Can I Retire with $5 Million [5 Strategies] | White Coat Investor (2024)

By Dr. Jim Dahle, WCI Founder

While not easy to acquire, a million dollars isn't what it used to be. A millionaire when Monopoly was invented is the equivalent of a decamillionaire now. However, 5 million dollars is still enough to provide quite a luxurious retirement. Per the 4% rule of thumb, a $5 million retirement kitty will provide an inflation-indexed $200,000 a year of income with a high degree of certainty. In fact, most people who retire with $5 million will die with far more. $200,000 goes a long way, especially if you've got the mortgage paid off, no car payments, and you have both your and your kids' college educations paid for.

Would you like to retire early and retire well? On over $5 million a year (in today's dollars)? Here are 5 ways to do it!

#1 Get a Job (or Better Yet, Two Jobs)

This slow and steady method has been employed by countless multimillionaires. Here's how it works.

First go to college.

Second, get a halfway decent job.

Third, marry someone else with a halfway decent job.

Fourth, put some money away each year and invest it using a boring old portfolio of index funds.

Fifth, sit back and wait until you turn 55.

If you start earning and saving at age 22 and your investments have a real, after-inflation return of 5% a year, you will have $5 million at age 55 if you save

=PMT(5%,33,0,5000000) = $62,450, or $5,204 per month

That's a lot of money for a lot of people, but it is doable for a couple earning $80,000 a piece. It requires them to save 39% of their income, which most people aren't willing to do. You might be though. You might also be able to increase your income throughout your career, which makes it easier (lowers savings rate).

If you need help putting together a financial plan to get you to $5 million, consider taking our Fire Your Financial Advisor online course. It'll take you from zero to hero and you'll finish the course with a financial plan you build yourself and thus understand. The one-week, money-back guarantee eliminates your risk and there's even a version that qualifies for CME.

#2 Become a Professional

Another option is to become a high earning professional like a doctor. While this is a very competitive process and involves years of difficult education and training, it also results in a high income that can be used to build wealth. You are probably also more likely to marry somebody else that is a high income professional. Let's say that between the two of you that you earn $600,000 a year, but not until age 32. Plus you owe $500,000 in student loans.

If you start earning and saving at age 32 and your investments have a real, after-inflation return of 5% a year, you will have $5 million at age 55 if you save

=PMT(5%,23,0,-5000000) = $121,000 per year

$121,000 per year is a savings rate of 20%, the standard amount I suggest that docs save for retirement. Obviously those student loans will have to be paid back out of the other $479,000 per year in earnings. Or PSLF.

#3 Use Leveraged Real Estate

Learning how to be a skilled real estate investor can increase your returns. Perhaps to as high as 10% real. This involves additional risk (leverage and less diversification) as well as additional expertise (which must be acquired somehow) and additional work. But it would allow you to save less money. If you start at 22, you would need to save

=PMT(10%,33,0,-5000000) = $23,000 per year

That's just 29% of an $80,000 income or 15% of an $160,000 income. 2nd job? Yes. Time or money. However, if you're that high income professional type starting at 32, you could get away with

=PMT(10%,23,0,-5000000) = $63,000 per year

That's a savings rate for that $600,000 couple of just 11%. It would be 22% of a single $300,000 income. You can learn more about this pathway in our No Hype Real Estate Investing online course. Its one-week, no-questions-asked, money-back guarantee means that at least the course is a risk-free option for you.

#4 Get a Windfall

Five million can show up without all of that earning, saving, and investing. You could win $5 million in a lottery. You could receive $5 million in an inheritance. While I don't really recommend either of those methods, they do create pentamillionaires all the time. Unfortunately, many of those who receive them don't have the skills and attributes necessary to hold on to the money, which are incidentally very similar to the skills and attributes required to build it gradually.

Another windfall option is to come up with just one great idea or develop one incredible skill or product. Maybe you're an NFL superstar or a famous singer or an actor. Perhaps you patent your great idea and sell the patent. You might only work for just a few years, but manage to get $5 million out of it.

#5 Build a Business

Small business owners not only receive an income, but often build a valuable business that can be sold when they're ready to retire. While these businesses can be a medical or dental practice, they are often something far more mundane. A dry cleaner. Car washes. Gas stations. Subway franchises. Locksmith. Plumbing or electrical or drywall company. Maybe you spend all of your income during your career, but selling the business at the end provides that $5 million nest egg.

Lots of businesses fail of course. There's a lot of risk in the entrepreneurial pathway. But it can also work out spectacularly well. None of those in pathways 1-3 are going to be end up with $30 million, but the business owner might.

Combining Pathways

There is also no rule that says you can only use one of these pathways. Combining them can be even more powerful. We started saving for retirement, not at 22, but before 32. (At 28/25 to be specific). We also got us some of that doctor income and saved a big chunk of it. We used investment real estate. We also had a successful entrepreneurial venture, which although not sold, provided a high income due to a profitable talent. Predictably, we hit that $5 million mark well before age 55 and were able to turn our focus away from building our own retirement nest egg and toward legacy and philanthropy. Maybe you can find a way to combine one or more of these pathways too!

What do you think? Can most people get to $5 million by age 55? Can you? Which pathways are you using? What's your savings rate? What's your nest egg goal and target age? Comment below!