Yahoo Finance Wealthy Retirement: 3 Ways To Become a Millionaire by 65
If you want to become a millionaire by age 65 — the target retirement age for many — you need to get busy as soon as possible. The earlier you put a plan in place, the easier it will be to reach your goal. Even if you are on a tight budget, you’d be surprised how just a little bit of saving and investing can help you reach millionaire status by your 65th birthday.
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The Motley Fool ran the numbers on how much you need to invest every day to become a millionaire by 65. The numbers assume you earn a 10% average annual return, which is in line with the average stock market return over the last 50 years.
Here’s what you would need to save/invest at different ages to amass $1 million in wealth by 65, based on a 10% yearly return:
Age 25: $6.19 a day
Age 35: $16.66
Age 45: $47.83
Age 55: $171.90
What those numbers show is how much easier it is to reach your goal if you start early — but also that even if you start late, there’s still a path to get there.
In terms of practical strategies, here are three ways to become a millionaire by 65:
Start Now
If you are 25 years old, then you need to start setting aside about $185 a month in investments based on The Motley Fool’s numbers. That figure rises to $500 a month at age 35 and $1,435 at age 45.
If you have sufficient income to put that kind of money into investments, then now is the time to do so. If you don’t have enough income, then find ways to cut costs so you can free up extra money toward your savings goal.
Becoming a millionaire at 65 means making sacrifices now, so consider cutting back on your vacations, nights on the town and expensive lunches. If you are older, then you might need to take more drastic measures to save money, such as downsizing to a less expensive home.
Boost Your Income
Most millionaires get that way by earning a lot of money through work, investments or some combination of the two. If your current income won’t allow you to sock away enough money to reach your savings goals, then the obvious answer is to find more income. You can do this by getting side hustles and part-time jobs and putting the extra earnings into savings/investments.
For an even bigger income boost, invest in stocks, mutual funds and other assets. Before making the leap, though, consider hiring a financial advisor to help you get the right mix of investments to hit your targets.
Maximize Your Retirement Plan Contributions
In addition to starting your retirement savings/investments as soon as possible, you should also max out your retirement plan contributions as soon as possible — especially if your employer matches your contribution.
As of 2024, employees with a traditional 401(k) and similar plans can contribute up to $23,000 for the year. If you are 50 or older, the “catch-up” contribution is an additional $7,500. The maximum you can contribute to an individual retirement account in 2024 is $7,000, though if you are 50 or older, you get an additional catch-up contribution of $1,000 to bring the total to $8,000.
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This article originally appeared on GOBankingRates.com: Wealthy Retirement: 3 Ways To Become a Millionaire by 65
