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The tale of 3 millionaires



There are many ways to reach your retirement goals. As a financial planner, I’ve had countless friends come to me with the popular question: “How much do I really need to save for retirement?”.

The answer is complex because it depends on many variables. In this article, I will tell the story of 3 friends with a common goal of reaching a net worth of one million dollars to fund their retirement lifestyle and illustrate that not all millionaires are created equal.  Jack decided to go get a degree to work in marketing. Jack earns good money however he had student debts to pay and a habit of constantly upgrading his home and vehicles. By the time Jack was comfortable to start investing, he was 35 and decided to commit $1,000 each month into a semi-aggressive investment account. By age 60, Jack’s account had reached $588,120 from $300,000 contributedwith a 5% average return. Luckily, Jack also finished paying off his house by this time which is worth $450,000. Jack has reached his goal of being worth a million dollars but he’s not sure these amounts will be enough to support his lifestyle through retirement, especially since his principal residence represents close to half of his net worth.   Julian is a well-known businessman who took over the family business. Due to the nature of growing a business, Julian was only able to start investing aggressively once the business was financially stable. At age 50, his mortgage was paid off and he started investing $25,000 per year into an investment account with moderate risk because he was close to retirement. At age 60, Julian’s account had reached $312,158 from $250,000 contributed and a 4% average return. The business is worth approximately $1.5 million dollars and his home is worth $300,000. However, Julian can’t find a buyer for the business at that price. He has to decide whether he wants to sell the business at a discount, keep working until he can get more for it or live off of his savings hoping he can sell it at a better value later on. Joe is a construction worker and has always been disciplined with his money. He managed to stay out of any major debt and never really tried to keep up with the Joneses. Joe started investing at age 20 with $100 per week in an aggressive investment account and committed to increasing that amount by 2% each year. By the time he retired at 60, Joe’s investment account had reached $1,081,901 with$314,090 contributed and a 6% average return. He also managed to pay off his mortgage just before retirementand the house is now worth about $250,000. Joe is in pretty good shape having reached his retirement savings goal plus the value of the home and being used to a modest lifestyle.  As you can see, there are many ways one can accumulate a net worth of one million dollars. But not all assets are created equal. If Jack and Julian had started saving earlier and used time to their advantage, their outlook and their options could have been different. As Joe demonstrated, starting early even with small amounts can give you the best chance of investment success over time. Catching up is harder than it seems.     This writing is for general information purposes only and is not intended to provide legal, accounting, tax or personalized financial advice. If you are not sure how to proceed with a request for further information, seek help from a professional. Any opinions expressed are my own and may not necessarily reflect those of Louisbourg Investments.   Author:

Marcel LeBlanc, BBA, CFP, CIM  is a Financial Planner with Louisbourg Investments. Comments or questions may be submitted to Marcel at marcel.leblanc@louisbourg.net, or he may be reached at (506) 383-5204.  

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