Can You Reach $5M in the Bank with a $45K a year salary?

401k.jpgFinancial freedom gives you more choices, like the choice to retire. But it seems ever elusive for most. Can a person go beyond simple financial security and save $5,000,000 within a 40 year career at a salary of $45,000  year?

 Theoretically:

  • 37 year career
  • $45,000 a year salary
  • 25% of salary contributed to a 401k plan
  • 6% company match
  • 4% salary growth a year
  • 10% annual return

Equals $5,000,000.

These may seem achievable (although the 25% savings plan may be high for most) and even likely for families who have a dual income and follow this plan. However, life’s suprises can become roadblocks in this plan. In any event, you can ‘improve your chances,’ as is outlined in the Money Magazine below, by:

  1. Building a cushion
  2. Not assuming your next egg’s value is locked in
  3. Re-assessing your progress periodically

37 years. $5 million. What could go wrong?. [Money Magazine – Walter Updegrave]

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