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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FAQs
The time it takes to become a millionaire depends on how much you save and the return you get on your money. If you invest $1,000 per month and get an 8% annual return, you'll be a millionaire in 25.5 years. The key to being a millionaire is to start investing right away and to be consistent about it.
How can I be a millionaire in 5 years? ›
Here are seven proven steps to get you wealthy in five years:
- Build your financial literacy skills. ...
- Take control of your finances. ...
- Get in the wealthy mindset. ...
- Create a budget and live within your means. ...
- Step 5: Save to invest. ...
- Create multiple income sources. ...
- Surround yourself with other wealthy people.
“It is almost impossible for most people to become millionaires within just one year,” said Loretta Kilday, attorney and spokesperson for Debt Consolidation Care. “More often than not, luck also plays a role,” she explained.
How long does it take 100k to turn 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.
Is it hard to become a millionaire? ›
Unless you come from a very wealthy family or win the lottery, there's little chance of becoming rich by doing nothing. You'll need discipline, a plan, and, if necessary, good advice from a registered professional who can help push you in the right direction to reach your goal of becoming a millionaire.
Can I be a millionaire at 25? ›
Let's be real: becoming a millionaire from scratch by the age of 25 (or ever) doesn't exactly come easy. It takes incredible dedication, relentless work ethic, a keen vision and, more often than not, a healthy side serving of luck. And it takes discipline — not only in your work life but in your life-life.
How to become rich in 3 years? ›
Amplify Revenue Rivulets. The key to expeditious wealth accumulation lies in augmenting your revenue streams. Prowl the landscape for avenues to bolster your earning potential — be it seizing loftier job echelons, engaging in peripheral hustles, or birthing a lucidly profitable enterprise.
What is a good age to become a millionaire? ›
The average age of a first time millionaires is 37, it has been found. In data released by Betway Insider, the average age of a first time billionaire is also revealed: and is a little higher at 51. So, if you're not quite there yet, what can you do to make your first million?
How common is a millionaire? ›
Millionaires comprise about 8.8% of the American population. The average net worth of a millionaire in the U.S. is $2.2 million, according to Charles Schwab's 2022 Modern Wealth Survey. New Jersey boasts the highest rate of millionaires, with nearly 10% of households having a net worth of $1 million or above.
How much money do I need to invest to make $4000 a month? ›
Making $4,000 a month based on your investments alone is not a small feat. For example, if you have an investment or combination of investments with a 9.5% yield, you would have to invest $500,000 or more potentially. This is a high amount, but could almost guarantee you a $4,000 monthly dividend income.
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 long does $1 million last after retirement? ›
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
How much income will $1 million generate? ›
Saving a million dollars is a big achievement, but many Americans fear it won't be enough. One rule of thumb suggests $1 million would generate around $40,000 each year, adjusted upward for inflation. Instead of picking a figure, work out what income you might need in your old age and work backward from there.
Are most doctors millionaires? ›
In order to qualify as a millionaire, you must have assets worth $1 million or more. The 2021 physician wealth report showed that 56% of physicians reported a net worth of over $1 million. The majority of family physicians become millionaires by the age of 55 — only 11% had a $1 million net worth before 45.
What age is too late to become a millionaire? ›
It's never too late for anything, not even to become a millionaire later in life. Sure, it's always better to get into the habit of saving, budgeting and planning early in life — even if just to take advantage of compounding interest.
How many Trillionaires are there? ›
No individual has claimed the status of trillionaire just yet. But a net worth equal to at least one trillion in U.S. dollars or a similarly valued currency isn't unattainable, but it will be a couple of years yet. Only 18 countries have a GDP that exceeds that amount.
How to become a millionaire quickly? ›
Here's the list of habits and principles that most millionaires used to build their net worth:
- Stay away from debt.
- Invest early and consistently.
- Make savings a priority.
- Increase your income to reach your goal faster.
- Cut unnecessary expenses.
- Keep your millionaire goal front and center.
- Work with an investing professional.
10 high-paying jobs
- Pilot. ...
- Actuary. ...
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- Air traffic controller. ...
- Petroleum engineer. ...
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- Computer and information systems manager.
Although it's likely you won't be able to become a millionaire overnight — unless you win the lottery or get some other major windfall — it's a goal you may be able to reach within a decade.
