You may look at the title and think if I want to have $1Million and I’m only putting away $10 a day then it would take me forever to accumulate $1M!  It’s impossible!  Well, in fact, it’s not and by using a retirement plan, it can be done in less than 35 years!  No kidding.

In this post, I’ll show you exactly how and give you an example through a story of a guy named Michael.

Discussion about this topic:
Listen to “Murphy on Money – Ep6 – Retirement, $1 Million by 54 on $10 a Day!” on Spreaker.

First, what are the keys?

  1. Multiply your money before you invest it! It’s easy!
    1. Pretax investment
    2. Take advantage of employer contributions if offered
  2. Minimize investment expenses.
  3. Invest for the long-term

Let me dive into the story about Michael and I’ll point out the keys in the story.

The Story of Michael, His Money, and a Helpful Coworker

Michael entered the workforce at age 23 and fortunate to make $50K a year salary. However, he is unfortunate because in this story were going to assume he’s never going to get a raise, ever.  It makes the math easier. 😊

After starting work, a coworker told Michael that he was eligible to contribute into the company’s 401K plan and that the company would match dollar for dollar on the first 3% of his salary.  Michael’s co-worker explained that if he put in $1,500/year, his employer would deposit an additional $1,500/year!  That’s great! (#1. Multiply before investing. B. Take advantage of employer matches)

His coworker explained to be prepared for retirement he should plan on putting 10% of his income into retirement, not just 3% to get the match.  Because Michael trusted his coworker, he figured he would invest the 10% of his income but first, he wanted to understand the numbers.

Michael annual deposits into his 401K retirement plan looked like this

  • Michael’s deposits:         $5,000
  • Company deposits:         $1,500

Total investments:          $6,500 (Excellent!)

Michael wanted to know how much he was sacrificing in his paycheck because he was investing so much.  If he stopped investing, how much more money would he have to spend each month? He did the math:

The $5,000 would be taxed at his tax bracket, let’s say 25% (a common tax bracket). Michael realized if he made no investments into his 401K, he could only get $3,750 a year or only about $312/month more money (#1. Multiply before investing. a. pre-tax investing) but he is investing about $542/month!  Wow! Michael realized if he reduced his income only $10/day he actually gets to invest $17.5/day! Cha-ching! He liked the idea of multiplying his money so he decided to invest.

Michael also wanted to learn about investing so he asked his coworker.  His coworker suggested that he invest in funds with the lowest possible gross-expense ratio and strong 10-year returns. He explained that high expenses slowly eat away at the growth of your money and that any fund with less than 10-year return is too new to have stood the test of market cycles and trends.

Following this advice, Michael chose to invest in an S&P 500 index fund that was available in his 401K plan.  It had an annual gross expense ratio of 0.06%(#2. Minimize expenses) and a 10-year average annual return of 7.5%.  After setting up his 401K, Michael forgot about it and he didn’t mess with it or borrow money from it. He kept investing and left the money alone to grow (#3. Invest for the long-term)

So what happened to Michael’s money? Let’s find out.

After 10 years:

  • Money sacrificed: $37,500 (this is money that he didn’t see in his paycheck over 10 years)
  • Investment balance: $98,850

After 20 years:

  • Money sacrificed: $75,000 (this is money that he didn’t see in his paycheck over 20 years)
  • Investment balance: $302,600

After 30 years:

  • Money sacrificed: $112,500  (this is money that he didn’t see in his paycheck over 30 years)
  • Investment balance: $722,500

After 40 years:

  • Money sacrificed: $150,000  (this is money that he didn’t see in his paycheck over 40 years)
  • Investment balance: $1,590,000

  The balance of the account first passes the $1M mark in the 35th year! Here’s the chart. 

Isn’t this incredible!?!  A small sacrifice of $10/day can turn into some serious money!

Let’s explore different scenarios;

  • If he could get 2% raise a year and always kept contributing 10%, we would have $1M in his 32nd year of saving.
  • If Michael could save $20/day he could have $1M in the 27th year of saving.

I am the Michael in this story.  I am only 10 years into this program but I have absolutely had the results above. In fact, I have been able to get substantial raises through my short career and I am now contributing 15% which is more like $30 a day.  If I add my wife’s contributions to her 401K as well we should pass the $1M mark in 12 years, even if we never get raises again.

You can do this too….. If you want me to run the math with your numbers or want to learn how to start on this journey yourself by learning how to take advantage of the keys and put them to work for you, please email me at

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