Shooting for $1 Million instead of just $250,000
Back to the strategy of getting rich with a part-time, minimum wage job:
What if you want to shoot for $1,000,000 instead of $250,000 to retire on? What if you make more than $12,000 per year? What if you are already 45 years old?
The plan outlined in prior posts is a starting point, we can make adjustments for different situations or goals.
If you want to end up at $1,000,000 instead of $250,000, you will need to save $387 per week for 25 years, at 5%, instead of the $110 per week in the original scenario. You could do that by working full time at your “regular job” instead of part time. Or by getting a job with a higher income. Instead of just making $12,000 at your day job, make $35,000. That will give you enough extra to invest and end up with a million.
By making this choice, you will need to be aware of several traps. First, when you make $35,000 per year, you will likely be more tempted to spend into a lifestyle of $50,000 per year. Peer pressure and advertising will be strong forces working against you. Prove it to yourself. If you are reading this, and over 30 years old, figure out how much you have earned in your lifetime. If you want an exact figure, you can request an earnings statement from the Social Security Administration, showing your exact earnings in your lifetime.
A rough figure will work for now. Suppose you are 30, and have been working since 18. That is 12 years of income. Suppose your average annual income was only $25,000. That is $300,000 of earnings so far. Of course taxes have taken some of that, so let’s use $220,000. What does a typical 30 year old have for assets to show for that? Don’t count any equity in your house, unless it is equal to the amount you paid in real cash downpayment. Subtract any debt from that. Most Americans have little or no net worth.
You will notice that I am using very low income scenarios. The reason is that I want to show that creating a financially secure future is possible using very low numbers, with extreme frugality. Higher incomes will make your retirement a breeze, as long as you add expense modestly.
The extra money you have after your expenses should not be called ‘disposable’ income. This money should not be disposed of at a shopping mall. it should be made to work for you in the future, so that you don’t have to work in the future at things you don’t want to.
Yes, this is not a new philosophy. I am repeating it because recent figures show that an increasing number of elderly Americans are in debt, and a spike in bankrupties for older people. A study in 2004 even predicted this 5 years ago.
Most readers will make much more than the $12,000 used to plan this retirement scenario. Use that extra money wisely. Keep control over your life, and what you will be free to do in later years. Your side venture should not be discarded either.
