How I Retired at 42 with $3 Million in Liquid Assets and a Paid-Off Rental Property

A Reddit user is retiring at the age of 42 with $3 million in various investment accounts, including a taxable brokerage account, as well as some retirement accounts. The poster explained that it’s been a “wild ride” on his path to early retirement and said that he is still in disbelief about being able to get so wealthy so fast — especially given that, 19 years ago, he started out at a salary of just $35,000 per year. 

So, how did the Redditor make such a journey and end up a multi-millionaire who was able to retire at such a young age? Here’s the path that he followed to achieve his success. 

This is how a Reddit user ended up rich

The Redditor attributed his great success in his finances to his wife and to a few smart financial decisions that they made as a couple. He explained that they have very similar personalities as far as their earnings, spending habits, and financial goals. Together, they worked hard to climb up the career ladder, and they saved aggressively and invested their money in index funds throughout their careers.

By increasing their earnings over time and being diligent about investing in the right assets and holding their investments for the long term, they were able to end up with:

• $1.3 million in taxable investment accounts
• $1.2 million in a 401(k) and other retirement accounts that they contributed to with pre-tax dollars
• Half a million dollars in a Roth IRA.

They also have a $500,000 one-bedroom condo, which is paid off completely. The Reddit poster said he owned the condo before meeting his wife. He also said that it is in a good location, so he’s been able to rent it out steadily since he first listed it and it produces reliable income for the couple. 

In fact, their current annual expenses are $105,000, but they will only need their savings to produce $85K of the money they need because the income from their rental property covers the rest.

With $3 million in invested assets, even at a safe 3.7% withdrawal rate, their accounts should produce $111k per year. This is much more than the amount they need. And, his wife likes her job and the employer-funded healthcare it provides, so she is planning to work for a few more years but scale back her responsibilities and take off more time to travel.

Can you follow this path to end up a success?

The Redditor’s story should be an inspiration to everyone because almost anyone can follow this path to becoming a multi-millionaire. You just need to:

• Marry someone who shares your values and who will help you accomplish the financial and career goals you set
• Improve your job skills and take steps to ensure you advance in your career so you can grow your income
• Invest in simple, easy-to-understand investments such as S&P 500 index funds and leave your funds to grow
• Take advantage of retirement tax breaks that make it easy to grow your wealth

This recipe for success doesn’t require you to earn millions of dollars, but simply to spend less than you earn and to be smart about how you allocate your assets.

It’s also very important to try to make sure you are on the same page about money with your life partner and to confirm that you have compatible financial goals that you are working towards together. As the Reddit poster here indicated, his wife was instrumental in achieving the financial success that he has financially.  It can be hard to be so successful if you have a partner who spends more than you’re comfortable with or who gets you into debt.

A financial advisor can help you accomplish many of these goals and can work with you to decide both how much to invest and where to put your investment dollars so you maximize your chances of ending up rich. 

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