When it comes time to retire, do you think you’ll have $1 million saved up? Most millennials aren’t optimistic, according to the Wells Fargo Millennial Study.
A survey of 1,000 U.S. adults between the ages of 22 and 35 found that 64% of them say they’ll never be able to accumulate $1 million in savings. While most have started saving, those who haven’t say they just don’t make enough.
Read more: How I paid off my $86,000 mortgage in 2 years
How millennials can retire as millionaires!
As Clark has mentioned so many times on the radio, the key is to begin saving early, even if it’s just 1% of your earnings to start. But it’ll take more than that to reach $1 million.
How much exactly? Wells Fargo did the math.
If someone earns a $32,000 salary at age 25, saves 5% during their first year and increases their savings by 2% each year (up to 13%), their investments in the market could grow to $1 million by age 65.
This example assumes a 7% annual return on the invested money, plus a 2% yearly pay increase.
Thanks to the power of compound interest, the money you save now is worth a lot more than the money you save later.
So where do you find the money to invest? Start budgeting. About half of the millennials surveyed have a budget, which can help you reduce spending and allocate that money to your 401(k).
Here’s more on creating and maintaining a budget.
Here are some more ideas to get you started:
- Switch up your grocery routine
- Find a low-cost cell phone provider
- Brew coffee at home
- Negotiate lower bills
If these ideas aren’t for you, you could put your energy into making more money instead.
Read more: The #1 way to stop living paycheck to paycheck
Final thought
When you’re just starting out, saving $1 million for retirement is probably the last thing on your mind, especially if you’re living paycheck-to-paycheck or burdened by student loan debt.
But this study shows that it doesn’t matter what your starting salary is, your retirement goals are within reach.
And if you’re not a millennial, you can retire a millionaire as well if you start saving. We have an age-based breakdown of how much to save each month.
Read more: Clark’s investment guide
