Let’s say you just had your 50th birthday party. Can you still retire a millionaire? Retiring a millionaire is quite simple, but it’s not easy. Otherwise, we’d see millions more people reaching financial freedom. Here is the basic math to achieve millionaire status – to help you see what you need to do daily, monthly, and yearly.

Perhaps you should dream bigger and strive to retire a multi-millionaire. If you start from scratch at 50, you are behind, but you can still make this financial milestone happen. If you have an above-average income, retiring as just a millionaire will likely allow you to maintain your standard of living through retirement.

I wouldn’t recommend waiting until you are 50 to start seriously investing for retirement. That said, you wouldn’t be the first to procrastinate opening a 401(k) or retirement account.

Nearly half of all families have nothing, zero saved for retirement. Starting to save any dollar amount will put you above the average. CONGRATULATIONS on doing the bare minimum! Without full pensions, average retirement savings rates just won’t cut it for your dream retirement.

I’m sure some of you think, OMG, a million dollars is a lot of money. Yes, you are right. It is. But if your income is above $50,000, you will likely need a nest egg of more than $1 million to maintain your current standard of living in retirement. You will likely need a larger amount if you live in a city like Los Angeles, San Francisco, Palm Springs, or New York.

However, even when starting at 50, becoming a millionaire is still possible by the time you retire. Whatever your age today, get started! The sooner you start, the easier it will be. To become a millionaire, here’s what you’ll need to save.

How A 50-Year-Old Can Retire A Millionaire

Becoming a millionaire might seem like an impossible goal. Keep reading as we break down what you will need to save each day, month, and year to have one million dollars by the time you reach 70. We assume you are just getting started, but if you have some money saved, you will have an easier time becoming a retirement account millionaire. Ultimately, it boils down to three things: time, compounding interest, and the amount saved.

These calculations are compounded annually at the listed rate. Also, the earnings are compounded and reinvested and do not consider any tax implications and their effect on the investment. They are not representative of past or future performance but are provided for illustrative purposes only. The illustration is not indicative of any specific investment. Actual investment results will vary. This type of plan does not assure a profit or protect against loss in declining markets.

A 4% Annual Return (Approximately What The Average Investors Have Earned Doing It Themselves):

· $92 per day

· $2,798 per month

· $33,581 per year

With A 6% Annual Return:

· $75 per day

· $2,265 per month

· $27,184 per year

An 8% Annual Return (Still Well Below The Average Return Of Various Stock Market Indexes Over Time):

· $60 per day

· $1,821 per month

· $21,852 per year

A 10% Annual Return:

· $48 per day

· $1,455 per month

· $17,460 per year

Before you freak out, realizing that these saving numbers can include things like a 401(k)-company match or profit sharing is essential. You will also likely receive tax breaks for contributing to a retirement account such as a 401(k), IRA, or 403(b). If this is the case for you, only 50-70% of the above numbers would come from your take-home pay. Contributions will be pre-tax. Also, the more you make, the more beneficial the tax deductions will be. Since we are talking about starting at 50, you can make catch-up contributions -putting away more money pre-tax.

If you are self-employed, you may even be able to open a Cash Balance Pension plan, which could allow you to save hundreds of thousands of dollars per year, pre-tax, into a retirement account.

Believe it or not, I’ve had people come to me who make millions each year but are still living paycheck to paycheck. Some were struggling with debt with little to no assets. On the flip side, some make $50,000 annually and have prioritized saving $2,000 monthly.

When I was 22, I started saving a whopping $25 per month into my first Roth IRA. Over time, the amount I invest for retirement each year has increased dramatically. I’m telling you this because the most important thing to do is start. Strive to save 10-20% of your income and start where possible. You may only be able to save 10% of your income. That’s fine. Save 10%, but set a specific time to increase that percentage.

Related: What Is The Average Retirement Savings By Age?

Maximize Your Retirement Savings

Contributing to your retirement account is your job. Maximizing the money you have saved is the job for a fiduciary financial planner like me. As you can see from the numbers above, the better your investment returns, the faster and easier you can become a millionaire. Vanguard estimates that even essential financial guidance can add around 3.76% per year to your investment returns over the long term. According to DALBAR’s annual study, the average investor earns roughly one-third of the stock market’s return over time. No wonder so many people are afraid of investing. This dismal performance is often about investor behavior rather than picking the “right investments.”

At the very least, start investing in your employer’s 401(K) plan. If they provide a company match, get the total amount. THIS IS LIKE FREE MONEY
ONEY
! Would you turn down a raise? I hope not. It’s important to realize that a 401(k) plan is a tax-advantaged retirement savings account. This means the money will be taken automatically from your paycheck; you likely won’t miss it because it’s automatic.

Beyond Millionaire To Reaching Financial Freedom

I truly believe anyone can achieve financial freedom with enough time and the right financial guidance. I have great news for those who are on track to become a millionaire and those who have already reached this milestone. The second million is even easier to achieve thanks to compounding interest.

The more you make, the more you will need to retire. To better understand what you will need to retire, check out this retirement calculator.

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