A 53-year-old worth $3.4 million is sticking with 2 strategies to keeping building his wealth

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The key to wealth is saving early and investing in real estate, says one millionaire. (The man is not pictured.)

• John, the blogger behind ESI Money, interviews millionaires about their income, savings, investments, and wealth-building tips.
• In a recent feature, a 53-year-old business owner with a $3.45 million net worth told John that he wants to reach a $5 million net worth before retirement.
• The man plans to continue building wealth in two ways: contributing the maximum to his retirement accounts and maintaining income-producing real estate.
• Read more personal finance coverage.

If you've found a strategy that works for building wealth, don't let up.

That's the lesson to be gleaned from the story of a 53-year-old millionaire who was recently featured on the blog ESI Money. The man, whose name was not published, currently has a net worth of $3.45 million, about one-third of which is held in retirement accounts and another third of which is home equity.

The man worked in a management position in the finance industry for 15 years before leaving in 2017 and founding a real-estate development business, he told John, an early retiree and the founder of ESI money.

The man's wife works in finance and together they earn about $390,000 a year. That's more than enough to cover the expenses for their family of four in a suburb in the Northeast, he said, allowing them to save about 70% of their income annually.

The man credits the bulk of their wealth to saving in retirement accounts and investing in real estate - two strategies he plans to continue using to increase their net worth to at least $5 million by retirement. They need to cover two college tuitions and fund a comfortable retirement, possibly abroad, he said.

While he and his wife didn't start maxing out their 401(k)s and IRAs as early as he would have liked, he said, they've done so consistently for several years. As a business owner over 50, he's able to contribute up to $62,000 to his Solo 401(k) this year.

The contribution limit for an employer-sponsored 401(k) in 2019 is $19,000, plus a $6,000 catch-up limit for folks over 50. IRAs allow a maximum annual contribution of $6,000, plus a $1,000 catch-up, though the limits and tax benefits may vary based on income.

When John asked the man for his best advice for aspiring millionaires, he said the only thing better than investing early in a 401(k) is investing in real estate.

There's 'no better way to become wealthy' than investing in real estate

The man purchased his first investment property at age 26 and rented it out for seven years before selling it for a $20,000 profit, he said. At 28, he bought a home for himself and rented out rooms to friends to help cover the mortgage - a strategy known as "house-hacking." 

After selling the home for a profit, he eventually bought two more rental properties, which he has maintained for 10 to 15 years. Both produce enough positive cash flow to cover their respective mortgage payments and allow him to borrow against the equity to invest in his business, he said. He also invests in real estate through the crowdfunding platform Fundrise.

"Unless you have a high income allowing you to save more, there is no better way to become wealthy than by using leverage to purchase real estate," he said. "The tax incentives are also fantastic and once you build equity over time you can tap into that equity to make additional purchases."

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