Who Wants To Be A Millionaire At Age 65?
Repeat after me...."I DO!"
Be a millionaire at age 65? For SOME it’s easy.
So you want to be a millionaire. To join the “double comma” club. The seven-figure bank account. All by age 65.
Sounds great ‘eh?
Now here is a secret. You can buy membership into that club for a monthly fee.
How does 300 bucks and some change a month sound? Would that be a great deal to join the club?
Or would you rather pay $450 or so for membership?
Or $650? ….all the way up to $6,000 a month to join that club?
Which would you choose? $300? Or $6,000 a month “dues”?
I suspect that we would all choose to join the club for $300 a month.
But there is a catch to becoming a millioniare…
It’s about time. It’s how long you put away that monthly money and let it do a lot of the work for you. Depending on your age, it may be too late to join the club for $300 a month. Because this is all based on age and compounding, it’s simple: The longer you contribute a small amount, the better off you are.
So how do you do that?
The Simple Plan To Be A Millionaire by 65
It’s simple. You start to save money earlier in your life. To join the million dollar club at age 65, you have to start putting away a little more than $300 a month and get an overall investment return of about 6% on your money, starting at age 20. Yup, you read it right. Age 20.
But if you wait five years until age 25, your cost of admission went up to about $450 a month. Wait 10 years to age 30, the price of that ticket is now around $950. If you don’t start until age 40, 50 or even 55 years to start saving, your ticket price goes up to $1,400, $3,400 and then a whopping $6,050 a month.
Time Is Money
Yikes! Waiting certainly has its drawbacks.
The longer you wait to join the club, the higher your price of admission.
The Two Elements
Did I mention that there are really TWO elements to the admission process? One is money. The other is …. Time. It’s kind of like this calculation:
Money x Time = Your Goal
If you have a set goal…then you either have to start putting in money early and let time do the heavy lifting, OR, you can start with less time, but have to put in a whole lot more money to lift you to your goal.
Which would you rather spend? Time or Money?
The really cool part about this calculation is to understand this:
To make the money you need to put into the calculation, it usually takes your time to earn it. A little bit of money = a little bit of time; More money to invest = more time to earn it. You need to spend (i.e. use or “consume”) the time to earn the money. BUT…here is the cool part…the “time” element of the calculation doesn’t really require you to “spend” your time. It just happens. It’s going to happen regardless if you pay attention to it…or not. It’s the time that you are using to compound your money. It’s isn’t time that you are actually consuming to make the money for the equation, it’s time that is just…going on.
So you see, when you start early, the time you need to “consume” to make your investment money is less (because it's less money). Although the “Time” you wait (until age 65) is longer, it’s not time that you have to “spend” to make your goal. It’s just the time that goes by…while you live your life.
It also COSTS you more when you wait.
In total dollars, the sooner you start, the less the total amount of money you have to invest to get into the millionaires club. The total cost of being a millionaire at age 65 is around $162,000 investment when you start at age 20, but it’s around $270,000, $420,000 or $630,000 if you start saving at age 30,40 or 50 respectfully.
Look at the difference between starting at age 20 versus age 50. That’s almost $470,000 difference. For that, you can pay off your house. Or buy a vacation home. Or put some kids through college. It’s the difference of having you work for the money … or having your money work for you. That’s the beauty of compounding.
So In Summary…
Getting to the millionaires club takes two things:
- Getting started with saving money on a regular basis.
- Giving enough time to allow your money work for you and grow to get you into the two comma club.
The sooner you start, the less it will cost you.
So let’s ask that question again….
Who wants to be a millionaire at age 65?
Repeat after me...."I DO!"
If you do, then it’s best to start that journey this month, and start paying yourself first with a regular monthly investment deposit … and buy your ticket to the club as inexpensively as possible.
Let’s all go and be future millionaires!
Hey, Just FYI... I ran across a statistic from Vanguard. Their "How America Saves - 2019" report provides some insight on how well you would be doing if you had a million bucks in your account at age 65. The average 401k savings for the average American worker at age 65 and older is.... (drumroll please) ... about $193,000 with a median value of around $58,000 (cymbal crash). That makes your million look even better, 'eh? It's time to get started on your savings plan!
Note: The information provided in this post is for illustration purposes only and is not a guarantee of success or performance. All values are approximate.
WhiteCoat Risk Management provides these articles to help improve general risk awareness in all aspects of your life. It is not responsible for any actions you take or fail to take regarding any aspect of your financial planning or risk management. This article is provided for information purposes and is not intended to provide individualized advice. You alone are responsible for your financial decisions.
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