My Blog, Your Money

When I was but a wee lad, I daydreamed of being a millionaire.  Sure, a million bucks isn’t what it used be, but back then, it seemed like a vast fortune.  I still remember when I read How Much is a Million? and learned it would take 23 days* to count to a million.

Now that I’m much older and have experience performing calculations with commaed numbers, a million seems much doesn’t seem like such a fantasy anymore.  I decided to crunch some numbers to see how much, how often, and for how long you would have to sock away to reach that mystical million by the age of 60.  Assuming 10% annual returns, here’s a table listing the amount you’d have to save each year for different starting ages.

I included all the ages between 20 and 40 since I think those are prime years to start saving.  The earlier, the better of course.  Although, I don’t need to tell you that.  You can see that from the numbers.  If you start at age 20, you would have to save $2,259.41 each year (less than $200 a month).  Wait another 10 years to start and the amount rises to about $6,000 (~$500 a month).  To make up for the missed $22,600 (10 years of saving $2,259.41 each), you have to save more than 2.5 times more each year!  If that sounds like a big jump, the amount for a starting age of 40 is 7.7 times that of age 20.

Just for reference, I included age 50 to demonstrate the staggering amount you would have to save to retire by 60.  I also included the ages 0 and 10 in case you were planning to set your children up to be millionaires.  If you start saving as soon as birth, it only takes $329.51 a year for that child to have a million by the time he or she is ready for retirement.  That’s less than a dollar a day!

I also included the “Years to $ 1 Million” column to make it easy for those that want to reach a million before the age of 60 and just want to see the dollar amount for a certain number of years and vice versa.

Whatever age you do begin your quest for a million (or more), it is clear that the earlier you start, the easier it is.

* Assumption: 1 number per second for 12 hours a day