How to Save a Million Calculator

Millionaire Calculator

As the saying goes: “Who wants to be a millionaire?” If you’d like to have a million, this calculator can help you figure out how much you need to save each month to reach that goal. The calculator requires five inputs by the user:

  • Your current age, or the age you plan to start saving
  • The age you’re targeting to become a millionaire
  • Any current savings you might have that would count towards this goal
  • The annual rate of return you expect to earn on the money
  • The expected annual rate of inflation, which lowers our buying power over time – more on this later

Note: The calculator’s default value of 2.9% is the long-term inflation rate in the United States.

The calculator then provides the user with two sets of values. The first set is adjusted for inflation, while the second set provides values that ignore the effects of inflation:

  • The monthly savings, which is how much the user needs to set aside each month
  • The account value at the millionaire age. The inflation adjusted set of values will always show an account value of 1,000,000
  • The total of all payments made or saved, which is found by multiplying twelve times the number of years times the monthly savings value
  • Finally, the calculator displays the interest earned on the savings over the years

Real versus Nominal Values

The calculator results labeled as Inflation Adjusted / Real Values represents money with the same buying power that one million has today. This means all results have been adjusted for inflation.

The calculator results labeled as Ignoring Inflation / Nominal Values represent the actual values. For example, if someone in the United States wanted to save enough money to have $1,000,000 of buying power today, this is how much money they would need in their account in the future (at the Millionaire Age).

Ignoring Inflation

If you want to ignore inflation and find out how much you need to save each month to have exactly 1,000,000 in your account when you reach the millionaire age, then enter zero for the expected rate of inflation. We no longer need to account for inflation in the calculations, which means the monthly savings value will be lower, the interest earned value will go up, and the total payments will go down. Since we are still targeting 1,000,000, the account value remains the same. Finally, both sets of data (Inflation Adjusted / Real Values and Ignoring Inflation / Nominal) will now be identical.

Why bother adjusting for inflation?

While it is possible to ignore inflation when doing this calculation, you might not be happy with the outcome. The inflation estimate accounts for the increase in price of goods and services over time, and the resulting decline in the purchasing power of money. Persons with longer-term planning horizons might be disappointed to learn that million doesn’t buy as much as they thought it would thirty years ago when they started saving towards this goal. In fact, it would take around 2,400,000 dollars to equal the purchasing power of 1,000,000 dollars with a 30-year planning scenario and an inflation rate of 2.9%.