Is it possible to become a millionaire with an average salary? The answer is yes, but the key to the answer is to leverage compound interest. CNN had an interesting article addressing the question: can you become a millionaire on an average salary? 37% of American’s think they will need $1 million to retire safely. It is great that more people are starting to plan for their retirement.
Now back to the crux of the equation – compound interest. The earlier that you start saving, the better. Using CNN’s numbers of a 7% return and a retirement age of 63, the person that starts saving at age 25 only needs to save 13% of their income to become a millionaire. The person that waits until they are 45 will need to save over 55% of their income to reach $1 million, AND their income is much higher.
CNN’s study doesn’t take into account any raises, which are bound to happen. So let’s take a look at an interesting scenario.
Let’s say a 25-year-old is making about $40k per year and they receive a 10% raise every 10 years until they retire:
On the far left, I have CNN’s original projection, which falls short of $1 million. I show the math for calculating the future value for those that are interested 🙂 I broke down each 10 year period to add in the 10% raise.
Bottom line, if this person worked hard and received roughly a 10% raise every ten years, they would have almost double the amount saved, close to $2 million, compared to CNN’s original projection. This person’s income when they reach age 55 would be just over $54k – the 10% raise every ten years is achievable.
The power of compound interest! So again, yes, you can become a millionaire with an average salary!
April Goal Check In
Provide value to my readers by sharing information they can use to either: get out of debt, take better control of their finances, and start investing.
I’ll leave this to my readers to answer!
Write one new post each week.
I continue to publish at least one post per week – every Monday. Some weeks I can get out an additional post, and I’ve received quite a few requests for guest posts. I’ll be releasing more guest posts in the future.
Reach 20k monthly page views
I doubled my traffic in April. I have a bit to go to hit 20k page views, but I think I can get there 🙂
For those of you looking to grow your traffic, check out these two posts.
Physician on Fire has a great how to get started guide – check out step 8.
I would also visit Grant’s post over at Millennial Money on SEO optimization.
Grow email subscriber list to 500 people
Similar to my monthly page view goal, I am not close to 500 subscribers. I’m at about 100. But, if I continue to grow my monthly traffic I feel confident I can get close to reaching this goal.
Grow Twitter follower list to 10k followers
I’m halfway home on this goal. Check me out on Twitter! One thing that sucks is Twitter starts to limit the number of people you can follow when you get close to following 5,000 people. If anyone has mastered Twitter, I’m open to receiving further insight!
Spend at least 15 minutes each week on marketing
This goal has been easy to achieve because of my activity on Twitter. Because it was easy, I pushed myself to spend more time on marketing. Currently, I am working my way through Millennial Money’s 67 SEO tips to improve your blog. I highly recommend checking out Grant’s article to help grow your traffic.
Read one book each month relating to personal finance.
I need to read two books in May to get back on pace to achieve this goal. Next on my list is Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century by Vicki Robin.
I could use a few recommendations to keep my reading funnel full, so feel free to drop me a note.
I got distracted by the Master’s golf tournament. It is one of my favorite sporting events. Leading up to the Masters, I read Tiger Woods book, The 1997 Masters: My Story. If you are a golf fan, I highly recommend checking it out.
I also read Out of the Rough: Inside the Ropes with the World’s Greatest Golfers by Tiger’s caddie, Steve Williams. It is a great read about a guy that grew up with little and became quite successful. Even better, Steve has given so much back to his small town in New Zealand.
I’ve read three books (one last year) that all have the same overall theme – invest in low-cost index funds. These books are:
99 Minute Millionaire
The Smartest Investment Book You’ll Ever Read: The Proven Way to Beat the “Pros” and Take Control of Your Financial Future
The Simple Path to Wealth: Your road map to financial independence and a rich, free life