What You Need To Know At Every Age To Become A Millionaire

Unless you are a pro athlete, movie star, or lottery winner, you will not likely become a millionaire overnight. For the rest of us, we need to let time and compound interest do their things if we want to retire as millionaires or even multi-millionaires.

Here is what you need to do during each decade of your life to stay on track to become a millionaire. 

What to Do in Your Twenties to Become a Millionaire

The money you save today is more valuable than the funds you save later in life. Time is still on your side, make a point to build the habit of saving something. When I was 22, I started putting a staggering $25, per month, into a Roth IRA. I didn’t expect to live long enough where saving $300, per year, would turn into a million dollars, but I at least started the investing habit. 

In your twenties, strive to save at least 20% of your income. For those drowning in student loan debt, you can count payments towards your loans in that number. Saving more will also help to keep lifestyle inflation at bay. 

To make saving easier, set up automatic contributions to your account. If your employer offers a 401(k), you can have contributions deducted right out of your paycheck. You will even get a tax deduction for the contribution. Depending on where you work, you may also get a matching contribution to your 401(k) from your employer. That is like getting a raise without having to work any harder.

When you spend everything you earn, you will never build life-changing wealth. You also won’t be prepared when you have a financial emergency.

If you start at 22, you can become a millionaire by only contributing to a Roth IRA. Assuming an 8% average net return, you would need to save only $2,600 or so, per year, to retire a millionaire at 67. Of course, you should save more if you want to retire early or become a multi-millionaire.

What to Do in Your Thirties to Become A Millionaire

Many people in their thirties find that life just seems to get more expensive. Perhaps you’ve gotten married, purchased a home, had kids, or just like fancier things. As your social groups earn more money, you tend to take exotic trips, eat at nicer restaurants, and eat better food. You may also have a fancier car in the driveway, a Rolex on your wrist, and wear more fashionable clothes.

The key in your thirties is to continue living below your means. That will be relative to your income. I have nothing against you driving a Porsche, but if that means you can’t save enough to retire comfortably, I take issue with it. Do what you can to avoid lifestyle inflation in your thirties. It will only get worse as you age.

Continue saving 20% of your income. Take control of debt, like student loans and credit cards. Make a smart choice about how much house to buy. Let me tell you, the banks will give you a bigger mortgage than you will likely want to take. Taking that bigger mortgage translates into a more significant payment than you may be able to comfortably afford, which could leave you feeling house poor.

If you start saving at 30, you will need to sock away just $4,925, per year, assuming a net return of 8%, to become a millionaire by 67. That could be done by using a Roth IRA, Traditional IRA, 401(k) or other retirement plans.

Related: The Top 11 Ways You Are Killing Your Odds Of Becoming A Millionaire

What to Do in Your Forties to Become A Millionaire

Hopefully, by your forties, your career is on track, and your income has been growing. This is the time you really need to get focused on getting your financial house in order and get serious about saving for retirement.

You may be lacking time more than money. Look for ways to outsource things that stand in the way of you earning more. Working with a fabulous Fiduciary Financial Planner can save you both time and stress. Get the help of a tax expert, consider hiring a gardener and housekeeper.

Your forties are likely your peak earning years. They also need to be your peak saving years. Retirement may still seem a long way off, but it will be here before you know it. As your income increases, make sure to also make larger contributions to your retirement accounts. That will happen automatically if you have set up your contributions as a percentage of your income. Whatever level you are at now, continue to take up your savings rate just a bit, with a goal of 20% or more.

If you are starting in your forties, you will need to save more to retire a millionaire. Assuming an 8% net investment return, you will have to save around $11,500, per year, to retire a millionaire by the age of 67.

Related: What You Need To Do In Your Forties To Retire Become A Millionaire

What to Do in Your Fifties to Become A Millionaire

Once you have reached your fifties, you are in the final stretch to retirement. Make sure you have a plan and that you are saving enough to retire comfortably. For this piece, we are talking about retiring a millionaire. But sadly, a million dollars will likely not be enough for many Americans to retire comfortably.

It will be important to make sure your kids have the tools to be financially independent. When I moved into my current home, a neighbor still had his adult son living with him. I don’t know exactly how old they were, but I do know the father was in his 90s. With that, I’m guessing the son was in his late sixties, if not early seventies. While that may be an extreme example, many parents still give substantial financial support to their adult children. If you find yourself in that situation, it not only limits what you can save for retirement, but it also increases the amount of money you will need to retire comfortably. If your kids never get off the gravy train of free money, they will continue to ask for money.

Also, make sure you sit down with a Certified Financial Planner to find out where you actually stand when it comes to retirement. You may already have $1 million (or much more) in your retirement accounts, but depending on your income, that may or may not be enough.

When you reach the age of 50, the IRS gives you the ability to play catch-up and make even larger retirement plan contributions. Take stock of any pensions you may have and figure out how much you can expect to receive from Social Security. Just know, many people find that it is less than they expected.

Even if you are starting late in your fifties, there is still time to retire a millionaire. If you want to retire at age 67, assuming an 8% net investment return, you would need to save around $30,000, per year, to retire a millionaire. I’m sure some of you are already saving way more than that. Still, there are others who don’t make that much in a year, let alone have it available to save.

Related: How Anyone Over Fifty Can Still Retire a Millionaire!

What to Do in Your Sixties to Retire A Millionaire

Once you’ve reached your sixties, you have probably already established many financial habits that are deeply entrenched. Hopefully, you are on track for an amazing retirement. Even if you are just starting to save, there is still time to improve your golden years. Take stock of your expenses, cut anything that is not essential. Look for ways to earn more money, which will allow you to save a bit more towards retirement.

This is also time to develop a retirement income plan. Also, you should have a strategy to maximize your Social Security benefits. That is even more important for married couples. You should also think about what you want your retirement to look like. Where will you live? How will you spend your days?

Hopefully, you have already saved a good amount of money by this time. If you are just starting from scratch at 60 years old, you will need to save a whopping $122,000, per year, assuming an 8% net investment return in order to retire a millionaire at 67. Now, I don’t think I’m going out too far on a limb here to assume that if you have saved zero dollars by the age of 60, you will most likely have a hard time coming up with an extra $122,000, per year. Granted, I would love to see a 60-year-old prove me wrong on that.

Whether you are well on your way to financial freedom and have a multi-million-dollar net worth or are  just getting started, it will take work to stay on track for your most important financial goals. I believe anyone can become a millionaire and achieve financial freedom provided they are given the right financial guidance and have enough time. What steps can you take, today, to speed up your progress towards becoming a millionaire?