Give me a lever long enough, and I can move the world.
We all hear about becoming a millionaire as entering into an elite status of wealth. While a million dollars may not be as much as it once was, it is still a great milestone to achieve. Most people will not make a million dollars in a year, and if you do, the ability to save 100% pre-tax is next to impossible. But it is actually possible for the average person to save a million dollars in their lifetime by saving for one year.
With a few basic assumptions, we can put this plan in motion. If you spend your first year after college living like you’re in college, you can probably save $15,000. If we assume a rate of return of 10%, in 42 years and few months, this will grow to $1 million. If you start this at 23, in 42 years you will be 65 and right on time for retirement! One year of hard saving and time is all it takes.
Perhaps you’ve neglected to save in your twenties and need a jump start to get back on track. Now you are 30 and married. If you and your spouse were to each double down on your savings and come up with $30,000 ($15,000 each), invest it, earning 10% per year on average, at age 65, you too would have $1 million.
Lastly, let’s consider one more scenario where you are 40, married, and haven’t started to save yet. There’s still hope! Now, your goal is to save $27,500 ($13,750 each) a year for 5 years. Then invest it, earning 10% per year on average, at age 65, you too would have $1 million.
It’s important to save and invest throughout our lives. It is, however, interesting to see how just one year of lean living can jump-start your retirement. Working with a CERTIFIED FINANCIAL PLANNERTM professional can help you find the right portfolio and the right accounts to invest in. Saving your own money is something only you can do.