How To Make a Million Dollars

This month in Kiplinger Personal Finance magazine they have an article talking about how much you need to save at any age to become a millionaire when you retire.

They look at the ages 25, 35, 45 and 55. They make certain assumptions at each age about how much you’ve already saved, so their article may or may not apply to your exact situation, but maybe it can give you that nudge you need to realize that you’re behind. You need to get saving!

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How Much Do You Need To Save At Each Age To Reach 1 Million?

millionaireSo how much do you need to save at each age if you’re starting from zero if you want to reach 1 million dollars by the time you’re retirement age?

At Age 25
You’ve Saved: $0
To reach one million by age 65 you need to save $286 per month.

  • Contribute enough to your company 401(k) plan to capture your employer match.
  • keep 100% of you account in stocks.
  • Pay down credit cards and other high-interest debt.
  • Set up an emergency fund in a high yield online account.

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

At age 45
You’ve Saved: 0$
To reach one million by age 65 you need to save $1,698 per month.
If You’ve Saved: $50,000
To reach one million by age 65 you need to save $1298 per month.
If You’ve Saved: $100,000
To reach one million by age 65 you need to save $861 per month.

  • contribute up to $15,500 to a 401(k)
  • 80% stocks and 20% bonds.
  • Don’t put your kids’ college costs ahead of retirement.

At Age 55
You’ve Saved: 0$
To reach one million by age 65 you need to save $5,466 per month.
If You’ve Saved: $50,000
To reach one million by age 65 you need to save $4,859 per month.
If You’ve Saved: $100,000
To reach one million by age 65 you need to save $4,253 per month.
If You’ve Saved: $200,000
To reach one million by age 65 you need to save $3,040 per month.

  • Add an extra $5,000 in catch-up contributions to your 401(k)
  • 70% stocks and 30% bonds
  • If you’re coming up short, consider working a few more years

Read the whole article, however, the message is clear. Start saving as early as you can!  The longer you have to save for retirement, the less hard you’ll have to work for that large nest egg!

At 38 I seem to be right about on track for the 35 year old, so that is encouraging for me. I do know, however, that I need to save more – it never hurts! As it says in Proverbs 13:11:

He who gathers money little by little makes it grow. Proverbs 13:11

How are you doing in your quest to save a million dollars? Are you on track?

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Last Edited: 16th June 2014

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Comments

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  1. GFish says

    I think these articles are always a great reminder of how important it is to save. But one thing they nearly always lack is that $1 million in 2048 (a 25 yr old today at age 65) is going to be SIGNIFICANTLY less than $1 million in 2028 (a 45 yr old today at age 65).

    20 yrs of 3% inflation would mean that in 2048 one would need $1.8 million to be the equivalent of $1 million in 2028.

    Or to make it sound even worse… $1 million in todays money, you would need $1.8 million by 2028 and $3.2 million by 2048. (assuming 3% annual inflation).

    $1 million in 2048 would be equivalent of $305,000 today. Still a lot of money, but loses a lot of luster.

  2. says

    These articles are good to let us know that we all need to start out young to get the full benefit of compounding of interest. To counter the effect of inflation, shoot for an interest rate that is about 3% higher than the stock market. By investing in the stock market and real estate that combination should yeild more than 10% return. That can be accomplished by leveraging your investment.

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