Wealth series: Everyone should become a millionaire by age 55

I think the last part of our life should be the climax of our journey on earth. As everyone would agree, two things–health and wealth–immensely contribute to that purpose. To investigate the wealth part, below simple calculation convinces me that everyone should aim to become at least a millionaireby the earliest age of retirement (55), when income from our labor stops coming in.

So let’s assume that you have saved up a million bucks to invest, and let’s further assume that you earn 5% annual return on your investment by taking moderate level of risk. In that case, your annual income from your investment returns will be $50,000 ($1,000,000 * 5%). If you divide it up by 12 months, you will earn $4166 per month.

And as we can’t avoid it, there will be an income tax on your income from investments. Let’s say the tax rate is 40%. In that case, you will receive $2500 ($4166*(1-0.4)) on your hand to spend.

Is monthly income of $2500 enough to make the last days of your life the best days of your life? If not, then while you can labor, you need to save up more than $1,000,000. How do you do that? I will be guiding you along with my Wealth Series posts. So stay tuned!

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