Financial Planner: How To Turn a Modest Salary Into a $22M Nest Egg
It can feel impossible to save for retirement when you aren't earning a high salary, but the key to long-term saving isn't your income — it's what you do with it.
Ann Schreiber, a retired IRS auditor, never earned a high income, never owned property and lived in a modest rent-controlled apartment — yet she built a $22 million nest egg. A $22 million outcome might sound like a fluke, but Leo Chubinishvili, a certified financial planner at Access Wealth in Roseland, New Jersey, said the core strategy is simple and repeatable.
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Here are the simple, practical habits he recommends to build wealth on a middle-class income.
Pay Yourself First
The first thing Chubinishvili said to do is to automatically redirect a portion of your paycheck into savings or investments.
"You can't spend what you never see," he said.
Use Roth IRAs and 401(k) Plans To Build Tax-Free Growth
"Before investing in taxable accounts, max out accounts where the IRS gives you a break," Chubinishvili said.
These include 401(k) plans and IRAs.
"Take advantage of a Roth IRA since it grows tax-free for life — that's very powerful," Chubinishvili said.
The numbers show just how powerful this can be. Someone who starts contributing $500 a month to a Roth IRA at age 25 will have $1.2 million by age 65, assuming a 7% annual rate of return — and those dollars are tax-free.
Invest Consistently, No Matter the Market
Rather than trying to time the market, the better strategy is to continue to invest no matter what the market is doing.
"Invest and save consistently through highs and lows of the markets and the economy," Chubinishvili said. "You are better off investing small amounts consistently than a one-time lump sum investment."
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Be Aggressive About Paying Off High-Interest Debt
You won't be able to build real wealth if you have high-interest debt as part of the equation.
"Paying off a credit card at 22% APR is essentially a guaranteed 22% return, which is better than most investments," Chubinishvili said.
If you have credit card debt, paying this down should be the priority over investing.
"If you are making a 7% rate of return on your investment, but the credit card costs 22%, you are losing money," Chubinishvili said. "Pay down debt aggressively with extra payments — then redirect those payments back to monthly investment contributions."
Live a Modest Lifestyle
The less money you spend on discretionary expenses, the more money you can use to build your long-term savings.
"Avoid a luxurious lifestyle," Chubinishvili said. "Don't buy things you don't need just because you can. Don't worry about what other people think of you."
Instead, keep focused on the future.
"It all pays off when you can retire with a nest egg to live comfortably during your retirement years," Chubinishvili said, "with the ability to have options and choices to do what you want, when you want."
That discipline — not a high salary — is what ultimately creates long-term financial freedom.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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