You CAN Save One Million Dollars!

One of the most common questions we are asked as a financial advisers is “will I have enough to retire?” It truly is the sixty-four thousand dollar question and if $64,000 was the answer, we’d all be on easy street!

With so many variables involved, there is no set answer, but these days with many of us expecting to live longer, at least one million dollars in the future might be the minimum required to fund a comfortable retirement.

This might come as a shock to many and a lot of people might think that figure is only achievable by winning the lottery, but we can assure you that it is achievable. All it takes is some planning and commitment… and a little bit of magic called compounding.

Below we have outlined some key tips that we would talk to you about if you were sitting in front of us:

Start with your focus. For this example, it’s one million bucks.

Frequency – Regular deposits are recommended straight from your pay. What you don’t see you don’t miss.

Amount – Minimum 10% of monthly net income is recommended.

Rate – Choose investments that provide at least a 6-8%pa rate of return.

Type – High interest savings account to get started, then perhaps managed funds once you have saved enough for the minimum investment. As your balance grows, we will look at other assets to spread your investment. If you’re taking advantage of the low tax applied to super, in addition to the superannuation guarantee, you may want to salary sacrifice to your super fund – as long as you don’t exceed the concessional contributions cap.

Risk – Remember: high returns generally mean high risk. On the other hand, being too careful can slow progress. Everyone has a different risk tolerance which depends on age, personality and circumstances.

Age – Obviously it’s best to begin as early as possible, but you can still save a substantial amount even if you start in your mid-late thirties.

Emergencies – Emergencies mean just that. If you withdraw money for a new car or big holiday, you’re only undermining yourself. (That doesn’t mean you miss out on these enjoyable lifestyle events. Fun is an important part of your savings plan.)

Goal – The figures we have quoted here are based upon a $1 million target, however, depending on your lifestyle and expectations, you can revise that amount to suit your circumstances.

How many years to save $1 million

Let’s start with a savings balance of $5,000. This is how long it will take to reach the million dollar mark at different contribution amounts and earnings rates:




Years @ 6%pa interest


Years @ 8%pa interest


Years @ 10%pa interest


$400 43 36 30
$500 40 33 29
$800 33 28 24
$1,000 30 26 23


Obviously, the earlier you start saving, the smaller the contribution is needed. You can accelerate your contribution rate as your income increases. Savvy savers who pay a mortgage off early can accelerate their program considerably by directing the amount formerly devoted to the mortgage payment into savings.

And what about money you receive along the way? If you receive an inheritance of say, $100,000 (assuming an annual return of 8%), the $1 million mark can be reached in just 20 years contributing only $400 per month.

Regular investing is likened to building a “saving muscle.” You grow accustomed to putting away this money over the years and are able to increase the amount as you would increase an exercise regimen. Eventually, it becomes habit, you don’t notice the pain anymore, and the payoff can be enormous at the end. Like achieving a fit and healthy body, building your saving muscle results in a healthy financial outlook.

Being a millionaire may seem like an unattainable dream, but with the right amount of planning and diligence you can join the Millionaires’ Club sooner than you think.

Notes: taxation and inflation have not been taken into account in these calculations. Calculation based on achieving $1 million in today’s dollars.