A few days ago I posted on this blog about an article in Kiplinger's Personal Finance talking about how you can become a millionaire at any age. The article talked about people at ages 25, 35, 45 and 55 – and how much they would need to save at those ages in order to get to that magical 7 figure number.
As an example, the demographic I most closely fit into was the 35 year old bracket. Here is what it had to say about that:
At Age 35
You've Saved: 0$
To reach one million by age 65 you need to save $671 per month.
If You've Saved: $50,000
To reach one million by age 65 you need to save $304 per month.
* Aim to save 15% of your gross income
* Shift your assets to 90% stocks and 10% bonds.
* Invest in a 529 college-savings plan
I'm just about where I need to be to have that million dollars by the time I retire. I was still curious, however, to find out just when I'll have a million dollars in the bank, and when I can expect that to happen.
Calculate When You'll Be A Millionaire
To figure out when I might be able to become a millionaire I tracked down a millionaire calculator from another site that allows you to put in how much you're currently saving, and how long that contribution might take to become a million dollars. Essentially you input your current assets, the amounts you save and a few other pieces of information, and it tells you the number of years it will take to get 7 figures in the bank. For me the number was right around 55. What age are you going to make your first million?
What Will It Take To Reach The Millionaire Goal?
Over at Free Money Finance today he touched on an article with a family that retired in their 40s. They may be a good example of how you can get ahead faster if you are willing to make some sacrifices. They did things like cooking their meals at home, living off of one spouse's paycheck and using the other for savings and retirement, clipping coupons, buying things used instead of new and more. In other words, being smart with their money and denying themselves some pleasures now in favor of having more later.
What can you do to become a millionaire? It isn't really a mystery, it's just a matter of having some discipline and following through to reach your goals. You need to:
- Create income: Make money from your day job, and create income on the side as well.
- Spend lower than your means: Here's where a lot of people get tripped up, they're not able to delay gratification. Spending less than you make is key.
- Invest and save your money regularly: Set up automatic contributions to your savings and retirement accounts and let the power of compound interest go to work.
- Repeat: Do the above things over and over until your savings have reached your goal!
The next time I talk about being a millionaire, I'll touch on the subject, “Will a million dollars be enough when I retire?”.