The New Magic Number for Automatic Millennial Millionaire Status
Automatic Millionaire Status, Is it Even Possible Anymore in 2020 and Beyond?
It makes more sense than those “Make Money from Amazon without Selling any products.”
Just like that people are intrigued. Gone are the sleazy 90s business guy in a suit, now it’s all about the laid-back person who was featured somewhere. Unfortunately, the ploy works. Get Rich Quick ads exploded during the pandemic. Here’s the real solution to your problem.
Originally, I spent over 5 years helping people, either through resume building, financial literacy tips, articles, or personal 1-on-1s. I ended up publishing $77,000+ is the Magic Number for Million Dollar Millennial on Linkedin back in 2018. I realized that for most people, math itself was a difficult subject.
Table of Contents
Financial literacy concepts were often ⇢ too broad or maybe too complicated.
When you start throwing terms like 401k, Dow Jones, $ARKK Invest, compounding interest, Individual Retirement Accounts, Social Security and etc; for the uninitiated, just speak Latin and move on.
In hopes to lessen confusion and to get more people on the wealth-building train, I’m making the journey EASY and RELATABLE.
Most millennials can and should consider becoming Automatic Millionaires.
This article is all about how. To prove it, my wife and I are breaking down our net worth every month.
It’s a wild ride but it’s ultimately a hard choice that you have to make.
At least $1 Million Needed For Retirement? How?!
Thinking about Retirement is not sexy in your 20s or 30s. But it’s important to note that retirees never complained about investing too much. Most Americans over 50 are worried that they don’t have enough to retire. Although we can’t plan when we are going to die, we can make a great guess as to how much we would need. We have to think 25 years into the future.
See the Table Below for how to calculate your automatic millionaire expense needs.
Rough Estimate: 25x Annual Expenses Long-Term Spending Need
| Current Lifestyle | Current Annual Expenses | Multiply by 5% Inflation | Retirement Savings Need |
| Low to Moderate | $40,000 | $42,000 | $1,050,000 |
| Average | $50,000 | $52,500 | $1,312,500 |
| Urban Millennial | $58,000 | $60,900 | $1,522,500 |
| Moderate to High | $75,000 | $78,750 | $1,968,750 |
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. I was highly dependent on the “Free or Reduced Lunch Program” throughout Middle and High School. This is likely why I had near-perfect attendance. I still have PTSD from the struggle days, so much so that it made my stint in the Marines look easy.
“Just remember how your story started is not necessarily how it will end.”
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 spend, 2. Determine How much to Save/Invest, 3. how much we need to make and that’s it.
1. $58,824 is How Much We Need to Spend
The average annual expenses for a US Household totaled $48,000. Let’s say that’s $50,000 if we rounded up for miscellaneous and incidental reasons.
You need at least that much after taxes. If taxes are 15% on average, then the starting amount would have to be $58,823.52 in retirement annually. Fact-checkers: $50,000 divided by 85% to give us the pretax amount.
2. Minimum Savings and Investing is $30,000 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, and HSA. For 2021, the maximum contributions for a 401k, 403b, or 457b is $19,500 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 $29,100 annually. 401k for singles at $19.5k, IRA for singles at $6k, and HSA for singles at $3.6k. Close enough to be $30,000.
- 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%. It’s a TRAP!!!!
3. The Automatic Millionaire Salary You Need to Earn is $88,824 per year
It’s OK you don’t have to start making this number on day one. I started off my career making less than $21,000 before taxes. The mountain does seem large starting off but you can make it to the top.
If you get to this number by 25-30 yrs old and 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.
Just good old salary and here’s the math:
| Years | Cumulative Contributions | Accumulated Interest Gained at Historical Avg. 8% | Total Remaining |
| 1 | $30,000 | $1,085 | $31,085 |
| 5 | $150,000 | $32,360 | $182,360 |
| 10 | $300,000 | $150,300 | $450,300 |
| 15 | $450,000 | $394,000 | $844,000 |
| 20 | $600,000 | $822,500 | $1,422,500 |
| 25 | $180,000 | $1,522,475 | $2,272,475 |
4. Retire as an Automatic Millionaire Two Times Over with More Than $2.272M
- Your total at the end of the game. Let’s say you started at age 30, that’s almost $2.3 million by 55. Not even including dividend investing for the long term.
- As long as significant issues don’t arise or you don’t start doing coke; you will be fine. I’d also say be moderate in your spending on homes. Don’t buy big 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 $89,000 as a household. Allocate and invest no less than $30,000. And finally, continue to live your life. That’s all there is to it.
Again, you don’t have to start at $89,000 so it’s OK to have a goal. Focus on the Destination, not the starting line. Now Run!
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 $50 for $50 referral if you need it – https://m1.finance/SYdqDJ2SyADC (offer ends March 31, 2022)
- Boosting back the EF savings with an additional $2,000. 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
- 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.
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