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.
Alert: our top-rated cash back card now has 0% intro APR until 2025
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.
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 long does it take to become a millionaire on average? ›
It takes 32 years for the average person to become a self-made millionaire. Here's why that's a good thing.
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.
“In my experience, you can't become a millionaire in a year,” said Syed Lateef, business coach and CEO of SyedBNB. “At least, there isn't a guaranteed way to achieve it.” He explained it all boils down to luck and circ*mstance. Not even exceptional talent or hard work can guarantee such rapid financial success.
How hard is it to become a millionaire? ›
Even with a $150,000 starting investment, it would still take you 22 years to reach the $1 million mark. Of course, with the use of the steps already mentioned, plus consistent determination, diligence and perseverance, you can reach your goal of becoming a millionaire even more quickly than the previous example.
What age are most millionaires? ›
Millionaires — those who have a net worth of at least $1 million —are, perhaps not surprisingly, on the older end. They're predominantly 55 and older; just 2.4% are under the age of 35.
At what age do most millionaires become millionaires? ›
In their 50s, many Americans attain the mythical status of millionaire, their household assets worth at least $1 million more than their liabilities.
How much money do I need to invest to make $1000 a month? ›
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
How to invest 100k to make $1 million? ›
The simplest path from $100,000 to $1 million
The simplest way to invest your money is by using a simple broad-market index fund. An index fund that tracks the S&P 500 or a total stock market index typically has low fees, and it's going to closely match what the overall stock market returns.
How many millionaires are in the US? ›
How Many Millionaires Are in the U.S.? Do you know how many millionaires there are across the country? According to a recent study, almost 24.5 million millionaires live in the U.S. today. To put that into perspective, that's more people than the entire population of Florida!
This may seem daunting, but the truth is, it's never too late to start. For example, if you are 35 years old and just starting to take control of your finances, you can still reach millionaire status by the time you're 62, which is before normal retirement age.
Is 45 too late to become a millionaire? ›
Think it's too late to retire rich if you don't have savings in your 40s? Think again. With focused effort, it's possible to go from financially strapped to millionaire status within a decade or so.
How do millionaires live off interest? ›
Living off interest involves relying on what's known as passive income. This implies that your assets generate enough returns to cover your monthly income needs without the need for additional work or income sources. The ideal scenario is to use the interest and returns while preserving the core principal.
What do 90% of millionaires do? ›
Real estate investment has long been a cornerstone of financial success, with approximately 90% of millionaires attributing their wealth in part to real estate holdings. In this article, we delve into the reasons why real estate is a preferred vehicle for creating millionaires and how you can leverage its potential.
What age is too late to become a millionaire? ›
The bottom line is, there's no age when you should stop working toward your financial goals or give up on achieving them.
How likely is it to get rich? ›
There are about 336 million people in the U.S. With 24.5 million of them being millionaires, the odds that someone in the U.S. will end up a millionaire come in at around 7.29%.
Is it true that 90 of millionaires make over $100 000 a year? ›
“Only 31% averaged $100,000 a year over the course of their career,” the study found, “and one-third never made six figures in any single working year of their career.” Just look at the story of former custodian Ronald Read for a perfect example.
How long does it take to go from 100k to $1 million? ›
The time it takes to turn $100k into $1 million through investing varies based on factors like the type of investments, the return rate, and whether returns are reinvested. Assuming an average annual return of 7%, and reinvesting all gains, it could take approximately 30 years to reach $1 million.
How long does it take for 200k to become 1 million? ›
Following the same math, 12% gains double your money in six years. If your investments earn 8%, you'll have twice as much in nine years. Presuming the stock market's approximate historical return of 10%, $200,000 becomes $400,000 in 7.2 years, then $800,000 in 14.4 years and finally, $1.6 million in 21.6 years.
How long will it take to turn 500k into 1 million? ›
How long will it take to turn 500k into $1 million? The time it takes to invest half turn 500k into $1 million depends on the investment return and the amount of time invested. If invested with an average annual return of 7%, it would take around 15 years to turn 500k into $1 million.
