Three things I read this week that I keep chewing on.

A Costco employee making $33 an hour crossed $1 million in his 401(k) after 40 years. Investors are arguing about whether a 30-year Treasury paying north of 5% belongs in a retirement account. And a guy with an AARP/UnitedHealthcare Medigap policy watched his premium jump 21.88% in two years.

Same variable running through all three: time. It made the Costco guy a millionaire. It’s slowly bankrupting the Medigap guy. The Treasury buyer is betting he can lock in a number and let time do nothing to it, which is the part I’d push on.

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The $33-an-hour Costco millionaire

Here’s what nobody says about this story: the wage isn’t the interesting part.

I ran the numbers. To land at $1 million after 40 years, assuming something like 7% to 8% annual returns, you need to be putting in roughly $320 to $420 a month. Call it $4,000 to $5,000 a year. On a $68,000 salary that’s about 6% of gross, and if your employer matches part of it, your own share drops below that.

So the guy who “got rich working at Costco” was saving an amount that a lot of people spend on car payments. For 40 uninterrupted years. That’s the whole trick.

What actually did the work:

Four decades in the market. The dollars he put in during his twenties had 40 years to compound. The dollars he put in last year had one.
The employer match, which is the only investment I know of that returns 50% or 100% on day one before the market does anything.
Whatever profit-sharing Costco layered on top, which for a lot of long-tenured employees is real money.
Never cashing out. Every job change is an opportunity to blow up the balance, and he didn’t take it.

A bigger salary shortens the timeline, but only if you save the raise instead of absorbing it. Most people absorb it. That’s why the software engineer making $250k sometimes has less money than the warehouse guy.

Start contributing now, bump the percentage every time you get a raise, and then be boring for 40 years.

Should you buy a 30-year Treasury paying 5%?

A lot of people see 5% and think, “That beats the 4% rule, I’m done.” Those are two different numbers measuring two different things.

The 4% rule is a withdrawal rate, not a return. You pull 4% of your starting portfolio in year one and adjust that dollar amount for inflation every year after. It was built on historical results from portfolios holding stocks and bonds, and the whole point is that stock growth carries you through the decades when your withdrawals get big.

Buy a 30-year Treasury and hold it to maturity and you have locked in your coupons and your principal in nominal dollars. That’s genuinely nice. But run inflation at 3% and the final coupon payment buys about 41 cents of what a dollar buys today. Your income never moved and your grocery bill did.

The other things you’re signing up for:

If rates rise, the bond’s market price falls, which only matters if you have to sell before 2056.
Thirty years is a long commitment. If yields hit 7% in four years, you’re stuck watching.
No growth. A Treasury pays you and then gives your money back. It doesn’t compound into anything.

Individual bonds get good when you match them to a specific bill you know is coming. Retiring in 2032 and want that year’s spending already handled? Buy the bond that matures in 2032. Better yet, build a ladder across several maturities instead of jamming your entire bond allocation into one 30-year issue. And if what you’re actually protecting is purchasing power, TIPS do that job directly.

Bond funds aren’t the dumb cousin here either. They keep rolling maturing holdings into new ones, so after rates rise, the fund’s yield climbs with them. Pick individual bonds when you need money on a date. Pick funds when you want bond exposure that keeps reinvesting itself.

The Medigap premium that went up 21.88% in two years

One policyholder went from $174.44 in March 2024 to $212.61 after two increases, 9.9% and then 12%. That’s $458 more per year for the identical policy.

The rate hikes are only half of it. This plan gives new members an enrollment discount of up to 45%, and that discount shrinks every year for 20 years. So the insurer can raise your base rate 6% and your actual bill goes up more, because the cushion underneath is deflating at the same time.

I modeled it out. Base rate rising 6% a year, discount melting from 45% to zero over 20 years, and the bill you pay in year 20 is roughly five to six times what you paid in year one. The insurer never did anything you’d call outrageous in any single year.

Community rating doesn’t save you here. It describes how the insurer buckets policyholders when it sets rates. It says nothing about whether those rates go up, and discounts and statewide increases still hit you individually.

If you’re on Medigap, do four things:

Call and ask for the complete enrollment-discount schedule, year by year, in writing.
Model the base premium and the discount as two separate lines. One is going up, the other is going away.
Check the medical-underwriting rules before you try to switch plans. Federal guaranteed-issue protections cover certain situations, and outside of those, it’s state by state and you can get denied.
Stress-test healthcare at rates well above CPI. General inflation is not your inflation.

One guy’s premium isn’t a national statistic. It is a good reason to stop assuming your health costs rise at 3%.

A planning note

Most retirement spreadsheets hide everything behind two cells: one assumed return, one assumed inflation rate. Split them. Track nominal returns separately from what your money can actually buy, and give healthcare its own inflation assumption that runs hotter than the rest.

Fixing those two things will improve your plan more than nudging your expected return from 7% to 8%, which is the move everyone reaches for first because it makes the number at the bottom look better.

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What to watch

If long-term Treasury yields stay above 5%, expect more near-retirees to start buying individual bonds to fund specific years of spending. That’s a targeted move for people with a known bill coming. It isn’t an argument for dumping stocks.

On Medigap, watch two numbers, not one. Your next base-rate increase and your remaining enrollment discount. A mild rate hike lands hard when the discount is dropping at the same time.

This post is for informational and entertainment purposes only. It does not constitute financial or tax advice. All data and figures may be subject to error or change. Always consult qualified professionals and do your own research before making financial decisions.

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A Costco guy has $1M, a 5% Treasury that…