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How Much Money Does a 45-Year-Old Need to Invest to Become a Millionaire?

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There is no universal rule for how much you need to save to retire. It varies from person to person and depends on factors such as your current income, age, the standard of living that you hope to have after you retire and how long you expect to live after retirement.

However, there are certain rules that you can use and practise to retire comfortably. It is also advised that you consult with a professional financial advisor who can draw up a retirement plan for you to save and invest your funds, go through the pros and cons of different retirement accounts, and suggest financial instruments in which you can invest in per your risk tolerance.

Let us look at these rules in detail:

The 4% rule

According to the 4% rule, you should not withdraw more than 4% of your total retirement fund in the first year of your retirement. Subsequent withdrawals can increase along with increased costs of living.

The other part of the 4% rule is used to determine how much your retirement corpus should be worth for it to last for about 30 years, given that you have a fixed amount of expenses. The formula used for this is as follows:

Retirement corpus = Annual income required after retirement / 0.04

For instance, if you wish to have $60,000 per annum for your expenses post-retirement, your retirement corpus should be worth - $60000 / 0.04 = $1.5 million.

The 4% rule assumes a 5% return on your investment after inflation and taxes and no additional income in the form of social security. While the 4% rule seems easy enough to follow, it does not account for any large withdrawals made. If you withdraw more than usual due to an emergency, it negatively affects your income for the rest of your life as the amount of interest you get goes down.

The 80% rule

According to this rule, your annual income post-retirement should be worth 80% of your annual income before retirement. This will allow you to have the same standard of living as you did while you actively worked. Naturally, the percentage can vary according to your lifestyle needs. If you are going to have a minimalist lifestyle, you could opt for 60% of your pre-retirement income. If you wish to travel and such, you might want to have 90 to 100% of your pre-retirement income.

So, keeping your lifestyle in mind along with how long you expect to live, you could plan your corpus accordingly. For instance, if you earned $100,000 per annum before retirement and wish to live a lifestyle that requires 80% of your pre-retirement income and you expect to live for 30 years after retirement, your corpus should be worth $2.4 million.

Saving by age

Setting up goals for the value of your retirement corpus based on age is an excellent way to keep track of your funds and let them grow. You can find two other such age metrics below:


How much you should have saved up


1x annual salary


2x annual salary


3x annual salary


4x annual salary


5x annual salary


6x annual salary


7x annual salary


8x annual salary

67 and more

10x annual salary


How much you should have saved up


0.5x of annual salary


1x to 1.5x annual salary


1.5x to 2.5x annual salary


2.5x to 4x annual salary


3.5x to 6x annual salary


4.5x to 8x annual salary


6x to 11x annual salary


7.5x to 14 annual salary

There are several plans like these where you can plan your strategies on whichever plan suits you the best.


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How to become a millionaire by starting investing at 45

At the age of 45, a person might have a lot more expenses than they might have had as a younger person. This may be because of reasons such as childcare and their education, life insurance payments, supporting aging parents, health insurance premiums, and so on. In these circumstances, it might be difficult to spare enough to invest. However, it is not impossible to become a millionaire by the time you turn 65.

Brian Stivers, a financial advisor, did the math and drew an investment plan which would allow a person to start investing at 45 and become a millionaire by 65. He gave estimates of how much a person would have to invest each month, for twenty years, in order to earn a million dollars. These are:

  • If a person aged 45 can invest nearly $3100-$3200 per month in investments yielding ~3% annually, he/she can reach $1 million by the time he is 65 (other things remaining constant).
  • It is also applicable to 6% and 9% yielding investments, where, by investing $2,200 and $1600 per month, respectively, a person can reach $1 million by the time they are 65.

These figures would be much lower if the person starts investing early. Investing early and the power of compounding is your best bet to having large returns in the long term.

However, practise caution while choosing your investments and only take the amount of risk you are comfortable with. It is advised to discuss your options with a financial advisor who can assess your financial position, risk tolerance, and other factors and recommend a good investment plan.

How much should I have saved in my 401k at 45?

To live your post-retirement phase comfortably, you need to have a decent retirement corpus. A large chunk of that corpus comes from a 401k plan which you might have started at the time of your first job. Just like the ‘saving by age’ method, there are certain guidelines about how much you should have in your 401k by the time you reach a certain age.

There are three types of savers:

  • Old savers/low-end savers: If you are an old saver, you should have around $300,000 in your 401k plan by the time you turn 45. This way, you will have around $1 million by the time you turn 65.

  • Middle-aged savers/mid-end savers: If you are a middle-aged saver, you should have around $800,000 in your 401k plan by the time you turn 45. This way, you will have around $3.5 million by the time you turn 65.

  • Younger savers/high-end savers: If you are a high-end saver, you should have around $1.25 million in your 401k plan by the time you turn 45. This way, you will have around $8 million by the time you turn 65.

Compared to this, the following table shows the real-time average 401k balance by age.


Average 401k balance


$10,500 with a 7% contribution rate


$38,400 with a 8% contribution rate


$93,400 with a 8% contribution rate


$160,000 with a 10% contribution rate


$182,100 with a 11% contribution rate


$171,400 with a 12% contribution rate

Can you retire with $1.5 million comfortably?

The answer to this is both yes and no. As mentioned before, the size of your retirement corpus depends on your standard of living and the age at which you retire. For instance, if you were to retire at 45 with $1.5 million, it probably would not be sufficient to do so. However, if you retire at 60 with $1.5 million while maintaining an optimal standard of living, it may prove to be enough.

According to the 4% rule, a retirement corpus worth $1.5 million would give you an income of $60,000 per annum. For some, this would lead to a comfortable living, while it may not suffice for others.

If you are someone who can expertly manage expenses and cut down costs optimally (like housing, travel, food, and so on), you can certainly retire at 60 with a $1.5 million retirement corpus!

To summarize

Everyone wishes to have a comfortable and hassle-free post-retirement life. This is attainable for those who have worked consistently throughout their pre-retirement lives. If you are young, the best thing you can do for yourself is to start investing right now. It is never too early to start. Even if you are a middle-aged person of 45 years, you can still have a comfortable retirement. Consistent investing and the power of compounding is one of the most efficient ways to retire with a healthy corpus.

Use Paladin Registry’s free advisor match tool to match with an experienced and certified investment advisor who will be able to guide you effectively and help you choose the best retirement strategy as per your financial goals and dreams. Give us basic details about yourself, and Paladin Registry will match you with 1-3 professional financial fiduciaries that may be suited to help you.

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The blog articles on this website are provided for general educational and informational purposes only, and no content included is intended to be used as financial or legal advice.
A professional financial advisor should be consulted prior to making any investment decisions. Each person's financial situation is unique, and your advisor would be able to provide you with the financial information and advice related to your financial situation.