,012
(Dirty little secret: They’ve also been socking away pre-tax dollars into a health savings account)
H.S.A. Investment Savings at year 10: $73,918

Get Rich By Living Below Your Means
Remember, their student loan balance in year 4 was $87,986. By year 10, the amount remaining was $51,226. Our fine couple took the time to refinance their outstanding balance down to 2%, knocking the total interest paid down to $21,242. Much improved over the $58,389 they’d have shelled out otherwise, at 5%.
There’s also a house in the mix. At year 0, the home was appraised at $150,000. Over ten years, with a housing recovery in effect (dare I say “bubble”?) the humble rambler is worth $200,000.
By this time, our handy couple and their handy father-in-law had worked hard to incrementally finish that basement. That effort alone added $20,000 in value.
By year ten, the amount owed on the mortgage is $99,872. During that same stretch, they’ve managed to build roughly $100,000 in home equity.
Net worth at year 4: $71,797 (including home equity)
Preliminary Net worth at year 10: $602,930!
What’s amazing about a family that lives below its means? They get to rock the sh*t out of life, that’s what! This couple was able to avoid playing up to their raises. Year after year, they socked away as much of their pre-tax income as they could, while living comfortably off $40,000 per year in living expenses.
Oh yeah, that basement finishing project… We can safely bump up their annual expenses for a couple of those years to $50,000, to account for the $20,000 invested in that work.
Vacations? Typically this family likes to go on road trips. But every other year, they splurge a bit. $5,000 goes towards a fancy visit to Florida or Cancun or Banff, depending on whose turn it is to pick the destination. So, every other year their annual expenses surge from $40,000 to $45,000.
When it’s all said and done, this power couple has been able to save EVEN MORE year over year, to the tune of about $36,000 EVERY SINGLE YEAR. Wonder where that money goes?
The Roth IRA, of course. At $11,000 socked away each year, the ten-year value comes out to a whopping $162,619. Gravy. We’ll just ladle some of that right on top of our net worth of mashed potatoes… Are you doing the Million Dollar Decade Dance yet?
Almost Net Worth at year 10 (plus Roth IRA): $765,549!
How to Save When Big Expenses Come Up
There’s always a big expense that comes along that puts a dent in our plans. It could be a health scare or even a tragedy. Life deals us with many challenges, and this post assumes a fairly storm-free path.
Big expenses happen no matter what. It could be mundane maintenance things like you need a new roof. Maybe your trusty Honda Accord finally crapped out at 250,000 miles (from road trip vacations, not crazy-ass commutes.)
We’ll make a few modest assumptions and add $5,000 on top of the $40,000 baseline, as a “random expense for a roof replacement” in year five. I’ll also add a new (used) car cost of $5,000 in year 9. Maybe you need a tree in the front yard removed, and a crane has to be called in? $3,000 in year 3.
Most years, the family can absorb maintenance and miscellaneous expenses with an annual $2,000 home and garden budget. But not all years are equal, speaking from personal experience…
Even then, we have $24,000 in net income after all the pre-tax investments, household expenses, and taxes. Man. What will we do with all THAT money??? We’re going to keep it simple, of course! Let’s put those dollars to work in a post-tax, low-fee S&P500 index fund:
After 10 years, the $24K post-tax account grows to $354,806. (Love it when administrative fees are .005% vs. 1%!)
Let’s maybe use some of that money to pay off the balance of our student loan, shall we? ($54,271)
Net Worth at year 10: $1,066,079
That, friends, is a million dollars. Boo-yah. Make it rain. Jack Bogle style.
Is a Million Dollars Enough to Retire?
The common wisdom is that you need 25x your annual spending to pull off this “magic” trick. In this instance, we’re talking exactly $1,000,000 (25 x $40,000.) Using the oft-cited “4% withdrawal rule”, you can safely pull 4% of that million year-over-year and never put a dent in your capital.
“But wait a minute, Cubert! They only have $354,806 of accessible cash to make it through their 40s and 50s. You’re $645,195 SHORT.” Right! I did say “Retire With…” didn’t I? Our couple has more work to do to make their first million.
To bridge the gap from 40 to 60, this couple doesn’t need the full million. Remember, they’d already squirreled away a healthy chunk of money ($429K) into their 401Ks. This, plus their Roth IRAs, plus their HSAs will make quite the nut for their golden years, from 60 on.
Now to get from 40 to 60, the bridge could be gapped with half of that million – $500,000. Depending on how the market fares, at a reasonable 6% average return, inflation-adjusted, our couple would have to work another whopping TWO YEARS.
And even then, you’ve shaved a year off that 20-year gap, so you only need $475,000. But one of your kids is going to be asking for wedding money, right about that time, so stick with it, Charlie. Two years is nothing!
Now you know what can happen in ten years if you don’t get stupid with your money. You become a MILLIONAIRE. And throw in a couple of years more, and you might just be able to retire early too. Pretty cool if you ask me.
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Hey, our story! When we retire, even if we have a million (may not happen), half of that will be in 401(k) accounts. It doesn’t really matter if you take 4% of the total from other accounts. Provided you won’t run out of money before you can access the 401(k) without penalties…
Ha! Don’t sue!!! 😉
That’s absolutely right, BusyMom. The tail end of this post describes a bit about “funding the gap.” You may not need to set aside as much as you think, based on your age. If you’re retiring at 30, that full million makes perfect sense. If 40 or 45, maybe you just need 500K, like our imaginary couple here.
At 50 or 55, maybe you need, say, 250K? The main thing is to get friendly with your spreadsheets, or even OnTrajectory, to figure out your own glide path through those gap years.
We aren’t starting at zero (or negative) at 30, but in a much higher cost of living area (and paying for part time childcare). This is really inspiring and a good reminder on how much can happen/change in just a decade.
Hey there, Angela! Oddly my comments system marked your last two as spam. I wonder if the captcha was messed up? I’ll keep an eye on my spam folder – may need to ditch this comment tool…
I’m glad you find it inspiring. It’s kind of a companion piece to what Fritz published on Sunday. Heck, I had to rely on a magic decade to overcome many years of knucklehead finance starting after college. AND NO ONE SPAMS MY BUD ANGELA, EVER! 🙂
Great “Case Study”, showing it can, indeed, be done. Congrats on running a good race, Cubert. Only two more years to the starting line!
Hey Fritz!
I’m hoping to make it there in under 1.5 years, but I may take a full two to pay off the rest of the student loans.
I like how you call it the “starting” line — no finishing by a long shot. 🙂
Good case study! Sort of, kind of, mirrors us.
By the way, as I’m sure you and most readers know, there are ways to access your retirement funds early as the Mad Fientist has so lucidly elaborated
Hey there NWA-non!
I had the Mad Fientist’s work in the back of my mind as I was writing this piece. There certainly are ways to access 401K dollars that are totally legit, before you reach 59.5. I believe the process requires you to sign up for set distributions – may be worth a look, if you feel you’ve socked maybe *too much* into your 401K.
Too much in our 401(k) – that would be us. Our combined 401(k) accounts represents 77% of our net worth. The 72(t) Substantially Equal Periodic Payments (SEPP) would be the most obvious way forward for us.
It’s a good problem to have! Keep us posted how your 72(t) process unfolds for you. And thanks again for sharing, NWA!
Nice case study, showing it’s pretty feasibly with softly above average, but approachable incomes! My hubby and I have been fortunate enough to make those incomes and found FI by our mid twenties, so pour goal of FI by 40 feels very doable.
Thanks, Mrs. Kiwi! I wanted this couple to be relatable. In fact, I consider them an amalgam of my recent tenants.
Are you considering early retirement, once you reach FI at 40?
Entirely possible. I like the math. It reminds me of my “quit now” spreadsheet I used to maintain. Now that I’ve quit I hardly ever look at it. Tom
HAHAHA! I love it – The “Quit Now” spreadsheet. Maybe that’s what Tyson should’ve branded “OnTrajectory” as…
Love it man. Nice to see some realistic numbers and achievable outcomes! I like the case studies too. They are good for the readers and also the writers doing the research to put them together.
I’m still looking forward to your post about the potential move. My gosh, will this winter ever end? All the best buddy.
Thanks, Mr. DS! Those case studies at MMM were the main inspiration for my current path. I sometimes go back and re-read those, to relight the fire, as needed.
The potential move post is in the works – just wait, when it posts, we’ll have a glorious 60F day…
Hahahaha of course!
I used to read tons of case studies on the MMM forums, need to go and check a few out again, it’s been a while. Even though I’m already FI they’re great for inspiration and to consider how to help others.
Great post!
Thanks, man! I’ve got my forum icon sitting idle on the Chrome toolbar. Likewise – need to get back to my roots!
that’s almost exactly the story of the smidlap house. burned up the 20’s and half of the 30’s and got semi-serious and 12 years later, wham! done. i’m still working to pad the gap a little more and i like kinda pricey wine so the work is funding that.
Darn that pricey wine!!! Go with the Bota-Box. It tastes like crap, but after the first glass, who cares?!?
Glad to see your experience mirrors mine in large part – so yes, it can be done (recovery to ER!)
my comment died in space.
DOH! I wonder if it had to do with my migration to a new theme? Nothing in the spam folder… Odd…
This is such a good post!! Perfect road map for anybody to follow. I’m a 43 year old divorcee (in Canada too) and can still relate to a lot of the core principles you lay out.
Thanks, Karl! It seems that most of the process is all about discipline. That may not be there day 1, but you can learn it and recover from bad financial habits.