What age you are most likely to become a millionaire




Women
become millionaires at a younger age than men
do.

Dimitrios Kambouris/Getty Images
for Veuve Clicquot


  • The typical “401(k) millionaire” is a low six-figure
    earner who reached the milestone after age 50, according to a
    Fidelity Investments report cited by the New York
    Times
    .
  • On average, women hit the milestone at age 58.5, while
    the average man became a millionaire at age 59.3.
  • Those who reached millionaire status saved over 20% of
    their income and invested nearly 80% in stocks.

 

Some people spend their whole lives working toward a seven-figure
savings
.

But it’s undoubtedly easier to reach millionaire status if you
have a high-earning job that allows you to sock away more of your
income.

In fact, a Fidelity Investments report cited by the New York
Times
found that the typical “401(k) millionaire” was an
American with a six-figure income — $287,700 for women and
$354,600 for men.

On average, women hit the milestone at age 58.5, while the
average man became a millionaire at age 59.3. That’s several
years before the full retirement age of 67, but depending on how
much money you plan to spend annually in retirement, $1 million
may just be the tip of the
iceberg
.

Fidelity says there are 133,000 401(k) millionaires on its
platform, which oversees retirement accounts for more than 15
million Americans. Notably, women now represent about 20% of
Fidelity’s 401(k) millionaires, nearly double the share of women
12 years ago.

But you don’t have to be a high earner to become a 401(k)
millionaire. In fact, Fidelity found that saving consistently and
investing in the stock market
were the keys for those who
reached millionaire status while earning less than $150,000.

For those mid-level earners, women had a savings rate of nearly
25% — 18.1% of their salaries and 6.8% employer match. By
contrast, men earning less than $150,000 who reached millionaire
status saved 22.8% total. Still, men earned about $1,800 more
than women annually, according to Fidelity.

Perhaps most importantly, the stock market was the preferred
choice of investment. Men and women who became 401(k)
millionaires held the majority of their savings — 76% and 77%,
respectively — in stocks.

Ultimately, those who start investing in their 20s, no matter the
amount, will be better off. Fidelity found it takes about thirty
years of working and saving to reach the milestone.

Younger investors can take advantage of compound interest
and have more time for investments to bounce back from downturns
in the market. The S&P 500 has averaged an 11% annual
return
since 1966, but even a more conservative expected
return of 5% can make a difference in your retirement savings.

And while the $1 million mark is something of an accomplishment,
you may need more than that to live comfortably in retirement, or
even quit work early. A nest egg of $1 million provides annual retirement income of about
$40,000
, using a 4% withdrawal strategy.

To find your magic number, or retirement savings goal, all it
takes is a simple calculation: determine your desired annual
retirement income
and divide it by 4% (the maximum amount you
will withdraw from your savings each year to pay for your living
expenses in retirement).

Once you know that number — whether it’s $1 million or more—
you can leave work as
soon as you reach it
.

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