fi nancialforum Millionaires at 50 F
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48 MILITARY OFFICER APRIL 2017
It’s entirely possible to save a million dollars by the time you turn 50. How? Buckle down and get in the habit of paying yourself fi rst. By Lt. Col. Shane Ostrom, USAF (Ret), CFP®
For those of you in your 20s (30s, if you buckle down), investing should not be rocket science. Ordinary people fre- quently become millionaires in their 50s. You don’t have to win the lottery, inherit large sums of money, or become a web sensation. All it takes is dedication, disci- pline, and a plan. I suggest reading The Millionaire Next
Door: The Surprising Secrets of America’s Wealthy (Longstreet Press, 1996). Al- though it’s 20 years old, the lessons and research are timeless. Find out how 80 percent of American millionaires are reg- ular wage earners who built their wealth during their working lifetime. To build wealth, you have to be thrifty.
Not the eat-mayonnaise-sandwiches-ev- ery-day-and-have-no-fun kind of thrifty. Thrifty, as in skim-a-portion-of-your- income-off -the-top-to-invest-and-live- off -the-rest kind of thrifty. As stated in The Richest Man in Baby-
lon (Magdalene Press, 2016): “A part of all you earn is yours to keep.” Wealth is not about how much you earn, it’s about how much you keep. Paying your- self fi rst is a critical component to build- ing wealth. Figure on paying yourself 10 to 15 percent of your income. You’re worth it, right? Surely, you can budget to live off 85 to
90 percent of your income. Once you pay yourself fi rst, the rest you can spend, guilt- free. Just remember to live within your means and don’t fall into the credit trap.
Every increase in pay should be used
to increase the amount you pay yourself. Increases in pay represent money you didn’t have and weren’t already living on. It should be easy to pay yourself most of the increase and slip a little to your spending account. Be disciplined in your approach to
build wealth. Trust your plan, and stay fo- cused. As I often say, don’t be distracted by fi nancial media and marketing campaigns. Don’t base your investments on the crisis of the day or any news-related events. With a solid investment strategy, your plans don’t need to fl ex in response to out- side issues, because you expect them. Your plan can and should be simple and based on history and data. We know mar- kets rise and fall in the short term. That’s a given. We know markets consistently rise in the long-term. That’s a given. Have a plan that exploits these historical realities. Building wealth can happen by averag-
ing down, having a stock-heavy portfolio, and relying on time. Time is your greatest asset. Don’t waste valuable wealth-build- ing time by chasing after “pot-of-gold” schemes or being greedy. For more information on building
wealth at a young age, visit
www.moaa .org/fi nanceblog.
MO
— Lt. Col. Shane Ostrom, USAF (Ret), is a CFP® and benefi ts information expert at MOAA. Visit
www.moaa.org/fi nancialcenter for other re- sources. Email specifi c benefi t and fi nance inqui- ries to
beninfo@moaa.org.
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