Despite the challenging economic conditions, the United States continues to produce more millionaires. The total number of US -based millionaires more than doubled from 2020 to 2023, reaching nearly 22 million persons.
How have so many people reached this basic financial stage? Not through the trends in the rich in getting rich, such as engaging in cryptocurrency or launching an application. Most people achieve the American dream by prioritizing their retirement savings.
First, let’s clean what it means to be a millionaire. Of course, being a millionaire suggests that you have accumulated at least a million dollars, but there is a little more nuance than that.
By definition, the millionaire is a person whose net value is at least $ 1 million, which means that the total value of all their assets (money, ownership, investment) minus their unpaid debt is $ 1 million or more. The term is quite wide as it includes anyone with at least $ 1 million assets, but less than $ 1 billion.
Does a millionaire mean you are ready for life? Not necessarily. In the past, you were a millionaire meant that you were rich, but the $ 1 million value decreased over time due to inflation. For example, you will need over $ 1.6 million in 2025 to have the same cost you made with $ 1 million in 2005.
Being a millionaire also does not guarantee exactly happiness. According to one study, happiness reaches a maximum when your salary reaches $ 100,000 a year.
However, increasing your net value can help you overcome financial challenges, depending on social security as the sole source of income during retirement. It can also give you a greater sense of autonomy in terms of your own circumstances.
Read more: How much money is considered rich?
So, what is the most secure way to accumulate $ 1 million? Most people who become millionaires in the United States reach this cornerstone in a very simple way: by making automatic retirement contributions from every salary for many years.
Surprised to hear that? This method is certainly lacking the attractiveness of the article -rich scheme, but here are some reasons why the consistent retirement contributions work so well:
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Underestimation: Automatic contributions of each salary help you to prioritize saving money and teach you to live less than your full income.
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By remaining at level level: Permanent investment helps you see the bigger picture and reduces the temptation to make impulsive (and expensive) movements based on titles and trends.
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Free money: Many retirement plans come with an employer’s match. In other words, when you contribute, your employer invests free money into your account.
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Risk -based adjustments: Most of the retirement plans automatically adjust their portfolio based on your age and when planning to retire, also known as investing a target date.
It may sound contrasting, but there are certain financial goals that need to be prioritized over retirement savings.
If you carry a debt of high interest (ie credit cards), pay them as soon as possible. When you do, you will remove high interest rates that eat the return on investment in your retirement account.
Then put some money in emergency savings. In this way, you will not be tempted to make an expensive early withdrawal from your pension account when a financial emergency arises.
Read more: How much money should I have in an emergency savings account?
The earlier you start contributing to your retirement account, the more time your money should grow.
If your employer offers a 401 (k) or other pension plan, enroll immediately and create a repeated contribution from your salary, even if it is a small amount – if you have access to the employer’s match, even better, as it makes free money into your retirement savings.
If your employer does not sponsor a pension plan, you can open Solo 401 (K) and/or IRA.
Read more: 401 (k) vs IRA: Differences and how to choose which is right for you
If you want your retirement savings to be $ 1 million to the age of 65, here’s approximately how much you need to contribute to any age (if you take 8% average return and do not include plans fees):
If you are hesitant to put money on a pension, start small. Then strive to increase your contribution at least once a year. Here are some ways to make sure you can do this:
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Income is increasing: Make a goal to raise your income annually, whether by raising, raising, lateral bustle or by switching jobs. Continuing education can also help as gaining a degree strongly correlates with income growth and net value. However, you will increase your income, be sure to increase your pension contribution instead of your expenses.
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Lower costs: Each time your expenses are reduced, automatically implement the extra money in your retirement contribution. For example, if you have a $ 250 paying car loan, add those $ 250 to your monthly $ 401 (K) installment after the loan is repaid.
Ideally, you want to be able to contribute to the maximum amount allowed every year. For 2025, the maximum contribution to 401 (K) S, 403 (B) S and plans to save savings (TSP) was $ 23,500 for people under $ 50 and $ 30,500 for people aged 50 and more.
When you change work, be sure to take your retirement savings with yourself. Of course, you can leave your money in the account provided by your old employer, but there are great benefits to overturn it into a new 401 (k) or IRA, including:
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You may need to pay higher fees to the old account after leaving the employer.
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You can no longer contribute to the old plan.
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You will have less management accounts.
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You can avoid problems with access to the old plan.
Investing in retirement is the main way Americans build wealth, but this is not the only way. Another large engine for growth of net value is the possession of a major residence.
Buying and owning a home is not cheap; You will need to cover advance payment, cost closure, property maintenance and more. But it can be paid in the long run.
If you do not have enough money to buy a home, check out the programs for the first time for the home (FTHB) through your country or local agency. As long as you have not owned your stay in the last three years, you could potentially qualify for FTHB help.
Read more: Save to buy a house? This is where you should park your money for advance payment