Millionaire Retirement Steps
Having $1,000,000 in the bank sounds like a lot but applying the right steps will ensure that you will have a millionaire retirement. These millionaire retirement steps will require investing money, accountability, and determination. Some of these steps may seem surprisingly simple, but it will take great effort to be consistent with them. The main two steps are goal setting and being consistent with your goal. We will go more in depth to help you see how you can reach your millionaire retirement.
Millionaire Step 1: Goal
You must create a goal or a rule that you will follow to reach a million dollars. This goal will be yours and you are the biggest factor in its success. The main parts of your goal should be the number of years until retirement, annual return, and final amount ($1,000,000).
Number of Years
The number of years until retirement is up to you. You will have to come up with the number of years until your retirement to continue the millionaire retirement goal. You may want to consider some of the questions below to help you decide when to retire:
- What is my life expectancy (What age will I probably die)? The current U.S. life expectancy average is 79 years old.
- How many years do you want to be retired for?
- What do you want to do that you cannot do until you retire, and will that effect when I will retire?
The annual return is the percent increase of your money annually. What is the calculation to find out how much money you have after one year with an annual return rate? The annual return rate plus one multiplied by the original investment amount. For example, if you had $100 and your annual return was 9% then after a year, you would have $109 [100 x (1 + 0.09)]. The annual return will be determined by your investments. You can end up with investments that take money away from you, so it’s important to choose wisely.
If you don’t have any investments yet or are looking for a more reliable return, we recommend an S&P 500 Index Fund (10%) or a Nasdaq Composite Index Fund (12%). The parenthesis percentages are the average yearly returns of those indexes. These averages include recessions and economic expansion. Although we cannot predict the future, we can expect these averages to continue based on the historical data.
We have assumed the final amount you want to have at retirement is $1,000,000 because of the blog title, but you can change this to your needs. Below are some major factors to consider when determining your final amount:
- How much money do I need to retire?
- What is my current annual income?
- How much money do I want to live off each year during retirement?
- How much money do I need to live off each year during retirement?
- What do I plan on spending on when I retire?
- Do I have an expensive bucket list activity I should save for?
Millionaire Retirement Example
To the left, an infographic displays how much money you need to invest in the S&P 500 Index monthly for various amount of years. For example, if you have 25 years before your preferred retirement, then you would have to invest $2,130 monthly to be a millionaire by retirement. Yes, that is a large amount of money and could be very difficult for some people. One solution is to have a goal to invest a smaller amount a month, then work your way up. You could also budget to allow yourself to have more money for this goal.
As you can see you will have to put a lot of money towards retirement if you want to retire a millionaire. If you truly want to be a millionaire, then you will have to put serious effort to accomplish the goal. If you have the means you can invest more the minimum amount per month to speed up the process. (of becoming a millionaire).
To make your goal more personalized you can use our spreadsheet goal calculator on the “Long-term Calculator” tab to find how much you should invest monthly for retirement. Click Here
Millionaire Step 2: Be Consistent
Becoming a millionaire isn’t easy as you have already read above. This step will test your limits even more. To have a millionaire retirement you must be consistent. This means you must stick with your goal. If your goal is to invest $2,130 per month into the S&P 500 index, then do it. Find a way that you will come up with the money to put towards your goal.
Some ideas to come up with the money each month include:
- Get another job
- Create a business
- Get rid of unnecessary expenses (Stop paying for things that are not as important to you)
What will be your best ally in accomplishing this goal?
Accountability & Determination are the final two factors in whether you will succeed or not. Accountability means that you must care about this goal enough to make sure you follow through with it. Determination means that you will stop at nothing to make your dream come true. Becoming a millionaire must be one of the most important life desires for you to succeed. To be accountable with your goal check up with yourself every so often to make sure that you are keeping true to it. Don’t be afraid to get a friend or family member involved that can check up on you also.
Wonder if working circumstances change and no longer have an income? What if my income won’t support becoming a millionaire? There are two ways you can go with these types of questions. You can try even harder thinking how you can succeed at your goal or you can quit. Is quitting bad? No, sometimes you won’t be able to do everything you want. The good news is that you don’t need $1,000,000 to retire. You just need enough to support you for all your retirement years. You can calculate that by tracking your expenses and seeing how much you spend now, which will help you see how much money you need to live off.
I encourage you to try to not back away from your goal initially. It could be a great learning experience for you to ponder what you can do to overcome your challenge. You may find that another opportunity opens or may fail repeatedly. I bet that if you gave yourself some time and applied the actions you thought of that you would succeed with a millionaire retirement. Some things are uncontrollable, but a lot of things are.
Learn more about investing through our investment guide