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How Long Does It Take to Become a Millionaire?

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For most people, becoming a millionaire is a lofty goal. The median net worth across the country is $192,900, according to the latest Survey of Consumer Finances. So, if you’re a long way from $1 million, you’re not alone.

Because this is a big goal, some people also believe that it’s unrealistic. That couldn’t be further from the truth. If you manage your personal finances well throughout your career, it’s entirely possible to become a millionaire. And it may happen sooner than you think.

How long it takes to become a millionaire

There are two key factors impacting how long it takes to become a millionaire:

  • How much you save
  • The return you get on your money

The first is self-explanatory. Everything else being equal, you’ll have $1 million sooner if you’re setting aside $1,000 per month compared to $500.

The return you get on your money is even more important. This is what turbocharges your savings. Let’s say you’re able to save $1,000 per month. If you aren’t getting any sort of return on your money, it will take you 1,000 months to save $1 million. That’s over 83 years, longer than the average person lives.

Now, let’s say you invest your money. The stock market’s average return is about 10% per year. But you may put some of your money in more conservative investments, too. We’ll play it safe and assume you get an annual return of 8%. If you invest $1,000 per month, you’ll have $1 million in 25.5 years.

Depending on your income, you may be able to invest more or less than that. Here’s a look at how long it takes to become a millionaire based on how much you invest per month:

Monthly contribution Time to reach $1 million with an 8% annual return
$250 41.6 years
$500 33.3 years
$1,000 25.5 years
$2,500 16.3 years
$5,000 10.6 years
Data source: Author’s calculations.

Getting on track for $1 million

As you saw, it’s a lot easier to save $1 million if you have plenty of time to do it. If you’re starting at age 25, you could be a millionaire when you retire by investing about $250 per month. If you’re starting at 45, you’ll need to invest about $1,500 per month. It’s still doable, but the faster you want to do it, the more money you need to invest.

If you haven’t done so already, start investing right away. Set aside a portion of every paycheck. It can be any amount that works for you. What’s important is that you make it a habit. Here are a few of the best ways to invest your money:

  • Set up a 401(k) plan at work: If your employer offers this, it’s well worth taking advantage. You can have contributions taken out of your paycheck, and you’re able to invest with pre-tax income. Many employers also match 401(k) contributions up to a certain amount, which is essentially free money!
  • Open an individual retirement account (IRA): You can open this type of account yourself through a stock broker and contribute to it with pre-tax income, just like a 401(k). Another option is a Roth IRA, where you pay normal income taxes on contributions, but withdrawals in retirement are tax free.
  • Open a brokerage account: Unlike 401(k)s and IRAs, you don’t save on taxes with a regular brokerage account. But there also aren’t any annual contribution limits or early withdrawal penalties with brokerage accounts, like there are with retirement accounts.

You can invest in stocks with any of these accounts. They all offer investment funds, as well, that save you time by investing your money for you. Target-date funds are a popular option, because they invest your money based on the retirement year you choose.

Becoming a millionaire isn’t an overnight process. It takes a lot of discipline to set aside money and invest consistently. If you put in the work, the reward is well worth it. You’ll be able to build wealth and eventually have not just security, but financial freedom.

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