Last week, I posed the question: how much should you have saved by now?
With the general consensus being that pre-packaged formulas such as “6.1 times your current salary by age 50” mean a hill o’beans because:
a) the best these ‘common wisdom’ formulas will get you to is just over broke by the time you work to 65 (and, not a day before!), and
b) they fail to take into account that YOU need to have saved enough to ensure that you’ve reached Your Number by Your Date.
The corollary question is “when will you be a millionaire?”, one which CNN Money attempts to answer with this neat online calculator:
The problem with this calculator is obvious … but, in case you missed it, I blew up the bottom-right corner of the above image for you:
Your ‘desired nest egg’ – in this calculator – isn’t variable … it’s One Million … that’s it!
My issue is that plenty of people (fortunately, none of them readers of this blog) – with the support of an ‘authority’ such as CNN Money – still think that $1,000,000 is something to aspire to!
If $1 million isn’t just a hurdle along the way to your Number – and, a fairly early and relatively small hurdle at that – then you are destined for a VERY late retirement or an early trip to the ashram to meditate all day and eat rice at every meal … not that there’s anything wrong with aspiring to Asceticism 🙂
PS I’m sure there’s plenty of other online calculators that will do the job, although I couldn’t find one that accepts >20% annual return and we know that we need more than that! If you find a good one, please post a link in the comments.