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Can You Actually Become a Millionaire on an Average Salary?

By Christy Bieber – Jul 28, 2020 at 9:30AM

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You may be surprised at the answer.

For a long time, becoming a millionaire has been synonymous with becoming wealthy. While $1 million doesn't go nearly as far as it used to, it's still a generous sum that can help set you up for a secure retirement. But saving so much money may seem like a pipe dream for many, especially for the millions of Americans looking at a bank account with little spare cash. 

If you're aiming to hit the $1 million target but just aren't sure if it's possible, it can be helpful to look at the feasibility of that on an average salary. 

Burlap bag full of money.

Image source: Getty Images.

What it takes for the average American to hit $1 million in savings

For most people, it makes sense to begin saving as early as possible even if they can't save much. Then, as their income goes up, they'll increase the amount they're putting away for retirement so they can grow their nest egg faster. 

To keep things simple, the table below assumes you'll keep your savings the same throughout your career and shows the amount you'd need to set aside to hit your $1 million goal by age 65, depending on what age you start and assuming a 7% annual return on investment. It also shows the percentage of income you'd need to save to hit your target if you earned the median salary in each age range. 

Age You Start Saving

Median Annual Income

Annual Amount to Save to Become a Millionaire by 65

% of Income You'd Need to Save

















Table data: Bureau of Labor Statistics; calculations by author

Is it feasible to save so much?

As you can see, if you start early enough, it's not very hard to become a millionaire even if your income is just average. You can save 10% of your income in your mid-20s and hit your target. And if your income goes up, you could even keep your savings rate the same and still become a millionaire. If you jumped up to making $59,020, for example, you could continue investing just $5,025 per year (around 8.5% of income) and still have a $1 million nest egg by 65.

But you shouldn't do that because you don't want to save less than 10% to 15% of income, especially since $1 million won't be worth nearly as much by the time you retire when there are so many years of inflation to factor in. Still, your early efforts would pay off, making it easier for you to amass a small fortune. 

The longer you wait, though, the less feasible it becomes to save $1 million on an average salary. If you don't start saving until you're 45 and want a seven-figure nest egg as a retiree, you'd need to save more than $4 out of every $10 you make, and that's just not doable for most people.

And if you wait until just 10 years before retirement, you can kiss the idea of becoming a millionaire goodbye if you make an average income. You'd have to save more than 100% of your earnings to invest enough to reach that milestone.  

That doesn't mean you should give up on saving for a secure retirement if you've waited, though. You may not be able to hit $1 million, but the sooner you begin putting aside money and the more aggressive you are with your contributions, the more comfortable your retirement will end up being. 

Should you aim to become a millionaire?

Remember when I said above that $1 million doesn't go as far as it used to? The reality is that saving a $1 million nest egg will only provide you with about $40,000 a year in income in retirement.

While that's probably enough when combined with Social Security benefits, it'll hardly guarantee you a life of leisure. The bottom line is, $1 million is a good retirement savings goal for most people. And if you aim much lower, you may come to regret it, especially considering the impact of taxes, inflation, and healthcare on your nest egg.

Becoming a millionaire will likely require some sacrifice if your salary is just average, but it is doable if you start early, save aggressively, or both. So start working on it today.

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