A million dollars seems like such a magic number, but what does it take to get you there? It may be true that saving the first $100,000 is the hardest, but you have to start somewhere. This week Brian and Bo give you the basic steps necessary to becoming a millionaire by retirement age. The choice is yours, start early or start late…it can be done!!
According to Dr Thomas J. Stanley’s recent article titled “Wealth is Attracted to People Who Respect Money“, only about 8% of the households in the US have a net worth of over $1,000,000. This is a small percentage of the population so let’s dive into what it takes to make more millionaires.
- Pay yourself first – this means set aside 15-20% of your gross income every month.
- Take advantage of your employer’s free money – the retirement match is a 100% return on your money!
- Dollar Cost Averaging is your friend – this takes the emotion out of investing.
- With every pay raise or debt that you pay off, raise your savings amount – we call this “Forced Scarcity”.
- Quietly celebrate your milestones – your first $5k, $10k, $50k, $100k, and so on.
If your goal is to be a millionaire, it is possible (and relatively easy) to accumulate $1,000,000 by age 65. Lets use a 10% interest rate and below is the required monthly savings broken down by age:
Current age – 1 Required Monthly Savings – $14.00
Current age – 10 Required Monthly Savings – $35.00
Current age – 20 Required Monthly Savings – $95.00
Current age – 30 Required Monthly Savings – $263.00
Current age – 35 Required Monthly Savings – $442.00
Current age – 40 Required Monthly Savings – $754.00
Current age – 45 Required Monthly Savings – $1317.00
Current age – 50 Required Monthly Savings – $2413.00
Current age – 55 Required Monthly Savings – $4882.00
Current age – 60 Required Monthly Savings – $12914.00
Current age – 65 Required Monthly Savings – $79583.00
As you can easily see, the earlier you start, the easier it is to reach this goal! Investing consistently for the long-term yields amazing results. Stay consistent and build that army of dollars that will work hard for you in retirement.