Is it possible to get rich without a college education? Can an average truck driver become a multi-millionaire? Absolutely!! Everybody knows there are exceptional ways to get rich; lottery winners, professional athletes, celebrities and other high-paid professions. Some people actually get rich by “getting lucky,” and they are certainly the exceptions. But most people who get rich do so by using their smarts and by working hard. Most people who get rich are people who persevered and remained diligent by sticking to a plan.
The unfortunate reality for most people who are rich is something that is blatantly obvious – they are old!! Almost everybody who aspires to be rich (myself included) wishes to get there at the youngest age possible. We want to enjoy our riches while we still have some youth left in us. After all – who wants to be the richest guy (or gal) in the nursing home? I can tell you this much… being the richest will be far better than being the poorest.
So, where am I going with this? Yes – I’m a full-time truck driver for my day job. And I absolutely love it. I work for one of the best companies on the planet and I wouldn’t trade it for anything. But at the same time – I know I can’t achieve the level of wealth that I desire, anytime soon, by working a day job as a truck driver. Will it make me rich someday? Yes! Of course. But I want to achieve wealth and true financial freedom long before I am 65 years old – which is why I’ve been working so hard to create passive income online for the past several years.
Honestly though – this post isn’t going to be about me. I admit, I AM an “uneducated” truck driver and I WILL be a multi-millionaire someday. But I also work with a bunch of other “uneducated” truck drivers – and you might be surprised to learn that many of us really aren’t as dumb as we look!
Also – this whole idea of working online to try to achieve wealth while young is great. I love it almost as much (or maybe more) than trucking. People who stumble upon my blog often find it really hard to believe that quitting my day job is NOT even a goal of mine. Although, my mindset in that matter is starting to shift – especially after reading MJ DeMarco’s latest book, UNSCRIPTED: Life, Liberty, and the Pursuit of Entrepreneurship.
Bottom line for me: I’m trying my damn hardest to get rich fast so I can enjoy wealth before I’m really old – but I’m staying on track with my backup plan to get rich slow and build up enough retirement savings so that I can live comfortably without worry after I am too old to drive a truck.
Bottom line for most people: Work a job that you don’t hate for about 40 years, save 10 to 15% of your income and invest in the stock market so that you can be “rich” in your golden years.
So… much of this blog talks about the things I am doing to create passive income online in an attempt to build wealth – but, my day job is still my top priority… which brings me to what this post is really about (only took me 550 words to get here!)… Creating multi-millionaire (uneducated) truck drivers!
Meet Aaron – Young Man Just Starting Out in Trucking
Aaron is a 25-year-old rookie truck driver at my place of employment. His dad is a veteran trucker who has been with the company for many years – and he hooked Aaron up with a job as a part-time forklift (hi-lo) driver at the company. Aaron has spent the past few years loading and unloading trucks – and then he applied for and was accepted into the ‘dock to driver’ training program. As of the time I am writing this – Aaron has completed his training, obtained his CDL (Commercial Drivers License) and is now one of the next in line to become a full-time driver when the next opening becomes available!
Aaron is well aware that he is currently employed by one of the best companies in the world to work for – and that he is on track for a really rewarding and well-paying career (for somebody without a college education). No joke – as far as local trucking jobs go, he happened to land a job at a company that pays far better wages than most trucking companies in our area (West Michigan).
Since I’ll be sharing some specific numbers below anyway… I’ll just tell you – starting wages for truckers like Aaron in our company average right around $50k/year for the first year. It takes 3 years for a trucker to reach top pay at our company (which is typical industry-wide for these types of local trucking jobs) – and at that point, Aaron will be earning closer to $65k/year.
How Does $50k/year Get You to Multi-Millionaire Status?
What I’m about to explain is something that is known as the slow way to get rich – which is totally fine for most people. But, how can you possibly become a multi-millionaire on an average salary like that – especially given that you’ll need to spend most of your salary just to get by? It doesn’t seem to make sense. In fact – it’s not even close! Let’s look at some simple math. Assume that you saved 10% of that salary (and we’ll leave out inflation for this example) – that’s only $5k/year. Multiply that by 40 years (average career length) and you only come up with $200,000.
$5k/year X 40 years = $200,000
Last time I checked, 5 zeros does NOT equate to millionaire status. We need to find one more zero. Perhaps we could add a zero to the end of the salary number. But I don’t know of ANY truck driving jobs that start out at $500k/year.
Or maybe we could add a zero to the contribution amount – how about we save 100% instead of just 10%. Well – I don’t think the government will like that plan. They always get their cut first – so, saving 100% of our income is not an option.
What’s left? I know! We could work for 400 years instead of just 40. That’s it! $5k/year X 400 years = $2,000,000! 6 zeros. Problem solved. The End.
Taking Advantage of The Compound Interest Scam
Okay – simple math will never get us to millionaire status in this situation. And we didn’t even begin to figure in inflation! So we’re going to need to use a math trick to prove how an average trucker can become a multi-millionaire. But believe me – it’s not really a trick and it’s not really a scam. It’s just the way this type of math works out and it’s available to anybody and everybody.
It’s called “Compound Interest” (sometimes referred to as Compounding Interest) or the power of compound interest. The term is really just a description of what is happening to the numbers that represent the money that you invest for retirement. If you invest money properly and leave it alone for a long period of time – you’ll experience the effect of compound interest.
The key here is that you need to invest the money properly! If your money isn’t invested in something that yields predictable returns of at least 8 to 12 percent (average) – then compound interest can’t and won’t work for you. Don’t worry too much about this part though… Pretty much ALL 401k (or similar) plans offer these types of investments and they’re not hard to get signed up for.
So Why Do I Call It a Scam?
I can’t take credit for calling compound interest a scam. My eyes were opened to the scammy characteristics of compound interest when I read MJ DeMarco’s Unscripted book. But – it’s really only a scam if you’re in the ‘get rich fast’ crowd, like me. If getting rich slow is your plan – compound interest is absolutely your best friend!
The frustrating part about the compound interest “scam” is that you don’t really notice the numbers working in your favor until you’ve built up a really large sum – which usually takes a really long time. But, the time factor in this frustration equation is where the true power of compound interest flexes its muscle and shows you how well it really works.
How and Why Does Compound Interest Work?
In a nutshell – more time equals more opportunity for exponential growth. The longer your money sits (in investments) – the more it will grow. As this growth continues, the amount it grows by continues to increase exponentially. Make sense?
For example: If you start out with 1,000 and it grows by 10% – that’s $100 to make the total $1,100. 10% of the new total is $110, making the total for the next year $1,210. 10% of that total is $121… and the number just keeps increasing! You wouldn’t believe what it looks like after 40 years!
The best way to truly show you how this works and how powerful it really is would be to show you an example using real numbers and real math. For this hypothetical – I’m going to borrow the Ben & Arthur example that I read in one of Dave Ramsey’s books years ago. I don’t remember if there was a fictitious story to go along with it or not… so I’ll make up my own.
Ben & Arthur Get a Day Job
Let’s say Ben & Arthur are twin brothers – meaning they are the exact same age. After several years of dabbling with career choices and college and whatnot – they both end up landing full-time jobs at age 25 – working for the exact same company and earning the exact same wages. At age 25 they are earning a respectable $50/k per year with expected raises of 2% annually.
Ben decides to start saving in his 401k on day one. He contributes 10%. His company kicks in another 3% as a match (50% of the first 6% that he contributes), which is typical for many large companies that offer a match.
Arthur decides to NOT contribute to his 401k at all when they first start out.
Note: The following calculations assume average investment return rates of 10%
10 Years Later… Ben & Arthur are hanging out on the weekend. I think they’re probably shooting pool in Arthur’s basement or something. Anyway… they get to talking about how work is going. After 10 years and annual 2% raises, they’re both earning just under $61k now! When Ben mentions how much he has saved in his 401k – Arthur has a major “oh shit!” moment! After 10 years of saving only 10% (plus the company match), Ben has a sweet balance in his 401k of $$117,283.19!
They’re both 35 years old now and Arthur hasn’t saved a dime for retirement yet. He doesn’t let this wake-up call pass him by and he gets set up to start contributing to his 401k first thing the following Monday. Unfortunately, Ben has some unexpected family matters that lead to financial difficulties and he is forced to STOP contributing to his 401k that same week. (Weird story, huh?)
- Ben saves 10% from age 25 to age 35 and has over $117k saved at age 35. He stops contributing at age 35.
- Arthur saves nothing from age 25 to age 35 but starts contributing 10% at age 35.
30 Years Later… Ben & Arthur meet for coffee at McDonald’s one morning (because Ben has always been inspired by the story of Ray Kroc and how he founded McDonalds). Miraculously, Ben & Arthur both stayed in the exact same job at the exact same company for their entire 40 year careers. After 40 years of annual 2% raises, they’re now both earning a nice salary of a little over $110k. They’re each contemplating retirement and they decided to compare numbers…
Ben never recovered from his financial hardship and was never able to re-start his contributions to his 401k. So, he contributed absolutely nothing from age 35 to age 65 – but he did leave his $117k (that he accumulated by age 35) in good aggressive growth-stock mutual funds within the company 401k. He rarely monitored his investments – so, he was pleased when he opened up his 401k statement and learned that it had grown to a whopping $2.046 million!! Yeah, you read that correctly. To be exact – Ben’s investment grew to $2,046,521.
Arthur diligently saved exactly 10% (plus company match) for the rest of his career, starting at age 35. After 30 years of contributing, compared to only 10 by his brother, you would assume that Arthur surely ends up with a much bigger nest egg. But how much more, exactly? Let me check my 401k calculator… Weird! Is this right?! Arthur ends up with $1,626,285.
- All other variables being exactly the same…
- Ben saves 10% for the first 10 years only and ends up with $2,046,521
- Arthur saves 10% for the last 30 years only and ends up with $1,626,285
Bottom Line: Start saving as early as possible and save as much as you possibly can!
The Proof Is In the 401k Calculator!
The Ben & Arthur example is hard to believe if you’ve never been introduced to this concept of compound(ing) interest before. It’s true though. And no – I’m not just making up numbers! These are actual numbers calculated using a 401k (investment) calculator. Don’t believe me… search Google for any 401k calculator and punch in the numbers yourself! The problem here being that ALL online calculators are so much different from each other and they each allow you to change limited or different variables.
I have my own handy-dandy 401k Calculator – which is really just a spreadsheet that has some fancy formulas built into it. Despite some of the fancier calculators that can be found online – I’ve been using this simple spreadsheet version for many years. I update my own variables in it at least once per year to make sure that I am still on track. The cool thing about my spreadsheet calculator… I can change any or all variables and watch the numbers update in real time!
Want Access to My 401k Calculator for FREE?
My calculator is really easy to use. You just open up the spreadsheet (in Google Sheets or Microsoft Excel) then change the variables in the shaded cells. Here are the variables you can change to calculate your retirement savings…
- Start Age
- Present (annual) Salary
- Predicted (annual) Raise Percentage
- Present Amount Invested
- Current Contribution Percentage
- Company Match Percentage
- Expected (annual) Return Rate (average)
- Expected Retire Age
The calculator then displays your expected salary amount at your retirement age and allows you to input a few more variables…
- Annual Withdrawal Amount
- Inflation Percentage
- Rate of Return after retirement (some people change investments to more conservative at retire)
The calculator then displays your retirement savings, minus increasing annual withdrawals (based on inflation) to show you how your savings will last throughout your retirement years.
Hint: The goal is to be able to withdrawal an amount that will allow you a comfortable lifestyle and have your savings keep increasing year by year!
Back to Truck Driver Aaron – Future Multi-Millionaire
Aaron happens to be a white male without a college degree (just like me!). Did you know that there are statistics that show your chances of becoming a millionaire according to race, age and education levels… Pretty interesting stuff. According to the stats – Aaron’s chances of becoming a millionaire are pretty low based on education level. But the fact the he is white gives him a little bit of a leg up compared to his hispanic and black counterparts.
And in case you’re wondering… Aaron is a REAL person and I will be sending him this post as soon as I hit publish. I barely even know Aaron personally. He’s just an acquaintance at work. But given the opportunity that has been handed to him (starting a great career in a great company), I want him to understand the power of compound interest while he is still young. And not just Aaron. I’m really writing this post for the benefit of ALL young people who are just starting out in their careers!
Okay. Let’s look at Aaron’s numbers, specifically. If you paid close attention to the Ben & Arthur example above… I’m sure you’re wondering how much Ben would have saved if he kept contributing 10% for his entire career. It just so happens, that I’ll be using the exact same variables and numbers to calculate Aaron’s estimated retirement savings. Aaron’s beginner salary will be pretty close to $50k per year – so these numbers will give us a pretty good idea. Take a look at the following screenshot from my 401k calculator…
$3.672 million isn’t bad for an uneducated truck driver – right?!
But for Aaron – this is a very conservative low estimate to shoot for. If Aaron invests diligently and consistently throughout his entire career, and invests the money properly, he’ll likely have a far greater sum saved for retirement! The following variables play into Aaron’s scenario…
- The above example assumes a starting salary of $50k and only 2% annual raises
- By year 3 in his trucking career, Aaron will be at top pay in our company and his salary will be closer to $65k
- I would urge Aaron to contribute even more than 10% starting out – maybe closer to 15%
- Aaron is accustomed to living on far lesser wages
- Set aside 15% from the very beginning and never change that contribution amount
- Live on what’s left and NEVER even think about decreasing contribution amounts
Using these more specific variables for Aaron’s situation – let’s take another look at the 401k calculator to see how much money Aaron could end up with…
How does almost $6 million sound for retirement for an uneducated truck driver?!
Notice I changed the starting age to 28, the present salary to $65k and a present investment amount of $31,869. These are figures that should be pretty close for Aaron after his first 3 years as a full-time trucker. I increased the overall contribution amount to 15% – and there is still the 50% company match (on the first 6% contributed).
Almost $6 million dollars at 65 years old! But that’s not even the best part. Look at how the retirement sum continues to grow even after retirement – despite Aaron withdrawing an amount each year that is close to equivalent to what his salary would be. By age 77, Aaron is taking out $200k to maintain his lifestyle and his savings has grown to over $15 million! Compound interest baby!!
Remember how I mentioned earlier that the frustrating part about compound interest is that you barely notice it working in your favor until you’ve built up a large sum. Well – you can clearly see how powerful it is and how well it works once you DO have a large amount saved up.
Don’t like my assumptions? Want to see what the figures look like with different assumptions?
Click the button below and enter your email address – I’ll send you the calculator right now!
Quick & Simple Investment Advice
This post is long enough aready – so I’ll try to keep this section as short and simple as possible. But since the compound interest formula relies so heavily on the money actually being invested properly – I felt it wouldn’t be proper to publish this post without some basic investing advice.
Most average investors have a good portion of their retirement savings within a company-sponsored 401k plan (or something similar). So I’ll base my advice using that assumption.
Signing up for a 401k (or other savings plan) is pretty straight-forward. The process will vary depending on how your company and the provider they choose handle things. All of the major providers have websites that are pretty easy to navigate once you have login credentials.
Basic Investment Understanding & Strategy
Most investment advisers suggest that you choose more aggressive investments while younger and gradually move your investment allocations into more conservative funds as you get closer to retirement. More aggressive funds have better potential for higher returns – but they are also more risky (meaning you could “lose” money some years). More conservative funds have far less potential for high returns -and they are far less risky (meaning your returns will be steady, but lower).
Note: You never really “lose” money when the market goes down unless you cash out your funds. This is a HUGE and common misconception! The money is not “lost” – the funds simply “lost” some of their value. You still own the same number of shares and over time, the value almost always comes back and then some!
Personally, I think the investment advice that most advisers give sucks! This idea of moving into more conservative investments as you get closer to retirement is a good plan ONLY if you plan on saving just barely enough to retire. In this situation, you don’t have enough leeway to be able to handle the ups & downs of the market. In my opinion, it’s hardly worth keeping your money in the market at all if you’re investing conservatively and only getting 5 or 6% returns.
I want my money to be working harder for me and I want at least 10% (average) returns! My plan to achieve this is to ALWAYS stay in more aggressive funds. Yes – even after retirement! Sure, there will be years that my account value will decrease. But I will average much higher returns overall. Plus – I plan to save far more for retirement than I’ll actually need – so riding out the down years in the market won’t be an issue.
Tip: Avoid the ‘target date retirement funds’ that many companies offer. These types of funds do exactly what I suggest NOT to do… they automatically and incrementally move your money into more conservative investments (lower returns) as you get closer to retirement age.
Picking Investments for Highest Possible Returns
Choosing the right investments within company-sponsored 401k plans is not rocket science. It’s not difficult at all, really. Most companies offer a limited number of funds (usually 12 to 20) that you can choose from. You can find ALL information on any of the funds available online in something that is called a prospectus. The main figures you’ll want to look for are the return percentages over certain periods of time. Typically, they might show you 1-year returns, 3-year returns, 5-year returns, 10-year returns and/or lifetime (as long as the fund has been open) returns.
You are investing for the long term. Remember – time is a major factor in the compound interest formula. So you’ll want to look at the return percentages for the longer periods of time. In fact – I would suggest ONLY putting money into funds that have been open for AT LEAST 10 years. Only look at those funds.
Any fund that has not been open for 10 years yet still has some proving to do. Steer clear from those. We don’t yet know how they perform over long periods of time.
From the funds that have been open for 10 years or more…
- pick 4 or 5 funds to allocate your investments throughout
- pick the ones with the highest rates of return over the longest time periods
- try to diversify types of funds (if possible)
- large cap funds – typically invest in larger (established) companies and are less risky
- small cap funds – typically invest in smaller (new or startup) companies and are more risky
- international funds – invests in companies worldwide
- income (dividend) funds – invests in companies that pay dividends
- allocate your funds however you like – but try to keep it close to 25% in each of the 4 categories listed above
Without completely over-complicating things – this simple advice should be enough to get you started and on the right track. You really only need to go over this stuff in detail once. Just set it and forget it. Although, a review once per year wouldn’t be a bad idea.
Don’t Freak Out When You’re ‘Losing’ Money!
Over a 40-year career – there WILL be several times when the stock market will go down and the value of your retirement savings will actually decrease. Most people freak out during these times and complain to anybody that will listen because they are ‘losing’ money and they think they are getting ripped off by Wall Street.
Just chill and don’t worry about it. Rather – you should be excited when the market goes down. Why?! Because that is when stocks are on sale!! DO NOT cash out and DO NOT stop contributions during these times! Heck – if at all possible, try to contribute more during the down years of the stock market. You’ll be buying more shares for your money – then when prices go back up – you’ll have the last laugh!
How Many Millions Will You Be Worth?
Hopefully, after reading this post, you understand the 2 most important factors when it comes to ‘getting rich’ via 401k retirement savings…
- Time – start as early as possible
- Investments – pick the right ones
Perseverance (sticking with it) is just as important. But as you can clearly see – any idiot can do this stuff! It’s not difficult at all. You just need to figure everything out once, then set it and forget it.
You don’t need to earn an insanely large annual salary in order to end up wealthy later in life. You just need to be disciplined with your money and save diligently throughout all of your working years. The earlier you start – the better off you’ll be.
If even an uneducated truck driver can accumulate $6 million in retirement savings over a 40-year career – how much do you think you could accumulate?
I encourage you to access my 401k calculator and play with your own numbers. It’s 100% free! Just click the button below and I’ll email it to you instantly.
I would love to hear how much you will have saved for retirement! Play with the calculator a little bit. Change several of the assumptions to see how they affect your numbers. After you come up with a figure that you think will be close to your reality – let me know in the comments section below!
Passive Income Throughout Your Golden Years
Remember this… income derived from retirement savings is ultimately just another form of ‘passive income’ and passive income is what this blog is all about! Acquiring lots of passive income while young is really great and super cool – but having a backup plan for old-age (retirement savings) is an absolute MUST!
Hopefully – you’re reading this post while you’re still young and before it’s too late. It’s never too late to start saving, by the way. But in order to REALLY benefit from the magic of compound interest – you must start saving as early as possible.
Please pay it forward and send this post to somebody who is just starting out in their career. They’ll thank you in 40 years.
This post is for information purposes only and not meant to be used as actual financial or investing advice. Please refer to my Disclaimer page and do your own research and/or consult with an actual professional before making any financial or investment decisions. But beware – many professionals are college-educated (brainwashed) idiots!
Image Credit: Big Rig HDR by Sam Butler via Flickr