Traditionally, many people retire at the age of 65 because that's when Medicare begins providing insurance to seniors. Plus, 65 used to be the age when you could get your standard Social Security benefit (although the Social Security rules have since changed).
If you want to retire at 65 and you hope to retire as a millionaire, how much would you have to invest in your 401(k) or retirement account at your brokerage firm each month to make that happen? Read on to find out the amount you'd need to take out of your bank account and invest every day in order to have a seven-figure nest egg by this traditional retirement deadline.
Here's how you can become a millionaire by 65
The amount of money that you need to save each day to become a millionaire is going to vary based on how old you are when you start putting aside funds.
The table below shows the daily savings rates that would leave you with millionaire status when you reach this popular retirement age. It assumes you invest your money and earn a 10% average annual return. (This is in line with the stock market's average return over the last 50 years.)
| If you start saving at... | You must save this much each day to be a millionaire by 65 |
|---|---|
| 25 | $6.19 |
| 35 | $16.66 |
| 45 | $47.83 |
| 55 | $171.90 |
Data source: Author's calculations
Start saving today to get started on your seven-figure goal
As you can see, you really don't need to save very much money on a daily basis if you start at a young age. For around the price of a fast food meal, you could end up a millionaire. Now, if you wait until you're older to begin working toward your goal, you will need to save more -- but the amounts don't get ridiculous until you're very close to the time you need to retire.
If you want to save the least amount possible each day and still end up a millionaire, you should get started ASAP. Even if you can't save $6 a day or $16 a day, you can begin working on your goal and can get your money earning returns and working for you in an individual retirement account (IRA) or other tax-advantaged retirement account. Many people start by saving smaller sums and then increase the amount they invest as their income goes up. That can work really well, too.
Let's say that you managed to invest just $500 a year (or $1.37 a day) from age 25 to 45. If you did that, then you would only have to invest $38.86 a day a day from age 45 to age 65 in order to become a millionaire since your money would have been growing and would continue to grow for you. That's still a lot, but it's better than $47.83 daily.
Now, it may seem strange to consider how much to save each day to become a millionaire. But when you break big goals down into small ones, it becomes much easier to see how making pretty small sacrifices at a young age to invest just a little bit can make a big difference in whether you're able to achieve millionaire status.
The sooner you start, the more growth you'll see thanks to compound interest. So use the calculators at Investor.gov today to see how much you'd need to save daily to hit your goals -- then look at your spending to find those funds so you can build the wealth you deserve.
