Can a 50-year-old still retire a millionaire? The good news is, yes, even starting in your 50s, you can still end up a millionaire. Obviously, it will take more diligent financial planning and investing to reach the millionaire or multi-millionaire club the later you begin accumulating wealth.
There are simple steps to follow in order to become a millionaire. Most notably, you need to save money regularly and over long periods of time. Many more people would be doing it if becoming a millionaire was easy. While the net worth of many hard-working Americans skyrocketed during the past few years, nearly half of all families have nothing saved for retirement. Keep reading to learn the basic math and what it will take for you to retire as a millionaire.
Some of you should be dreaming bigger and planning to retire as multi-millionaires. If you are just getting started in your 50s, you are behind. However, you can still make this financial milestone happen. Keep reading to find out how.
How Many Americans Are On Track to Retire As Millionaires?
According to the 2024 UBS Global Wealth Report, about 1 in 15 Americans are millionaires. I would expect that even more people are on track to become millionaires by the time they retire.
On a more somber note, nearly half of all families have zero retirement savings. Want to be above average? All you need to do is save any amount of money for retirement.
However, it’s still completely possible to become a millionaire by the time you retire, even if you don’t start until you’re 50. Whatever your age, get started! The sooner you start, the easier it will be. Here’s what you’ll need to save in order to become a millionaire. If you are younger than 50 and reading this, don’t take this positive tone as an excuse to delay getting started.
What A 50-Year-Old Needs To Do To Retire A Millionaire
You may think becoming a millionaire is not possible for you. Keep reading as we lay out exactly what to do and how much to save each day, each month, and each year to have $1 million by the time you retire. Keep in mind that you may need to push back retirement until the age of 70 (or later). The assumption here is that you are just starting to invest for retirement. But if you already have some money saved, you will have an easier time hitting that big milestone.
The recipe for becoming a millionaire or even a multi-millionaire boils down to three things: time, compounding interest and savings rate. How fast your money grows will also influence how fast you become a millionaire.
The following numbers assume you start at age 50 and retire at age 70. If you are starting later or want to retire before age 70, you will need to save more each year.
Assuming a four-percent annual return (the approximate average that investors earn doing it themselves), you will need to invest:
- $92 per day
- $2,798 per month
- $33,581 per year
The amount you need to save gets a bit more manageable if you are able to increase your average returns to six percent per year.
- $75 per day
- $2,265 per month
- $27,184 per year
Savings Rate Needed to Become a Millionaire (assuming an eight-percent annual return, which is still well below the average return of various stock market indexes over time):
- $60 per day
- $1,821 per month
- $21,852 per year
Savings Rate Needed to Become a Millionaire (assuming a 10% annual return):
- $48 per day
- $1,455 per month
- $17,460 per year
I’m sure many of you could save these amounts without even noticing the money was gone. Others may need to set them as savings goals and work up to saving those amounts over time. Don’t freak out. It’s important to realize that those saving numbers can include things like an employer match or profit sharing.
Also, remember that you can make this process easier with the tax breaks for contributing to a retirement account, such as a 401(k), IRA or 403(b) and Cash Balance Plans. If that is the case for you, it means only 50-70% of the above numbers would be coming out of your pocket. Also, the more you make, the more beneficial the tax deductions will be.
The 401(k) contribution limit for those age 50 and older is $31,000 (including the catch-up contribution).
Is Becoming A Millionaire Really Possible For Me?
As someone offering financial planning guidance for over 20 years, I’ve met people making over a million dollars per year who said they couldn’t save a dime, while others earning $35,000 were saving a larger percentage of their incomes. If you never get started or save anything, you will never build a million-dollar net worth. As a general rule, strive to save 10-20% of your income. Start where you can and work up to that.
What do you think? Do you have what it takes to retire a millionaire? If you are already a millionaire, will you be able to grow a multi-million-dollar net worth?
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