As a 32-year-old who makes an above-average salary, I can tell you that it can be difficult to focus on the long-term goal of retirement. I mean, sure, it's in the back of my mind—but in-between is European trips, cars, houses, etc.—so forgive me if I haven't hired a financial planner to give me tips on what to be saving each month.
Chances are, if you fall into that "millennial" classification, you think and act like I do when it comes to your money, focusing more on spending for experiences rather than worry about what life will be life at the age of 60-plus.
Well, it might be time for all of us to change our ways with our cash, because Entrepreneur.com estimated how much a millennial will have to save each month to retire with $5 million and, let's just say, it's going to take some work.
This should be pretty obvious. The earlier you start saving the more money you’ll have in your retirement savings. For example, if you initially put aside $20,000 you would need to save $1,598 indexed at 7 percent annually in order to become a millionaire by age 65. That amount, when adjusted at 3 percent inflation, would turn out to be $3,262,038 in 40 years. Imagine if you were able to put aside $2,000 annually? You’d shatter that $5 million goal.
Got all that? If not, you can always play with this trusty millionaire calculator to better understand what you need to do to reach your $5 million goal.
Bottom line is this: while living the good life and impressing your 20- and 30-something friends with luxury cars and bigger than necessary homes is cool now, the future is uncertain—especially when it comes to finances—so be smart and save as much as you can now so that you're not forced to still be working well past your mid-60s.