In our lifetime, it is reasonable to expect many more people will become millionaires. For one example, “In the depths of the recession in 2009, there were still 236,883 individuals who earned more than $1,000,000 in the United States.” (source: WSJ)
I’m not sure what you imagined, but I had pictured the number people with a million dollar incomes or more to be much, much lower.
With inflation adjusted, a portfolio today of $50,000 can potentially bring us more than half way within 40 years.
From this perspective, it is easy to see how many of us will one day become millionaires so the question becomes, “How do we reach that point quicker and without stepping on any toes?”
For the Millennial Money Minutes Podcast discussion check out this episode:
When Will We Be Millionaires?
The irony is even millionaire status will still leave us feeling middle class.
As an Investopedia article highlighted recently, most millionaires feel middle class. They are first generation, “They did not inherit their money; they worked hard and saved what they earned to accumulate the mound of cash.” This is in line with research from the popular book Millionaire Next Door.
This habit of saving and investing the surplus is the same approach we’re using on our path to financial independence.
Do I Need to Become a Millionaire?
If we are 25 today spending 40K a year, then our lifestyle cost will be hovering around 100K by age 65. To compensate for decades of inflation, we will need a multi-million dollar portfolio to cover our new lifestyle.
That’s why most people today will need to become millionaires.
Currently, 2 in 5 believe they will need a million to retire.
This expectations gap is helping alleviate the sense of urgency people should feel when it comes to savings. Allowing the benefits of compound interest to slip away means we continue to face an upward battle with money.
As money continues to exchange hands, the question becomes:
When will we be millionaires?
P.S. Welcome to week two of Distilled Dollar’s Sunday Post. This past week we made a goal to spend $50 every day towards our credit card debt until it hit $0. So far, we succeeded this week with spending $350 towards CC’s. (still no interest being paid since it is a balance transfer due at the end of the year)
Expect a great post on Thursday this week covering What I Wish I Was Told in My 20’s. By Thursday, I’m aiming to update you on another week of paying $50 a day towards our credit card debt until it hits $0.