Saving To Be A Millionaire!
Want to be a millionaire? Everyone does, but do you know how much you need to save and what rate of return you need to get on your investments to reach that million level? This financial calculator helps you learn how your savings grows over time and how sensitive your final savings balance is to the rate of return you are earning.
- Did you know if you start saving $100 a month on your 18th birthday and put that money in a piggy bank, by the time you are 65, you will have $56,400 in your piggy bank (and $0 in interest).
- But if you put that $100 a month in a savings bank account that paid 3% interest, then by the time you are 65, you will have $122,425 in your bank account. That’s the $56,400 you saved plus $66,025 interest paid by the bank to you.
- That’s a big improvement, but if you could earn 8% return on your $100 monthly savings, then by the time you are 65 you will have $566,754 in savings! This example uses 8% because that is the historical return of the stock market.
- Better yet, if you save twice the amount per month ($200 instead of $100) you will have exactly twice the value at age 65, or $1,133,508.
- So how do you become a millionaire? Start saving $177 a month on your 18th birthday, earn 8%, and have a bank account worth $1,003,155 on your 65th birthday.
Current plan can make you a millionaire by age 60
Report
| Current age | 50 |
|---|---|
| Target millionaire age | 60 |
| Amount currently invested | 250,000 |
| Expected rate of return on investments | 8% |
| Inflation rate | 3% |
| Total at age 60 | $1,145,584 |
Suggestions to target a million dollars by age 60
Adjusted for 2.5% annual inflation, at age 59 a million dollars would be worth $803,795.
Terms
Your age
Your current age in years.Millionaire target age
The age you want to become a millionaire. For example, to find out what it could take to be a millionaire by age 40, enter 40 here.
Amount currently invested
Total value of all of your current investments. Although you could include your home and personal property in this amount – it is a bit more accurate to include only your savings, retirement accounts and investments.
Savings per month
The amount you will contribute each month to your investments. This calculator assumes that all savings are added to your account at the beginning of the month.
Expected rate of return
This is the annually compounded rate of return you expect from your investments. For the purposes of this calculator, taxation is not factored into the results. If you pay taxes on the interest, dividends or capital gains from these investments, you may wish to enter your after-tax rate of return.
The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor’s 500® (S&P 500®) for the 10 years ending Dec. 1st, 2014, had an annual compounded rate of return of 8.06%, including reinvestment of dividends. From 1957 through 2021, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 11.88%. Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can’t be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
Expected inflation rate
This is what you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI). From 1925 through 2014 the CPI has a long-term average of 3.0% annually. Over the last 40 years highest CPI recorded was 13.5% in 1980. For 2022 the CPI was 5.8% annually as reported by the Minneapolis Federal Reserve.