Can You Be A Millionaire By 40 With Just An Average Salary?

I recently saw an ad on Facebook that was something to the effect of “How to be a millionaire by age 40.” When I clicked to read the article, the advice given was basically to get a really high paying job at a very young age and start investing right away. While this would certainly allow you to become a millionaire at a young age, it doesn’t really help most of us who aren’t able to get a high paying job at 20. However, it made me wonder whether people making the median salary for their age are able to become millionaires by the time they reach 40 if they save a lot and invest well. My guess was that it might be possible, but it would be quite difficult, especially for someone who was single. For couples, it would likely be much easier to reach $1 million together if both are working.

To find out if I was right, I looked up median salary data based on age on DQYDJ and did some calculations to find out how much individuals or couples would need to save and how much interest they would need to earn on investments in order to reach $1 million by age 40. The salary data is pre-tax, so all calculations are based on pre-tax values. This means the amounts people would have left over to spend each month would be lower than the amounts I describe below. I should also note that I assumed these people were debt free from the beginning of my calculations, since having debt makes it much harder to reach $1 million at a young age. This might seem unrealistic, especially for people just out of college, but according to Pew Research Center, about two-thirds of people age 18-29 do not have student loan debt. This is by far the majority, so I don’t think the assumption is untenable. I also assume that people have no savings prior to the start of my calculations, but the more people have saved beforehand, the easier it is to reach $1 million.

Obviously it is easier to become a millionaire by 40 if you start saving and investing younger, so I will begin by discussing people who start right after college at age 22, first single individuals, then couples, and then just a general amount people would need to save per month or year. Then I will talk about whether it is possible to reach $1 million by 40 for people who don’t start saving until age 30.

For reference, these are the median pre-tax salaries for people age 22-40 as of 2019:

AgeMedian SalaryAgeMedian SalaryAgeMedian Salary
22$24,75029$42,00036$52,000
23$28,00030$46,00037$53,000
24$30,10031$45,00038$55,000
25$35,00032$49,00039$54,000
26$40,00033$50,00040$55,000
27$39,00034$50,000
28$42,00035$51,000
2019 median salaries from 22-40 (Source: DQYDJ)

Can a single individual making the median salary become a millionaire by 40 if they start saving at 22?

So I wanted to start with a single individual because I assume the original question was directed at an individual. It’s also not typical for people to be married by 22. According to the U.S. Census Bureau, in 2020, men got married for the first time at a median age of 30.5, and for women, it was about 28. Being married by 22 would have made more sense in the 1970s.

So according to my calculations, it is possible for a single individual making the median salary to become a millionaire by 40, though it would be incredibly difficult. Assuming they can earn 10% interest on investments after taxes and fees (which is certainly not a given but is possible), they would need to save 50% of their pre-tax salary every year. This means that they would be living on less than $2,300 per month all the way until 40 (and barely over $1,000 in their younger years). And remember again that this is pre-tax, so the actual numbers would be lower. Given how expensive rent is, they would likely have to live with roommates the whole time or stay rent-free with their parents. If saving 50% is too much, they could get away with saving 40% each year, but only if they managed to get 13% interest, which is much more difficult to achieve and mainly relies on luck. Needless to say, becoming a millionaire by 40 as a single individual only making the median salary would require some intensely minimalist living.

Can a couple making the median salary become millionaires by 40 if they start saving at 22?

Unsurprisingly, it’s much easier for a couple to become millionaires by 40, assuming they are both working, because they receive double the income. Keep in mind that the goal here is $1 million for the both of them, not $1 million each (usually net worth is calculated for households rather than for individuals). There are a number of ways that couples can reach $1 million depending on how much they are able to save and how much risk they are comfortable with for their investments. I have listed some of these in the following table:

Savings RateInvestment Interest
23%11%
25%10%
28%9%
30%8%
33%7%
36%6%
40%5%

Obviously, the more a couple is able to save, the lower the interest rate they need to obtain on their investments. While 11% interest may be difficult to obtain after taxes and fees, 5% interest should certainly be obtainable. And saving 40% of pre-tax salary is much easier for a couple than for an individual, as this would still allow the couple to spend around $2,475 per month at age 22 up to around $5,500 per month at age 40. Based on my calculations, it definitely seems possible for a couple to be millionaires by 40.

How much would I need to save per month to become a millionaire by 40 if I started at 22?

If you’re just looking for a savings target to hit the magic $1 million number for someone starting at 22, I calculated that you would need to save $1,650 per month or $19,800 a year at 10% interest. Depending on your salary, this may be more or less doable for you. The later you start, the more you would need to save. If you want to ramp up, saving $1,000 more per year, you would need to start by saving $13,500 per year or $1,125 per month.

What if I start saving late? Can someone start saving at 30 and still become a millionaire by 40?

Since most people don’t start thinking about their finances until later in life, I thought it was also worth calculating how much someone would need to save if they started at 30, again assuming the median salary.

For a single individual, it is pretty much impossible. They would need to save 80% of their salary with 16% interest. Even if they saved 100% of their salary, they would need 12% interest to reach $1 million by 40.

For a couple, it is more manageable. They would need to save 54% of their salary with 10% interest. At 9% interest, they would need to save 57%. That sounds like a lot, but it still leaves the couple with between $3,300 (age 30) and $4,200 (age 40) to spend each month (again, before taxes). While that may not provide enough for an extravagant lifestyle, it is certainly enough to live on in many areas of the country.

If you’re looking for a constant savings target starting at 30, you would need to save $4,500 per month or $54,000 per year at 10% interest.

Conclusion

So is it possible to be a millionaire by 40 if you’re making the median salary? Based on my calculations, it seems like it is. However, it is quite difficult for a single individual, especially with a late start. For couples, it is much more manageable even if you don’t start saving until 30.

If you want to be a millionaire by 40, make sure you start saving as much as possible as soon as possible. Keep in mind that you will have to take risks, as investment returns are not guaranteed. If your investments do not pan out over the short term, that’s okay. Sticking with it for the long term is generally a better strategy than trying to time the market (read more about that here). Good luck everyone!

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