What It Takes to Save $1 Million
I recently read a post by personal finance blogger Len Penzo about the secrets of millionaires. Number two on his list of 19 Things the Millionaire Next Door Won't Tell You reminds us that patience is a virtue: Most of us won't become millionaires overnight.
However, becoming a millionaire is not an unrealistic goal. I dug up a somewhat oldie, but still very goodie piece from the February 2008 issue of Kiplinger's Personal Finance magazine that illustrates how much you need to save each month to accumulate $1 million by age 65. The younger you are when you start saving, the less you'll have to set aside each month. Each example assumes you're earning 8% annually, which still is realistic (see The 8% Solution).
How to save a million at age 25: You need to save $286 a month to reach $1 million by age 65. See successful savings strategies for your twenties.
How to save a million at age 35: If you don't have any savings yet, you need to set aside $671 per month. If you already have $50,000 saved, you'll need to save $304 each month to reach $1 million by 65. See successful savings strategies for your thirties.
How to save a million at age 45: Assuming you have no savings, you'd have to set aside $1,698 per month. But if you've set aside $100,000, you can reach $1 million by age 65 by saving $861 per month. See successful savings strategies for your forties.
How to save a million at age 55: If you're starting from zero, you'll have to save a hefty $5,466 a month. That figure drops to $3,040 a month if you've already saved $200,000. See successful savings strategies for your fifties.
For help constructing a portfolio to meet your savings goals, use our resource with model portfolios for all types of investors.