The Path to A Million: A Millennial’s Guide
Hello again everyone! Welcome back to The Green Swan. In recent weeks we have taken a look back on my path to a million. If you missed those articles, you can check out Finding the Elevator and Moving to Move Up. In this post we will go through a millennials’ path to reaching a million.
In a recent survey published by Wells Fargo, 64% of working millennials said they never expect to accumulate $1 million in savings over their lifetime. Why not?! Come on folks, it is doable!
Look, I understand many have student loan debt, may not be employed in their preferred career or could be facing other financial struggles, but start small and let it grow! Unless of course you don’t want a million (in which case why are you reading this then?), let me lay out the savings math for you.
The Math to A Million
A millennial can reach $1 million in savings. Below I will detail three scenarios to reach that goal.
Let’s start by assuming that the millennial’s beginning salary out of college is $30,000 at age 22 and increasing annually by 3%, a savings rate of 5%, and an increase to the savings rate by 1% annually (capped at 15%). While the millennial makes more money each year, a small portion of the salary increase will be saved with the savings rate capped at 15%. In this scenario, the path to a million stops at age 61! Not too shabby.
For the millennials willing to embrace the frugal life and not let lifestyle inflation creep in as much, scenario 2 has all the same assumptions as Scenario 1 with exception to the savings rate capped at 25% rather than 15%. In this scenario, the path to a million stops at age 58, effectively shaving off three years!
And the last scenario, for the high achievers out there, I’ve assumed a starting salary of $45,000 as well as the savings rate capped at 25%. Under this scenario, the path to a million stops at age 53. How about that for FIRE!?
In all three scenarios, the assumptions are made for a single individual. Tie on the salary of a spouse and the improved ability to save each year and you can hit $1 million even sooner.
For those readers who have started to save for retirement, you are on the right track and are developing strong savings habits. I encourage you to find ways to advance your career, bring in side-hustle income, and reduce expenses to allow you to save more. I hope you realize the path to a million is achievable.
For those who haven’t begun to save for retirement, get with the program.
Get With the Program
According to the survey, 85% of millennials say that saving for retirement is an important part of becoming a “financial adult” while 82% say they are encouraged to save more when they see people comfortably retired today. Yet, only 45% have a routine to monitor their finances and 52% say that volatility in the stock markets makes them worry about losing their retirement savings.
Let’s remember that there are vast resources available online to help folks get with the program. I’ve even discussed many relevant topics on this blog to help millennials including why it is important to track and budget expenses and why long term investors should invest to win.
Other Interesting Tidbit
As I was reviewing the survey, I wanted to highlight one other relevant and interesting statistic.
- For those who have started to save for retirement, 44% say they are saving 1-5% of their income, 33% are savings 6-10%, and 6% are saving 11-14%. To that I say, “You can do better!”
Thoughts? Are you on your way to a million? If not, do you have a path to a million outlined? Let me know in the comments below.
Thanks for taking a look!
The Green Swan
Work Harder, Work Smarter, Retire Earlier and Find Your Beach
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