Saving $1 million: is it possible?

There have been two Moneyville articles that really caught my eye recently. There was one called How $100 a month can make you a millionaire by Madhavi Acharya-Tom Yew, as well as Can anyone really save $1 million?, by Allison Grifiths.

In Madhavi’s article, she begins by telling readers that we can all become millionaires in 40 years just by starting off with saving $100 a month. As you get older, you increase the amount you contribute. Going from $100, $250, $500, $750 and finally with $1,000/month. The numbers are based on a 6.8% average return over the life of the RRSP or TFSA. A lot of comments on those articles were about how a 6.8% average return was too high. But according to an article by MoneySense.ca in response to those two Moneyville articles, a balanced portfolio can reasonably expect a 6-7% return.

While saving $100 or $250/month might be feasible for most of us, $750 or $1,000/month might seem like a ridiculous amount of money for a lot of people. But consider this: by the time you are in your 50′s and 60′s, you might be nearing the end of your mortgage – and your salary will most likely have increased over the years. So when that money frees up, you will be able to apply it to your Retirement Portfolio instead. Or, if you contribute more when you’re younger, you won’t have to contribute as much when you’re older. For example, I make an average salary, and have average expenses. But I am making saving for retirement a priority right now, because I know that once I start a family, I probably won’t be able to save as aggressively as I am right now.

There IS truth to what both Madhavi and Allison are saying. You CAN become a millionaire by the time you retire if you want to be. But for most of us, it takes discipline and hard work, and you really have to want it. And I guess that’s the problem. With so many 20-somethings struggling with student  and credit card debt, trying to start a family, saving for a down payment, planning a wedding, and spending money on other things, saving for retirement just isn’t a priority. In fact, I can see why it’s so hard to save anything these days - especially an amount as daunting as $1 million.

In Allison’s article, she quotes a TD Canada Trust poll, where 75% of those aged 18-34 do not believe they could ever save $1 million, and 1/3 of respondents felt they had a better chance at winning $1 million in the lottery, than saving it themselves. That thought of hopelessness makes me sad, because while it isn’t the dream or goal of some people to save that much for retirement, it is my ultimate financial dream. I want to retire early at age 55 with over $1 million in the bank. And reading the comments on those two articles was hard. Most commenters were full of negativity. But, that just fuels my fire to prove them wrong.

Whatever your savings goal is, we all have one common goal in mind: to save for retirement. And the key is to start as soon as you can. The harder you work now, the easier it will be in the future.

What do you think? Do you believe that you can save $1 million by the time you retire?

**NOTE**
Yes, I do only pay $150/month in rent right now. But, when I was paying $725/month in rent, I was still saving approximately the same amount into my Retirement Portfolio. The difference? I didn’t have car payments or car insurance. One of the main reasons why I felt comfortable taking on $540/month car payments was because my rent was so low. If I still lived in that apartment, I wouldn’t have bought the car. I used to walk to work or drive my scooter. But now that I live a lot farther away from everything, a car became important to me.

AND, for the past year, I have been paying all of BF’s expenses while he was in school. It doesn’t reflect in my monthly budgets or weekly spending recaps, because he doesn’t want his finances being written about on this blog. So, there are a lot of expenses that I have to pay for that readers of this blog just don’t get to hear about. I would say, at least $300-600/month.

2 Responses to “Saving $1 million: is it possible?”

Author comments are in a darker gray color for you to easily identify the posts in the comments

1. Jaime says:

   Monday, July 4, 2011 - 03:26pm at 3:54 pm

   Yes I think a person can save up to a million if they pick a high paying career, are frugal, save, stay out of debt and live in an affordable area. I'm in college and I picked my degree on a strong Return on Investment. I'm paying for college on my own, I live with my bf and we split expenses. I try to be a minimalist without depriving myself and that's going well so far.

   Right now my expenses are going to college tuition and to bills. I'm paying for college mostly on my own. No loans, my parents help sometimes but it's mostly me since they're retired and need their money. My bf and I don't want kids, we're in our late 20s and early 30s. I also think that's part of the secret of retiring early, limiting kids or not having any and limiting consumer consumption in your family, I mean don't deprive your family but don't overdo it.

   I think it's possible but you have to be VERY VERY VERY committed. After college is done, I'm going to put my money mostly in regular savings and into retirement accounts. I really want to retire early. I've never been one of those people that has loved to work. My passions tend to be outside of work. I got inspired after reading the retire early lifestyle website. http://retireearlylifestyle.com

   That website is my inspiration. :)

   Reply
2. Ivory Deutschendorf says:

   Monday, October 10, 2011 - 04:21pm at 4:01 pm

   I have been reading through this blog for quite a while but this really is my 1st comment. Sorry in advance if it is way too long… I am getting close to retirement and need to ensure that my retirement income does not disappear before my eyes. I have plenty of funds secured in my I.R.A. but I have no desire to purchase something chancy like securities. I am not an expert on finance and need some investing tips. What kind of investment would you propose? I’ve been reading a whole lot about Swiss annuities recently- and think they sound like a healthy possibility. Is it correct that they are really immune to bankruptcy and divorce proceedings? In addition, are the tax breaks that they provide U.S. investors as effective as publicized?

   Reply

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