The Mindset of Up-and-Coming Millionaires

Happy holiday weekend Friday!

Did I capture your attention with the title of this post?  It was actually the catchy title of a webinar I listened to earlier this week.  The webinar was put on by Fidelity, who manages the 401(k) for my employer.

Here are a few fun takeaways from the webinar:

24% savings rate

Based on a Fidelity analysis of 133,000 participants with 401(k) balances of $1 million or greater, 24% is the average total savings rate for individuals who have hit the million dollar milestone.  This is comprised of 15% of their own pay and another 9% in matching contributions or profit sharing from the employer.

Does anyone out there get that much match or profit sharing?  Because my employer’s is MUCH less than that.

HSA Shout-Out

The Health Savings Account (HSA) has been a darling of the FIRE community for a while now.  It also got a shout-out in the webinar!  HSA contributions are made pre-tax, grow tax-free, and are not taxed when withdrawn for qualified medical expenses.

Unfortunately, my employer does not offer an HSA.  But if yours does, consider contributing – it is a great way to shield current income from taxes or simply just help pay for out-of-pocket medical expenses before your deductible kicks in.

Unlike FSA contributions, HSA contributions are ALWAYS yours, even if you leave an employer.  Mr. FIREDup still has some money in his HSA from the job he just left, which we can tap into for medical expenses if needed.

Compounding is Key

Millionaire status is within the reach of more than just high earners.  The key is to invest early and often.  Check out this scenario from the recap:

Capture

This hypothetical example uses a conservative rate of return of 4.7% and annual salary growth of 1.5%.

$1M in 40 years won’t have the same purchasing power as it does today, but it’s still impressive!  The key is to start the habit and make it automatic.

Do you have any tips for up-and-coming millionaires?

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