40 with No Savings? How to Retire a Millionaire

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Even if you're middle aged and haven't got a penny saved for retirement, $1 million is still within your reach. (Photo: @TatianaMara via Twenty20)
Turning 40 is like arriving at the Halftime Show of your life. After all, the National Center for Health Statistics has calculated that the average life expectancy for all Americans is 78.7 years. If you want to retire a millionaire (and who doesn’t?), then when it comes to saving, you need to put on the greatest Halftime Show ever. Luckily, the Super Bowl has seen some stellar ones to draw inspiration from.

Lady Gaga (2017)

If you’re 40 and have no savings, it’s time to put on your Poker Face because you have some work cut out for you. But you’re not alone. The Economic Policy Institute found that the average American family between the ages of 44 and 49 had saved $6,200 for retirement, which is a long way from $1 million.
How can you get to millionaire status? It literally seems impossible, like beating your kids at Mario Kart.
Now isn’t the time to get weepy, though. Poker Face, remember? And consider the fact that if you crunch the numbers, the math actually works out. The key is in understanding the long game of the S&P 500, a leading economic indicator that measures the stock performance of 500 major companies listed on U.S. stock exchanges. Since the S&P 500’s inception in 1926, it has grown at an annual rate of 10% to 11%. Once you adjust for inflation, it’s seven percent. To give you an idea of how boss that is, consider that you’d double your money in 10 years at that percentage. That’s the power of compound interest.

U2 (2002)

Now all you need is some money to invest. How much money per month will get you to that Beautiful Day when you’ve got $1 million in the bank? It’s less than you think, as long as you’re willing to stop wasting money.
If, on the morning after your 40th birthday party, you start kicking in $800 per month into an index fund, and if you assume a return of seven percent for the next 25 years, you’re looking at the the tidy sum of $607,000. The $800 amount wasn’t pulled from a hat: It represents about 20% of an annual salary of $50,000. And if you continue working past the age of 65 to 67, you could squirrel less away each month (like $650, or 15%) and get to the same point.

Michael Jackson (1993)

The key, of course, is figuring out the easiest way to free up an extra $650 to $800 per month, which seems as easy as running a marathon in two hours. Most people don’t save for retirement not because they’re buying caviar and Fendi handbags, but because they can’t afford to.
Which means we need to Beat It. And the first place to start is in lowering the fixed costs of things like auto insurance. There’s a highly rated app that by itself can get you on your way to your monthly investment goal. Jerry saves customers over $800 yearly by using crazy-fast AI technology to act as your personal insurance shopper. Billsmart can do something similar for your phone or cable bills. There are powerful tools at your disposal and you should use them. It’ll feel good to tell the insurance company that you Wanna Be Startin’ Somethin’ for them overcharging you for so many years.

Bruce Springsteen and the E Street Band (2009)

You were Born to Run, and your HR office is the first place you need to run to after turning 40 and realizing you haven’t saved a dime. Why there and not San Diego? Because in the HR office, you’re going to deal with your 401(k).
To get to $1 million, you’re going to need some help from your employer. You need to make sure that you’re putting into your 401(k) the max amount that your company will match. The most common match is three percent of your salary, which works out to $1,500 per year if you make $50,000. You can put in more, of course, and your company might have a higher match. And while you’re there, you might want to set up a meeting with the rep of the financial services provider who’s handling your account. When you’re young, economists advise that it’s best to be less risk averse, meaning you should allocate your 401(k) to more high-risk, high-reward positions. As you get closer to retiring, you should scale that back.

Prince (2007)

If you want to retire with a million bucks, you probably aren’t going to buy a little red Corvette, unless you intend to fix one up and sell it for a big profit. Prince gave what’s considered to be the greatest Halftime Show in the history of the Super Bowl, and there’s no reason you can’t turn 40, party like it’s 1999, and still feather your nest. You just need to be smart with your money and make good decisions.
You could have a “wardrobe malfunction” or two and still end up in good shape, as long as you stay committed. And since about a third of those between the ages of 65 and 69 are still working, and half of all retirees plan on working part time, even after you get $1 million, chances are you’re going to stay busy and live to a ripe old age. You might even get to see the Halftime Show at Super Bowl C (100 in Roman numerals).