Becoming a Millionaire by Age 65!

Recently, I sat down with my Sargent General of Savings (aka my boss Katie) and came up with an attack strategy for my retirement.  My mission: to become a millionaire by the time I retire at age 65.  Our plan: start NOW and be aggressive.  I will update you in 40 years on whether or not the mission was a success (unless I am too busy drinking champagne on my yacht by then). In the meantime here are some steps the average office soldier can take to get on track for retiring rich:


Step 1 – Start Saving NOW!!!

The thing about saving money is, it takes time.  Even Bill Gates didn’t invent Microsoft and become one of the world’s richest dudes in a day, so give yourself as much time as possible to save for retirement.  The longer a savings account has to accumulate interest and the more time you have to make contributions to that account, the more your money will grow in the long run.  Contributions don’t need to be large, just consistent.  According to, in order to have $1 million saved by the time you retire you only need to put away $6,500 per year if you start to save at 25 as opposed to the $28,185 you would need to save annually if you wait until age 45 – and who would want to put almost 30 grand a year into savings?  More likely than not, you’ll end up with more money saved if you start early.  And if part of your retirement savings plan includes investing in stocks and bonds, starting young means you can take more risks because you have time for your portfolio to recover from a bad investment.  If you haven’t already, visit the HR department of your office today and find out what sort of retirement plans your company offers employees – don’t wait another minute to start planning!

Step 2 – Learn the Lingo

Mutual Fund. Stock. Bond. 401K. IRA. These are all words that we hear occasionally but do you actually know what they mean? Really, truly know what they mean?  Like you could give a dictionary definition?  Or when asked if you know what a mutual fund is would your answer be, “Umm, yea . . . I think so . . . sort of . . . like I have an idea but it’s hard to put it into words . . .”

I may or may not have given that exact answer when Katie asked me that question. The truth is, I know I’ve heard the word before (I do work at a financial institution), I know it has to do with investing money, but I know nothing else about it.  When you start to plan for your retirement, give yourself a little background knowledge.  It’s easier to know what you want and what financial tools can help get you there if you understand the language being used.  Here’s a quick overview of some common retirement terms:

Bonds: a loan to a company or government, the money is returned by a certain date, with interest.

Stock: a small piece or share of a company, you earn money from owning stocks if you sell your shares when the price is higher than when you bought them, prices go up and down frequently.

Dividends: as a company makes money, some of that money is paid out to the shareholders, the amount is based on what percentage of stocks you own in that company.

Value: when a company grows, the price or amount that this stock is worth increases.

Mutual Fund: a professionally managed investment vehicle that pools money from several investors to purchase stocks, bonds, and other securities.

401K: a retirement savings fund offered by private companies to their employees, money in the account in invested in mutual funds and/or target date funds so that it grows.

IRA: individual retirement accounts, accounts offered through a financial institution that offer tax advantages for retirement savings.

(Note: I used my favorite resource, “The Kids’ Money Book” by Jamie Kyle McGillian for these definitions along with and

Step 3 – Use Every Tool Available

One of the biggest mistakes you can make is to not take advantage of every resource offered by your employer.  Most employers today sponsor some sort of retirement savings plan for their employees.  Whatever the plan may be (401K, 403b, and 457’s are the most common) you’re leaving money on the table if you’re not enrolled.  Some companies even have a matching program, where the company adds money to employee contributions as a savings incentive.  Here’s an example of how matching works from “. . . your company matches you dollar for dollar up to 6%. That means that if you contribute 6% of your salary, you will actually save 12% of your salary every year even though only 6% is being taken out of your paycheck.”  So basically, as long as you agree to save the money for your retirement, matching is a benefit that increases your salary! In that same scenario if you only saved 3% of your salary, they only match 3%, and you end up with half of what you could have potentially saved.  The lesson here: max out your benefits! Don’t turn away opportunities given by your employer to save for retirement.

Step 4 – Be Aggressive, B-E AGGRESSIVE

If you are smart, savvy, and young, don’t be conservative with your investment accounts.  You want your money to work for you and to grow.  The only way it will do that is if you allow yourself to take some risks.  Diversify, as they say, or spread your investments out, that way your success (or failure if things don’t go well) isn’t tied just to one fund.  There were two primary kinds of mutual funds that I reviewed for my portfolio; growth funds and growth and income funds.  Growth funds take all of the money you earn from investing and reinvest it into the company; you don’t earn dividends from these funds.  Growth and income funds reinvest some of the money, but also give some back to the investors.  At my age (24) it makes sense for me to invest mainly in growth funds, because I am a long way off from retirement.  Everyone’s investment needs are different, however, so I recommend working with a financial advisor to implement a plan that works best for your age, needs, salary, etc.  Don’t freak out if the value of your stocks go up and down – that’s what they do! Part of being a good investor is having a strong stomach.

Step 5 – Picture It


What does your retirement look like? Will you retire to your beach house on Cape Cod where you can enjoy the sunset over the water each night with a glass of wine?  Or maybe you’ll move to Florida to play golf every day.  Or maybe you’ll get a cabin in the woods and read mystery novels with no one around to bother you.  Or maybe you’ll travel the world with your significant other, just like you always wanted to when you were young.  Whatever your retirement looks like, just having a visual of it in your mind can actually help your saving plans stay on track (according to money specialist Jean Chatzky).  I know I have a hard time even imagining myself with kids, a husband, and  a house so thinking ahead to retirement is almost impossible. Make your retirement a concrete event that you can picture happening, rather than an abstract maybe in your future; it’s easier to save for a tangible object.

If you learn only one thing from this post, I hope it’s that having a retirement savings plan is a must!  Saving for retirement is a marathon, not a sprint; it can seem less urgent than other expenses because it’s not a month away or even a few years away.  It take decades to adequately save for your retirement (even if you don’t think you need to be a millionaire like me J ).  Remember – your chances of winning the lottery are only 1 in 175,223,510 so you’ll probably need a Plan B for funding your retirement.


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