How long does it take to save a million dollars? How much must you sock away each month to reach it? Is achieving millionaire status even a possibility for most Americans?
If you’ve ever considered these questions seeking to implement the answers in your own life, or you’re just curious, we’ve got the inside scoop. Read on to learn exactly how long it takes to become a millionaire.
Who wants to be a millionaire?
A million dollars is approximately four times the median net worth of retirement-aged people in the U.S. However, a net worth of a million dollars is well within the reach of most Americans, as long as they have enough time and a sound investment strategy.
How long does it take?
The amount of time it will take you to become a millionaire depends on the following factors:
1. The amount of money you invest
2. The rate of return on your investment
The table provided here gives you an idea of how much you’d need to save, and how many years it would take you to reach $1 million, at various rates of return.
Getting started
If you’ve made this your goal, don’t waste any time getting started. The sooner you begin investing, the less money you’ll have to put away each month and the sooner you’ll reach $1 million.The easiest starting point for your million-dollar prize is to maximize your contributions to your employer’s 401(k) and your own IRAs.
Two neglected factors
One crucial factor most people forget about when trying to invest their way toward a million dollars is the rule of inflation. Simply put, a million dollars today does not have the same value as a million dollars in 30 years. When you adjust for inflation at 3 percent a year, $1 million in 2020 would need to grow to $2,427,262 to have the same purchasing power in 2050.
Another point that is often overlooked is that no one can accurately predict the future. There’s no way to know what life events you’ll have over the next three decades, some of which can significantly affect your finances in either direction.
If you’re ready to start investing your way toward $1 million, speak to a representative at GreenState Credit Union to ask about our investment and savings products. You can be a millionaire!