I Retired a Millionaire at 49: The Best Financial Decision I Made Early in My Career
It’s probably everyone’s goal to retire early with a nest egg large enough to sustain a comfortable retirement. However, for most people struggling with bills, debt and a paycheck that never seems to stretch far enough, financial independence seems like a far-off fantasy.
Jackie Cummings Koski, a single mom who retired at age 49 with $1.3 million in savings and investments despite her income never exceeding $80,000 per year, CNBC reported. Her journey to that figure shows how much wealth creation boils down to the following three smart financial decisions over several decades.
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Calculating FIRE Number
Koski’s plan began with a formula popular in the Financial Independence, Retire Early community. "I came to my FIRE number after learning that you do 25 times your annual expenses and that totally made sense to me," she said.
She was aiming for about $1 million with a $40,000 to $45,000-a-year spend. By the age of 46, Koski's net worth was $1 million, but she was hesitant to quit her job right away. She worked two more years and her net worth hit $1.3 million before retiring on Dec. 6, 2019.
Prioritizing Smart Spending
As a single mother, Koski didn’t chase promotions or change jobs for more money. Instead, she focused on managing the income she made and spending more time with her daughter.
"If I were to sort of do the hard hustle to try to make more money, that would be time away from my daughter,” she said. “I was always wanting to be smart with the money that I had versus thinking that a higher income was going to be the thing that got me ahead.”
Today, her monthly expenses are still between $3,000 and $4,000, which mostly covers mortgage, groceries, utilities and other expenses. She owns a home and has no car payments.
Koski is also always finding ways to save money. If she gets a better deal on her cell phone or a slightly cheaper home or car insurance, she said: “That's not going to change much for me, but if I'm going to save a few bucks.”
Maximizing 401(k) Employer Match
Most of Koski's net worth came from her workplace 401(k) account over her 20 years at LexisNexis. “The matching that we got was if you put in 7% in your 401(k), the company would match you 9% and that’s far beyond what most companies offer,” she said. “I took advantage of that.”
That steady contribution throughout her working years, along with market growth, became the single biggest driver of her portfolio.
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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