$55 to a Million: Simple, Affordable, and Lazy Way to Retire

Fool-proof investment strategy to make big money while investing little

It is a myth that only a Wolf of Wall Street types can be millionaires. Hollywood would not invest in a blockbuster about a regular Joe making steady income with a long-term investment — however accurate, it is boring. But Hollywood is not the only one to blame. If you are already drowning in the annual influx of articles on how we all can get rich quickly, fix credit scores in a matter of days, earn thousands performing SEO miracles and enter the new year in a blaze of glory, you are not alone. In the time of “cholera”, market and employment uncertainties many of us starting to lack infatuation with these trends.

The truth is out there, but it is not a quick fix or a snake-oil recipe, but an easy, accessible way to generate 1 million with only $55 dollars per week. You do not need to be a financial guru, there are no books to read or investment strategies to analyze. It is truly simple and utterly dull. The only catch is that it takes time.

What is 401K and Why you want one

401K is a voluntary retirement savings plan offered by the majority of U.S. employers, named after the federal income tax code section that created them. It is hands down one of the best vehicles to invest long-term in a cautious and absurdly simple way. For self-employed individuals, the Simplified Employee Pension (SEP) is a worthy alternative that bears many similarities to 401K.

If you are 30 years old, with an income of $55,000 a year, it would be assumed that the only way for you to become a millionaire is to be nice to an extremely rich, elderly relative. But every retirement calculator out there (Vanguard, Fidelity, BankRate, NerdWallet, etc.) will tell you that a weekly contribution of $65 will deliver approximately 1 million in 401K holdings without Oceans’ 11 complexities. There are no movies about 401K because putting money away is boring. But it can and will make you a millionaire.

How does it work

Save $65 — Spend $55

You are not paying federal and state taxes on money contributed to the retirement plan. Thus, assuming a 15% overall tax rate on your modest salary, your true spending is $55 per week.

Free Money

Your employer will contribute to the plan as well. Generally, employers match around 0.50 cents for a dollar you contribute yourself e.g. every $65 that you set aside makes another $33 at absolutely no cost to you. Many employers cap their match at 10% of the allowed annual contribution. In 2021 you can contribute up to $19,500 to the retirement plan, which would make the employer’s maximum match to be $1,950 of free, no strings attached money. When you change employers, you roll plans together and just keep on saving.

Earn 7% Doing Nothing

Money invested in long-term target retirement funds (available at every financial institution) tends to earn on average 7% income. Even during the pandemic, a nightmare of an election season, and general unrest of 2020, income held at 7%, making it a very safe choice that earns money while you sleep, literally. Once you choose a fund, future contributions will automatically go towards it. If you plan to retire in 35 years, “Long-term Target Retirement Fund 2055” by any financial beast out there will do the trick. When changing employers, you might need to make that selection again.

Tax-Free Growth

Income earned by the plan is not subject to income tax. We said free money already, but I cannot help it — free money! You might start paying taxes when you reach retirement age and actually withdraw money from the plan, but these rates tend to be rather low.

Happy Sums

Employer match $33 + income $7 + tax savings of about $15 = $55.

You made back your entire spend and your 401K plan is growing. Congrats!

What if I Urgently Need Money?

The law allows employees to borrow against a 401K plan, but employers are not required to abide by it. If offered, the employer can loan the money from the 401K plan to employees and schedule re-payments to be administered via paychecks. For married individuals, the spouse will need to agree to the terms of the loan as well.

For plain withdrawals from the plan participants younger than 59½ will be subject to a 10% penalty, in addition to income tax on the total amount taken out. Congress allows for a few exceptions to this rule:

  • Permanent and total disability — curious element here is that the severity of the condition is irrelevant.

  • Medical expenses (including spouse and dependents) in excess of 7.5% of adjusted gross income.

  • Amounts required to fund alimony, child support, and tax levies.

  • Rule of 55 — you can start withdrawals penalty-free once you reach 55 years of age and leave (voluntary or not) your employment during that year.

  • Qualified ed disaster distributions — think federally declared disaster areas or year 2020 (disaster of royal proportions) which allows coronavirus affected individuals to draw up to 100K from retirement plans.

  • A special set of exceptions is offered to military personnel and veterans.

  • Death ☹ — funds within the account will be transferred to the beneficiary or to your estate penalty-free.

It is a common misconception that you can avoid penalties if 401K withdrawal is used to pay for higher education or to draw $10,000 to purchase your first home. These exceptions are valid for self-employed SEP accounts, however.


If the future presents you with deep financial troubles, 401K (or SEP) might be the one and perhaps the only account you will keep. Plans set up under the Employee Retirement Income Security Act (ERISA) generally protected account holders from creditors. Bankruptcy is designed to offer a “fresh start” — stripping you off of your retirement savings can hardly be considered fair since it will guarantee financial issues when you are older.

Key 401(k) Benefits:

  • Lower taxes on earnings

  • Employer match

  • Tax-free income growth

  • Emergency fund options

  • Shelter from creditors

Some might argue that they simply do not have money to spare. While I understand the sentiment of living paycheck-to-paycheck, I would also take the liberty of reminding you that penny rich is dollar poor. You can achieve financial stability with very little. Starting out with a $30 contribution will get you there as well if you accelerate your payments closer to retirement age. It is an achievable goal that is most certainly within your reach, despite modest income. Given time, you will be a millionaire.

#Livewellandsave #Mytaxgoal

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate for or applicable to specific circumstances. Consult a Certified Public Accountant before making any major financial decisions.

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