Is Being a Millionaire a Worthy Goal?

Is Being a Millionaire a Worthy Goal?

 

 

Since most people don’t have adequate education on how money works, they end of relying on Pop Culture Finance  as means of education. They read articles on the fly and attempt to get education along the way. The problem with that approach is Pop Culture Finance oftentimes sends incomplete information leaving the reader to rely on assumptions which are based on misleading, unclear points. In this latest article, they are writing about attaining the goal of being a millionaire by age 67. They rightly make the point that the earlier you start saving and investing the easier it will be. However, they leave out two very important points.

 

 

1)     Being a millionaire 30 years (as an example) from now is not like being a millionaire today

 

 

Say you are 37 years of age and your goal is to accomplish that goal by age 67. A million dollars is worth the equivalent of roughly $522,000 in today’s dollars given a 2% inflation rate. It is worth even less given a higher inflation average. At a 5% withdrawal rate, that produces a retirement income of $ 26,100 assuming that you survive future financial meltdowns. Can you live off of $26,100 and whatever is left of social security in 30 years?

 

 

2)     It probably takes more than being a millionaire to make retirement work

 

 

In the article, the writer states that a million dollars “is not an adequate goal for every saver.” Considering how much future income that million dollars produces I doubt it is adequate for the majority of future retirees.

 

 

Instead, go through the proper process of setting your goals and know what your number is that you need to accumulate in order to one day claim financial independence and retire the way you want. The last thing you want to do is set your sights on the wrong goal and find out in 30 years that being a millionaire is nothing more than being a “thousandairre”!

 

 

To go through an individualized process of goal setting and planing, email me at bob@prudentmoney.com

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