Retiring a millionaire always seems to be a popular goal. We want to retire comfortably and have plenty of money to do the things we want to do without any worries.

How to do it

Common sense will tell you that starting early on savings it the key, but few realize why. Certainly you have heard that it takes money to make money. A basic understanding of compounded interest will show you that the money it takes from you personally can be relatively small. Why? Well, with any kind of interest bearing account, be it a mutual fund, index fund, pure stocks or other such methods, the money you invest is making money then gets put into making even more money.

OK, I already know that

Yes you probably do, so what does it take to actually make that million? Naturally it depends. The factors include the age at which you start, the age at which you want to retire and the average interest you expect to make over that time period. The accepted norm for the interest is 8%, which I personally think is the smallest you should accept.

You can take these numbers and plug them into a variety of calculators online to figure how much you need to save, but I’ll use a recent article from Kiplingers to give you a decent figure. Assuming you are starting from zero you need:

$286 if starting at age 25.
$671 if starting at age 35.
$1700 if starting at age 45.

Think about that

The amount needed more than doubles for each 10 year period. If that isn’t a wake up call, well you probably won’t be a millionaire.

Now this doesn’t cover other retirement options like 401(k)s which if available to you will help out dramatically.

budget, Personal Finance, wealth