The 2023 Salary to Become an Automatic Millennial Millionaire
With credit card debt through the roof and a recession looming, is it still possible to become an automatic millionaire? In one answer, YES!
With all the doom and gloom clickbait media of 2022. it’s easy to wonder if the American dream is still achievable. Turns out, even though we have our societal and economic issues, the United States is still at the top of global social mobility.
Over the past 10 years, I’ve studied personal finances. Combing through a myriad of financial journals, panels, books, podcasts, and YouTube videos; way too much content. I ended up publishing nearly 300 blog posts covering “How to build wealth in a short amount of time.”
The first thing that I learned, people need help with understanding money. Secondly, “Cash Flow, not Cash is King.” And finally, you can backtrack your way to the magic number (salary needed) to become an automatic millionaire.
Don’t worry, just like the 2020 magic number, I’ll do the math for you.
Table of Contents
Automatic Millionaire Status, Is it Even Possible Anymore in 2023 and Beyond?
Old Financial literacy ideas and concepts were too broad and way too complicated
When you start throwing terms like 401k, Dow Jones, $ARKK Invest, Backdoor ROTH IRAs, compounding interest, Individual Retirement Accounts, Social Security and etc; for the uninitiated, it’s all Latin. Or worse, it’s gibberish.
I’m writing this so you can have the blueprint and understanding without the headache.
Wealth building is not extremely hard to implement. Once you start, the journey gets EASIER.
Do remember that this is a journey, not a walk in the park. Or a casual stroll. It’s more of a hike uphill when you weren’t prepared and didn’t drink enough water.
Based on the flow of the economy, most millennials NEED to consider becoming Automatic Millionaires. This is what this article is all about how. My wife and I break down our net worth every month. It’s a wild ride and a mandatory pivot since it’s going to get costly not to.
Try to keep it simple and automatic!
At least $2 Million Needed For Retirement? How?!
Thinking about Retirement is not sexy in your 20s or 30s. Retirees never complained about investing too much, instead, they wish they started earlier. Most Americans over 50 are worried that they don’t have enough to retire.
No one knows when they are going to die, however with the progress in medicine, it’s likely that you will live to see 80. From that point, it comes down to your goals and plan. You will need money when you retire. Social security pays out on average less than $30,000 annually.
It’s not going to be enough to survive. It’s up to us to guess how much we would need. For that, we have to think 25 years into the future. Check out the Table Below for how to calculate your automatic millionaire expense needs.
The numbers may surprise you.
Rough Estimate: 25x Annual Expenses Long-Term Spending Need
| Current Lifestyle | 2021 Annual Median Expenses | Compounding 3% Inflation through 2050 Using an Inflation Calculator | 80% Retirement Savings Need |
| Low to Moderate | $45,000 | $101,633 | $2,032,660 |
| Middle Class (Median) | $67,000 | $151,321 | $3,026,420 |
| Urban Millennial | $75,000 | $169,389 | $3,387,780 |
| Moderate to High | $100,000 | $225,852 | $4,517,040 |
So How Do You Get to an Automatic Million?
First, don’t panic or curse me out.
Like you, I didn’t start off with a Million dollars. My mom never made more than $30,000 which put me and my sister squarely in the poverty range. We were slightly above pure financial instability, otherwise known as the working poor.
Personally, I was highly dependent on the national “Free or Reduced Lunch Program” throughout Middle and High School. If I wanted breakfast and lunch, I had to be in school. This is likely why I had near-perfect attendance. Dinner was a hit or miss.
If it helps, just remember that it is not how your story started, it’s how it ends that count.
So how do you earn a million dollars in savings? Simple, we work the math backward this time. We have to figure out 1. how much we are currently spending, 2. Determine How much to Save/Invest, 3. how much we need to make.
This is the essence of how you can use social mobility and the financial system to create wealth in your lifetime.
1. So all we need is $114,286 to spend?
Math time – The 2021 median annual expenses for a US Household totaled $66,928. Let’s say that’s $67,000 if we rounded up for miscellaneous and incidental reasons. If we factor out, $10,000 from the cash contributions and pension insurance; the total comes down to $57,000. Shaving unnecessary expenses from unused subscriptions and way too many Uber eats, it comes down to about $52,500.
You need at least that much after taxes.
If taxes are 17% on average, then the starting amount would have to be $63,253.01 in retirement annually. Fact-checkers: $52,500 divided by 83% to give us the pretax amount. In 2050 dollars, it would mean that we need $142,858.
Furthermore, we technically only need 80%. This drives down the need to $114,286.40 per year. A grand total of $2,857,160 +/- $357,160.
2. Minimum Savings and Investing is $32,850 Per Year
Without fail, you would be shooting for this amount if you are single and no less than this amount if you are married. After that, you can set and forget it. This is easier than you think.
This is how the rich got richer and how they hold on to most of their wealth through tax avoidance and wealth maximization strategies.
The execution is simple:
- Max out your 401k, IRA, HSA. For 2023, the maximum contributions for a 401k, 403b, or 457b is $22,500 per working adult if they are offered at your job. Never miss the matching contribution and make sure you are allocated based on your risk profile at least.
- Total without you doing the math is a savings of $32,850 annually. 401k for singles at $22,500, IRA for singles at $6,500, and HSA for singles at $3,850. Add an additional $9,500 if you are over 50. Even if you average that down to around $30,000, it’s enough to get you over the threshold.
- WARNING: Saving less than 20% is simply not going to cut it anymore. The Experts are lying to you; if you ask them, you will realize they save way more than 10%. At that rate, it will take you more than 50 working years to amass enough savings to live off of.
3. The Automatic Millionaire Salary You Need to Earn is $96,100 per year
Let’s do more reverse math. Adding back $32,850 to $63,250 for current expenses, the median American household needs $96,100. It’s OK you don’t have to start making this number on day one.
I started off my career making $23,000 before taxes. It boiled down to $1,000 per month. And they paid us monthly. While the mountain seemed insurmountable at first, I took one step. And then, I took another.
If you understand this concept by 25-30 yrs old, we are in business. If you get married along the way, you can split it with a spouse. Half and Half is fine. $50k and $38k with one watching the kids part-time, that’s fine too. We aren’t adding any job promotions or side hustles.
Besides, there is no greater feeling than when your money starts to work harder than you. Based on the example below, by year 16, the compounding interest equals the amount that you put in. By year 19, your interests would compound by over six figures ($103,166 to be exact).
This is the power of financial freedom. Just good old math working in your favor. Here’s the breakdown of your contribution vs your cumulative interest earned:
| Years | Cumulative Contributions | Accumulated Interest Gained at Historical Avg. 8% | Total Balance |
| 1 | $32,850 | $1,188 | $34,038 |
| 5 | $164,250 | $35,436 | $199,686 |
| 10 | $328,500 | $164,590 | $493,090 |
| 15 | $492,750 | $431,447 | $924,197 |
| 20 | $657,000 | $900,635 | $1,557,635 |
| 25 | $821,250 | $1,667,113 | $2,488,366 |
4. Retire as an Automatic Millionaire Two Times Over with Nearly $2.5M
- And no we didn’t forget about the tax. Nor did we forget about your social security benefits or any matching contributions. We are merely keeping the math simple but your results may vary +/- $350,000.
- Your total at the end of the game. Let’s say you started at age 30, that’s almost $2.5 million by 55. Not even including accumulated dividends from your investments.
- Even if you factor out 20% in taxes, that’s $2 million needed for retirement. If we play your cards right, you can set up an income-based portfolio where you can withdraw as much as $80,000 per year in dividends without ever touching the principal. Add on around $30,000 or more for social security and you are golden.
- As long as significant health issues don’t arise; you will be fine. I’d also say be moderate in your spending on homes. You will still be able to have a great time. Travel and etc…
- 25-30 yrs old = 50-55 years old <— way before forced retirement age of 67.
Summarize the lifestyle of millionaires
There you have it, the automatic millionaire path without paying anyone a dime. You are welcome.
Make at least $96,100 as a household. Allocate and invest no less than $32,850 per year through retirement and tax-beneficial accounts.
And finally, continue to live your life. That’s all there is to it.
Again, you don’t have to start at $96,100 so it’s OK to have a goal. Focus on the Destination, not the starting line. This number didn’t factor in bonuses or income increases. This is merely a number that factors in tax planning, inflation, the future value of money, and compounding interest through dollar cost averaging.
Wow sounded complicated, so keep it simple with at least $100k. Now Run! Don’t walk to financial freedom. It should go without saying that above-average earners need to double up and invest way more. A good $5,000 per month in all investment vehicles should cut the mustard.
Prices are going up and so should your investment contributions.
Bonus: Here’s how TNFG is becoming an automatic millionaire household
Closing out the year stronger, as automatic millionaires or on the path.
- Working on investing in the after-tax portfolio to hit the total of $25,000 in M1 Finance Brokerage focused on Dividend Income that generates at least $1,000 in passive Income for starters in 2022. Check out the portfolio in real time. If you like the platform and want to start investing, I have the $10 for $10 referral if you need it – https://m1.finance/SYdqDJ2SyADC
- Boosting back the EF savings with an additional $10,000. Keep tabs on your savings, cash flow, net worth, investments, retirement, and more for absolutely FREE with Personal Capital! Sign up with my link & get a $20 Amazon gift card. *Terms apply. https://pcap.rocks/lawrencegonz
- Read more books to understand how being wealthy aligns with overall well-being. Check out our SMART Book recommendations.
- Getting back to shape – HIIT Mornings. Running, and biking just pushing out effort. I say it all the time but it’s still good. We did start HIIT workouts off of YouTube.
About Author
