## How Easy is it to Save a Million Dollars?

Do you know what my favorite posts to read are? The ones about how saving a million dollars is totally easy! And guess what? There are THOUSANDS of articles about how easy it is to become a millionaire! I decided to aggregate a few of my favorites to drive the point home. Saving a million dollars over a long period of time is actually very simple!

## How Much to Save Each Day to Become a Millionaire

Interest rates matter quite a bit when it comes to saving money. This Business Insider chart gives you a daily savings need based on 3 different return rates to save \$1,000,000 by 65!

## How Much to Save Each Month to Become a Millionaire

Kiplinger calculated, based on an 8% return how much you would need to save per month to become a millionaire by age 65. Here are the results:

• Age 25: \$286 a month
• Age 35: \$671 a month with zero savings. With \$50,000 already saved, you only need to save \$304 a month.
• Age 45: \$1,698 a month with no savings. If you already have \$100,000 saved, you only need to save \$861 a month.
• Age 55: \$5,466 a month if you have nothing saved! If you already have \$200,000, you need to save \$3,040 a month.

Young Adult Money provided a simple calculation for only \$500/month: With a “beginning balance of \$5,000. If you contribute \$500 [a month] over 40 years with a 6% return, you’ll end up with \$1,055,511.36.”

## Millionaire Returns and Contributions

DoughRoller set up a chart showing how long it would take you, in years, to become a millionaire based on annual contributions and return rates:

So, if you want to be a millionaire in 31 years, you can either save \$7,500 annually with an 8% return or \$5,000 annually with a 10% return! If you want to be a millionaire in 10 years, it’s not on this chart so you’ll have to save significantly more than \$15,000 a year.

The Green Swan compared three different scenarios for a 22-year-old becoming a millionaire as pictured on this graph:

Red line assumes:

• Starting Salary: \$30,000
• Annual Pay Increase: 3%
• Annual Savings: 5%
• Annual Savings Increase (15% Cap): 1%
• Investment Return: 7%
• Age to Reach \$1 Million: 61

Blue line assumes all the same thing except caps the savings rate at 25% instead of 15%.

• Age to Reach \$1 Million: 58

Green line assumes the the same as the blue except starts with a starting salary of \$45,000 instead of \$30,000 (with a 25% savings cap).

• Age to Reach \$1 Million: 53

First Quarter Finance looks at what would happen if you fully funded your Roth IRA every year: “For easy math, let’s just say I didn’t start putting money into my Roth IRA until age 18. Let’s assume an 8% annual return (very reasonable as the benchmark S&P 500 has gained nearly 12% since inception). The max annual contribution is \$5,500. The money grows tax free. […] By age 70, I’ll have \$3,987,645.24. […] Oh, and people age 50+ can contribute another \$1,000 annual to their Roth IRA. I think that was added to help the late bloomers catch up. I didn’t take this into account with my near \$4 million figure. So really, I’ll have \$4,037,072.12.”

## 401k Millionaire

And, to finish it off, here is an AMAZING chart by Joe over at Retire by 40 of how much you would have if you had always maxed out your 401K. Mr. T started his job in 2009, which means he could have \$195,113 (and the chart is based on December of 2015, so actually these values would all be higher!). That’s nearly twice what we have now… and that would just be his 401k!

In the end, what have we learned? It’s easy to become a millionaire by 65 if you consistently save! Set yourself a goal and get to it people! Track your progress with a FREE Personal Capital account!

### CHECK OUT PART 2: People Who Became Millionaires Faster! – The actual numbers of people who did it WAY FASTER than 30-40 years!

Personal Capital links on the blog are affiliate links. At NO COST to you, we get a “thank you” commission if you sign up through our links. If you don’t feel good about that, open a new window and go directly to their landing page.

Previous

Next

1. #### TJ

If you’re a saver you can absolutely be a millionaire or perhaps even a multi-millionaire by age 65. I’m always mind boggled at the \$\$\$ figures that some of the retirement calculators show me if I were to keep working and saving for another 20-30 years. Great job compiling all the information!

• #### MaggieBanks

If you want to work for 30 years, there is really no excuse not to save a million! (The main problem is that most of us don’t want to do that!)

2. #### Fervent Finance

Love me some maths. What boggles my mind is that there are thousands of posts like this, yet people read them and then DON’T ACT ON THEM. This just makes me want to get a plan in place to try to do it (and much faster) than the articles suggest.

• #### MaggieBanks

I know, right?! That’s why I love to see all the numbers together so I can be better informed in my own plan!

3. #### The Green Swan

Thanks for the call out and aggregating a lot of great posts!

• #### MaggieBanks

Thanks for having one I could add. 🙂

4. #### Ms. Montana

Retirement calculators and charts were my driving motivation to keep investing in my early twenties. I saw how my little efforts would pay off. And how much more it would cost if I waited 15 years. What I didn’t realize is how much freedom those numbers would provide. In some way the charts sold themselves short.

• #### MaggieBanks

Way to be the example for all of us!

• #### Ms. Montana

I assume you are referring to my love of ice cream? How I once set a goal to eat 100 scoops in one summer? How I burned through the motor on one Cuisinart ice cream maker? I’m a natural role model. =)

• #### MaggieBanks

um, exactly! This sounds AMAZING! 🙂

5. #### Kate

If only this was taught in high schools! I’d definitely have more money saved by now. Up until a couple years ago, I just assumed that I’d be working until 62-65. So grateful to this community for opening my eyes!!

• #### MaggieBanks

I know! I love seeing all the spreadsheets and wish I would have been on track at 20!

6. #### Amanda

This is amazing. And frightening. I both get a thrill from these and get a chill because I’m so far behind!

• #### MaggieBanks

What better motivation to start now?! 🙂 (PS – you’ve got this Amanda… you’re motivated, intelligent, and well-read. I have no doubt you’ll be a millionaire if you so choose!)

7. #### Harmony Smith (@CMK_Harmony)

They really should teach this in high schools. Saving money is not that hard – especially if you don’t accumulate debt.

Thanks for the inspiring numbers 🙂

• #### MaggieBanks

We’re all about hope around here! 🙂

8. #### Kalie @ Pretend to Be Poor

Thanks for sharing this collated info, Maggie. A huge part of my financial education was understanding the power of investing and the possibility that anyone can become a millionaire over time. That was huge for me. Looking forward to the numbers of people who did this faster than 30-40 years.

• #### MaggieBanks

I’m sure there’s nothing new in Wednesday’s post you haven’t seen yet, but it’s fun seeing them all together!

9. #### Marc

It really does seem easy 🙂 Looking forward to the next post!

• #### MaggieBanks

Today’s post is my favorite!

10. #### TheMoneyMine

It’s relatively easy, definitely simple and accessible to most people. It’s so simple in fact that this was my 3rd ever post! The biggest levers are savings rate and education and the majority of Americans can reach that level, but only 10% do!
“Get to it people!”. Indeed !

• #### MaggieBanks

I haven’t seen that post of yours… link it up!

11. #### mustardseedmoney

Did you happen to see Grant Cardone’s interview stating that a million dollars was the new middle class? This blew my mind but when you look at the numbers in your article it makes sense that becoming a millionaire is more attainable than ever before.

• #### MaggieBanks

It’s so true! If you’re not a complete idiot and you actually work a regular span of 30ish years, you’re bound to be a millionaire!

12. #### Penny (@picksuppennies)

This post has been on my mind for three days. I’m sorry I didn’t post sooner! Some of the percentages seem too high for my negative Nancy mindset. I know people will fight me to the death over that, but 8% every year isn’t a gamble I’m willing to take. But even if I use 4%, which is actually what my account is at (I know, I know, long haul, it could go up, etc., etc.), the point still stands. It’s way more within reach than I ever imagined when I first started working. And I hope I am wrong and the percentages do go up! I’m so glad you curated all of these posts. This was just the motivation I needed to reconsider how much we’re saving!

• #### MaggieBanks

I agree with you, which is why I wanted to be sure to include calculations based on many different return scenarios. We use 4 or 5% for our conservative estimates around here as well. But in reality, the average return for the market has been much higher than that.

• #### Dave

And here in lies the problem. Investors don’t earn the “average” return. They have to gut out significant ups and downs. And that is FAR FAR FAR from “easy”. Especially once you’ve accumulated \$500 – \$750k. To get to a million, you’ve got to keep ALL of that money invested in the stock market. Play it safe and you won’t get the magical, mythical 7 percent return. Of course there is NEVER an annual return in the stock market of 7 percent, but that’s another posting.

At 7.2%, it takes about 10 years for money to double (see the Rule of 72). Sure, you’ll still be adding to your nest egg when you’re ten years from “retiring”. But…how are you really going to react in the face of what the stock market does (which is provide negative returns about three out of every ten years)?

Consider you have \$500,000 and encounter the following returns:

2000 -9.03%
2001 -11.85%
2002 -21.97%
2003 28.36%
2004 10.74%
2005 4.83%
2006 15.61%
2007 5.48%
2008 -36.55%
2009 25.94%
2010 14.82%
2011 2.10%
2012 15.89%
2013 32.15%
2014 13.52%
2015 1.36%

These are the average annual returns (with dividends) for the S&P 500 (NO FEES).

@picksuppennies is spot on. Her “negative Nancy mindset” is foundational in behavioral economics…humans are, by nature, “loss averse”. Said another way, we hate losses WAY WAY WAY more than we love gains.

How many humans are going to watch their \$500,000 nest egg turn into \$454,850 in one year and then watch that turn into \$400,950 and then watch that become \$312,861? I’m now seven years away from when I thought I was going to have a million bucks. Instead, I’ve got about a third of that.

How many humans are going to still be investing new money into the stock market after these three year?

Compounding is great. But it’s math. It’s not how most humans are able to really invest.

Spreadsheets and financial calculators make it “easy” to see how money will grow over time using an average annual return of return, which don’t occur in the real world.

SO…the really hard part of investing is to actually stay investing ALL THE TIME.

In today’s historically low interest rate environment “getting” 4 or 5 percent returns means a healthy exposure to stocks. In this decade (since 2010), it’s been obvious and easy to be an investor.

Over a 40 or 50 year time horizon, investing in NOT EASY. Granted, it’s simple but given we’re human, it’s wickedly hard to execute.

• #### MaggieBanks

I agree that it is difficult for the average person to continue to invest during all time periods. Good point. Ms. ONL was the one that pointed out the math is simple, but that doesn’t mean it’s easy!

13. #### Fritz @ TheRetirementManifesto

I’ve been maxing out my 401(k) for 31 years. Easy million (s, actually). I’ll be retiring at age 55 as a result.

• #### MaggieBanks

Nice! We just got wise and haven’t yet maxed out one! But we’ll set ourselves up and eventually end up somewhere in the million category someday!

14. #### Financial Samurai

Good charts! I’m not sure if it is easy actually, even though I say “the first million is the easiest.” I think a more appropriate word to use is INEVITABLE! Follow these habits and if the direction is correct, sooner or later you will get there – Chinese proverb.

Sam

• #### MaggieBanks

Love it! And agreed. If you don’t set yourself up, your path will end up elsewhere. – Maggie proverb.

15. #### Our Next Life

For a while, when we’d tell people about FIRE, I’d say something like, “It’s actually pretty easy once you understand the math and get focused.” But then I realized that “easy” is probably not true for most people. So now I say, “It’s not always easy, but it’s definitely simple.” So here goes: Saving a million bucks is simple! 🙂

• #### MaggieBanks

So true. But if you’re starting at 18 like some of these charts are, it’s easy too! (It’s too bad we’re WAY past that!)

16. #### CoupleofCents

I guess I’m greedy, but when I read how it’s easy to retire a millionaire by 65, all I can think about is “65! That’s way too long.” Look forward to reading your next post of people who did it sooner!

17. #### Millennial Money

This is so true. It’s actually pretty easy to save \$1 million if you continue to make and invest more money. The growth truly accelerates in strong market years – that’s why building your base capital is so important. Thanks for sharing these charts. Always fun to see.

• #### MaggieBanks

More numbers like this help me calculate the possibilities!

18. #### retirebyforty

Thank you for sharing my 401k post! I think that’s the easiest way to become a millionaire. Just max out your 401k every year and you’ll get there quicker than anyone imagine. 🙂

• #### MaggieBanks

Thanks so much Joe! And I agree with you!

This site uses Akismet to reduce spam. Learn how your comment data is processed.