By Mike Timmermann, clarkhoward.com
When it comes time to retire, do you think you’ll have $1 million saved up? Most millennials aren’t optimistic, according to the Wells Fargo Millennial Study.
A survey of 1,000 U.S. adults between the ages of 22 and 35 found that 64% of them say they’ll never be able to accumulate $1 million in savings. While most have started saving, those who haven’t say they just don’t make enough.
How millennials can retire as millionaires!
As Clark has mentioned so many times on the radio, the key is to begin saving early, even if it’s just 1% of your earnings to start. But it’ll take more than that to reach $1 million.
How much exactly? Wells Fargo did the math.
If someone earns a $32,000 salary at age 25, saves 5% during their first year and increases their savings by 2% each year (up to 13%), their investments in the market could grow to $1 million by age 65.
This example assumes a 7% annual return on the invested money, plus a 2% yearly pay increase.
Thanks to the power of compound interest, the money you save now is worth a lot more than the money you save later.
So where do you find the money to invest? Start budgeting. About half of the millennials surveyed have a budget, which can help you reduce spending and allocate that money to your 401(k).
Here are some more ideas to get you started:
- Switch up your grocery routine
- Find a low-cost cell phone provider
- Brew coffee at home
- Negotiate lower bills
- Re-shop your auto insurance
If these ideas aren’t for you, you could put your energy into making more money instead.
When you’re just starting out, saving $1 million for retirement is probably the last thing on your mind, especially if you’re living paycheck-to-paycheck or burdened by student loan debt.
But this study shows that it doesn’t matter what your starting salary is, your retirement goals are within reach.
And if you’re not a millennial, you can retire a millionaire as well if you start saving. We have an age-based breakdown of how much to save each month.