Long-time personal finance columnist Scott Burns writes that by working for four summers starting at age 16, putting the money in a Roth IRA, investing it wisely, and waiting until age 67, it’s simple to become a millionaire. That’s the 51-year plan. But what if you’re not that patient—or that young? Lucky for you, there are many ways to hit the million-dollar mark, but the faster you try to get there, the harder it becomes.
Key Takeaways
- Becoming a millionaire may seem like it is out of reach for many Americans, but it is nonetheless achievable.
- Being a diligent saver and investor in a well-diversified and tax-advantaged portfolio can help you get there, but this, of course, will take some patience.
- If you start saving in your 20s, you can be on track to having at least a million bucks by the time you retire.
$1 Million the Hard Way
Let’s say you want to become a millionaire in five years. If you’re starting from scratch, online millionaire calculators (which return a variety of results given the same inputs) estimate that you’ll need to save anywhere from $13,000 to $15,500 a month and invest it wisely enough to earn an average of 10% a year. That means taking calculated risks, diversifying, and avoiding investment fees such as loads and broker commissions.
Obviously, in order to regularly save this much money each month, you’ll need to have a fantastic income. At the low end, to meet the $13,000 a month savings goal, you’d probably need to make around $265,000 annually. The specific number will vary considerably depending on your income tax situation, but the point is that it’s high.
According to the salary calculator at PaycheckCity.com, if you make $265,000 a year, are single, claim two exemptions on your federal tax return, and live in one of the nine states with no state income tax, you’d take home around $185,000 a year, or about $15,400 a month. Saving $13,000 would leave you with $2,400 a month to meet all your expenses—a perfectly reasonable number for many singles, and even some couples.
If you're willing to be extremely frugal—let’s say you can get by on a mere $700 a month—will it make a big difference? In this case, not really. You’d still need to make almost $250,000 a year.
If you’re in a committed relationship, however, things get a little easier. You can get away with making around $132,500 a year then, as long as your significant other can make up the difference and is on board with your savings plan. Of course, then you’ll have to share your millionaire status.
$1 Million the Harder Way
Of course, $132,500 (or $265,000) might seem attainable (or like pocket change) for some C-level executives, but according to the U.S. Bureau of Labor Statistics, the median salary for workers is $59,072 as of Q1 2024. Comparatively, a CFO makes over $360,000. Becoming a millionaire in the short-term, therefore, requires a more ambitious strategy than steadily collecting a well-deserved paycheck.
Alan Corey, author of “A Million Bucks by 30” (2007), claims to have made a million dollars in seven years while earning a salary that more of us can relate to: $40,000 to $50,000 a year. He happened to put some of the money he saved while living very frugally in New York City in the right place (real estate) at the right time (the expansion of the most recent real-estate bubble). Of course, he also had some of the most important personality traits of success: determination, a strong work ethic, confidence, and a willingness to make some extreme sacrifices.
$1 Million the Easy Way
A short-term plan for creating wealth certainly includes these personality traits, but it often includes factors such as timing, luck, and/or possessing an incredibly valuable idea and knowing how to implement and market it. If you know you’re closer to average, consider a more traditional, more attainable approach.
The longer-term road to wealth involves such time-honored tactics as avoiding consumer debt, diversifying your investments, minimizing your investment fees, tax planning, minimizing housing expenses, and, for two-earner households, living on one income.
Putting aside someone's $40,000 in take-home pay every year—and earning that 10% return as described above—will get you to millionaire status in about 15 years. Halve those savings and you’re still only looking at 20 years. It will take more work for sure, but it’s a lot faster than 51.
FAQs
$1 Million the Easy Way
Putting aside someone's $40,000 in take-home pay every year—and earning that 10% return as described above—will get you to millionaire status in about 15 years. Halve those savings and you're still only looking at 20 years. It will take more work for sure, but it's a lot faster than 51.
How long will it take me to become a millionaire? ›
$1 Million the Easy Way
Putting aside someone's $40,000 in take-home pay every year—and earning that 10% return as described above—will get you to millionaire status in about 15 years. Halve those savings and you're still only looking at 20 years. It will take more work for sure, but it's a lot faster than 51.
How long does it take to go from 100k to $1 million? ›
The timeline for achieving this goal depends on your returns. For example, a 10% average annual rate of return could transform $100,000 into $1 million in approximately 25 years, while an 8% return might require around 30 years.
How long does it take for 200k to become 1 million? ›
Following the same math, 12% gains double your money in six years. If your investments earn 8%, you'll have twice as much in nine years. Presuming the stock market's approximate historical return of 10%, $200,000 becomes $400,000 in 7.2 years, then $800,000 in 14.4 years and finally, $1.6 million in 21.6 years.
How long will it take to turn 500k into $1 million? ›
The time it takes to invest half turn 500k into $1 million depends on the investment return and the amount of time invested. If invested with an average annual return of 7%, it would take around 15 years to turn 500k into $1 million.
Is saving $500 a month good? ›
The short answer to what happens if you invest $500 a month is that you'll almost certainly build wealth over time. In fact, if you keep investing that $500 every month for 40 years, you could become a millionaire. More than a millionaire, in fact. Investing is about buying assets you believe will increase in value.
Can I become a millionaire in 5 years? ›
Becoming a millionaire in five years is an extremely aggressive goal, but it could happen. Although hitting a home run with an investment is what dreams are made of, the most realistic path is to put aside big chunks of money every year. The historical average return for the S&P 500 index is 8%.
How to turn 10k into 100K? ›
To potentially turn $10k into $100k, consider investments in established businesses, real estate, index funds, mutual funds, dividend stocks, or cryptocurrencies. High-risk, high-reward options like cryptocurrencies and peer-to-peer lending could accelerate returns but also carry greater risks.
Can you turn 10k into a million? ›
How realistic is it to get to $1 million? Even with above-average gains of 15% per year, it would still take more than 30 years for a $10,000 investment to grow to $1 million.
How much will $100,000 grow in 30 years? ›
The amount of $100,000 will grow to $432,194.24 after 30 years at a 5% annual return. The amount of $100,000 will grow to $1,006,265.69 after 30 years at an 8% annual return. Where, FV = Future value of the amount invested today on maturity.
Passive or semi-passive income options include:
- Fixed-income securities.
- Dividend-paying stocks.
- Real estate.
- Business or entrepreneurship.
- High-yield savings accounts.
- Hobbies or interests.
There are two approaches you could take. The first is increasing the amount you invest monthly. Bumping up your monthly contributions to $200 would put you over the $1 million mark. The other option would be to try to exceed a 7% annual return with your investments.
How much money do I need to invest to make $1000 a month? ›
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
How long will 1 billion dollars last? ›
If someone then gave you a billion dollars and you spent $1,000 each day, you would be spending for about 2,740 years before you went broke.
Can 5 million dollars last a lifetime? ›
Can you retire at 50 with $5 million? Yes, this is very doable. If you were to retire at 50, assuming a life expectancy of 90 years, you could guarantee an income of at least $10,417 a month. You could also retire at 40 with at least $8,333 a month or even 30 with at least $6,944 a month.
How do millionaires live off interest? ›
Living off interest involves relying on what's known as passive income. This implies that your assets generate enough returns to cover your monthly income needs without the need for additional work or income sources. The ideal scenario is to use the interest and returns while preserving the core principal.
How hard is it to become a millionaire? ›
In fact, most Americans are unlikely to ever become a millionaire. Estimates vary, but they range from about 12 million to 24 million millionaires in America. While that sounds like a lot, even the upper limit of that range is less than 10% of the approximately 332 million people in the U.S.
Can you become a millionaire in a year? ›
“It's very difficult to become a millionaire in one year, even under ideal circ*mstances,” said Jake Hill, finance expert and CEO of DebtHammer. “Building wealth is a time-consuming process that involves careful planning and a solid strategy.”
How much will $1 million dollars be worth in 40 years? ›
The value of the $1 million today is the value of $1 million discounted at the inflation rate of 3.2% for 40 years, i.e., 1 , 000 , 000 ( 1 + 3.2 % ) 40 = 283 , 669.15.
How to turn 100k into 1 million? ›
If you keep saving, you can get there even faster. If you invest just $500 per month into the fund on top of the initial $100,000, you'll get there in less than 20 years on average. Adding $1,000 per month will get you to $1 million within 17 years. There are a lot of great S&P 500 index funds.
