T<\/span>he old quip \u201cBeer money, champagne taste\u201d<\/em> can be levelled at several acquaintances of mine \u2013 not least a good friend who lives in fine style for the present, but reacts like Dracula to sunlight when he hears the word \u2018pension\u2019.<\/p>\n Jousting over our contrasting lifestyles \u2013 \u201cYou can\u2019t take it with you!\u201d<\/em> comes his retort \u2013 reminds me of our different visions of what we can do with our money.<\/p>\n After all, we will see a good deal of the stuff over our working lives. Research from the Prudential in 2014 reckoned that the average Brit would have earned a million pounds<\/strong> by age 46. That made for a great headline back in the day. But in truth a million wasn\u2019t what it used to be even then. And it certainly isn\u2019t now, after several years of especially uppity inflation<\/a>.<\/p>\n For what it\u2019s worth, Prudential calculated it\u2019d take a man (I\u2019m one of those) 28 years to notch up his millionth pound earned (assuming average wages for his age, starting at 18).<\/p>\n But after those 28 years, a million would only be worth around \u00a3492,000 Worse, while a million pounds still sounds like \u2013 and is \u2013 a lot of money, it\u2019s worth a lot less than it was in 2014.<\/p>\n You\u2019d now need \u00a31,428,000 to live it up like a millionaire back when Prudential ran the numbers.<\/p>\n Remember: inflation is the first reason why we invest<\/a>.<\/p>\n There\u2019s more bad news for anyone aiming to barge into the seven-figure club.<\/p>\n Obviously, you\u2019ll have to pay bills along the way. This will consume much of your million pound earnings.<\/p>\n Food, water, a roof over your head \u2013 even the most extreme frugalists<\/a> can\u2019t avoid spending a few pennies over the course of nearly three decades.<\/p>\n Then there are taxes<\/a>. It won\u2019t have escaped your notice that income tax thresholds and most personal allowances have been frozen for \u2013 technically-speaking \u2013 \u2018yonks\u2019.<\/p>\n Chuck in a cost-of-living crisis, and it\u2019s tougher for us to pile up our hard-earned loot than it was for would-be millionaires a decade ago.<\/p>\n Time to put that Ferrari catalogue back on the shelf?<\/p>\n Everything has gone up in price, and the value of the pound But the silver lining is that wages have risen, too.<\/p>\n Well, a bit:<\/p>\n Here\u2019s the direction of travel in pretty graphical form:<\/p>\n Source: Sage<\/a> \/ ONS<\/a><\/p>\n There are many ways to slice-and-dice earnings data<\/a>. We\u2019ll stick to full-time employees, as working a 9-to-5 for five days a week seems like the least one can do in the pursuit of millionaire status.<\/p>\n But of course there are taxes. Very generally we can assume annually:<\/p>\n On this basis it would take 31.6 years of continuous work to see \u00a31,000,000 in take-home earnings.<\/p>\n Just three decades, then, on average wages, to become a millionaire. Assuming someone is paying for all your living costs so you can save every penny.<\/p>\n Ahem.<\/p>\n I hear you! What about high earners? How much faster if you stashed your spare cash in a pension? What if you\u2019d invested the lot in nVidia \u2013 would it even have taken a decade?<\/p>\n Clearly there are a gazillion permutations in reality. We\u2019re just spitballing.<\/p>\n I will look at savings in a moment, though. (Think of it as the cavalry coming over the hill!)<\/p>\n Leaving out those who enjoy a leg-up from their parents, a lot of people who get very rich do it by starting a business, or otherwise operating outside the mainstream.<\/p>\n However as we\u2019ve seen above, millionaire status and wage money are not incompatible these days. Albeit that\u2019s because a million pounds is worth so much less than when everyone was writing songs<\/a> about it.<\/p>\n Accountancy software firm Sage compiled a handy list of the highest-paying industries for all you financially-motivated wage slaves:<\/p>\n Source: Sage<\/a><\/p>\n Before you rush to Heathrow to ask about a job in the control tower, I\u2019d take this list with a pinch of salt. It\u2019s suspiciously short of bankers and others in finance.<\/p>\n If you really want to make money, go where the money is!<\/p>\n The big question is what could I do with a million pounds if I had it now?<\/p>\n There are plenty of answers to that, but essentially I\u2019d like to live it up, draw an income, and never work again please.<\/p>\n The standard rule of thumb for living off your assets in retirement is that you can withdraw 4%<\/a> a year without going bust before your clock runs out.<\/p>\n On this basis, a million pounds equates to a \u00a340,000 annual income:<\/p>\n \u00a31,000,000 x 4% = \u00a340,000<\/p>\n However many people around these parts want to retire early<\/a>. And questions persist about how sustainable<\/a> 4% will be going forward, given it was originally based on US investors and their dream team returns from the US stock market.<\/p>\n For today, let\u2019s plump for a more cautious 3% to keep us out of harm\u2019s way:<\/p>\n So if you can\u2019t live on less than \u00a330,000 a year, you\u2019re going to need to be a millionaire by the time you retire. A real<\/em> millionaire. We have our roadmap. All we need now is the saving ethic of a Swedish tramp<\/a>, an eye on inflation<\/a>, the magic of compound interest<\/a>, and a fair wind for a stock-heavy portfolio<\/a>.<\/p>\n Well I say that, but while the average Brit may see a million pounds slip through their fingers long before they\u2019re 50, it\u2019s going to be a b\u2019stard for most to become millionaires.<\/p>\n The key factors are:<\/p>\n If you\u2019ve got nothing in the bank now and we assume a growth rate of 5.5% You can use Dinky Town\u2019s investment return calculator<\/a> to run your own numbers. Or check out Monevator\u2019s<\/em> millionaire calculator<\/a> for a quick estimate.<\/p>\n The snag, again, is inflation.<\/p>\n At 2.5% a year, inflation will wear down that million to around \u00a3600,000 in today\u2019s money after two decades. On that you could draw an equivalent income of \u00a318,000 per year<\/strong>, at a 3% withdrawal rate.<\/p>\n So just how much do we need to put away to earn a \u2018real\u2019 million, assuming annual growth conditions of 5.5% nominal return and 2.5% inflation?<\/p>\n To earn the equivalent of a million pounds in today\u2019s money, we need to invest nearly \u00a346,000 a year for 20 years<\/strong>.<\/p>\n By that point, we\u2019ve amassed around \u00a31,640,000 in nominal terms. That\u2019s just over \u00a31 million in real terms.<\/p>\n Impossible you say? It would have been for me<\/a>.<\/p>\n Let\u2019s take a more leisurely 30-year route to Millionaire City.<\/p>\n Annual investments of just over \u00a313,000 a year<\/strong> would balloon into a million after 30 years, given the same growth and inflation assumptions as above.<\/p>\n But, tragically, a cool million in our hypothetical 2056 will only be worth a very uncool \u00a3468,000 in today\u2019s money.<\/p>\n You\u2019ll need over \u00a32m to have the same spending power as a millionaire does now, which means you\u2019d need to invest nearly \u00a328,000 a year<\/strong> to hit a real million<\/strong> after 30 years.<\/p>\n Hmm, let\u2019s be more optimistic. Thirty years is a long time. Who knows what might happen?<\/p>\n What if growth was a not unreasonable<\/a> 7% nominal for a 60\/40 portfolio of equities, bonds, and other bits<\/a> over that time?<\/p>\n Well, you\u2019d still need to find almost \u00a322,000 a year<\/strong> to achieve the \u00a32m target that would make you the equivalent of a millionaire in today\u2019s money.<\/p>\n My Ferrari catalogue is burning on the fire because I can\u2019t afford central heating.<\/p>\n Clearly millionaire status<\/strong> will be beyond the reach of the average Brit for a while yet, barring a dose of Weimar inflation.<\/p>\n UBS estimates<\/a> that just one in 29 or so Britons are US dollar millionaires \u2013 and the number would be lower in pound sterling terms.<\/p>\n On the other hand, the same estimate was one in 65 back in 2014, when I first wrote about this topic.<\/p>\n Eventually inflation will make millionaires of us all!<\/p>\n The truth is even a comfortable retirement status is a steep climb<\/a> for many of our fellow citizens. You\u2019ll need a pot into six figures, as a minimum.<\/p>\n Going on to hit seven figures in a hurry \u2013 unless you\u2019re already rolling in it \u2013 is a tough ask. But it can be done<\/a>.<\/p>\n Indeed a seven-figure pension pot is arguably becoming a necessity for the typical higher-earning Monevator<\/em> reader, given the latest estimates on retirement spending<\/a>.<\/p>\n Who wants to be a millionaire, eh? Perhaps I\u2019ll re-read The Investor\u2019s<\/em> tips on living like a billionaire<\/a> in the meantime.<\/p>\n Take it steady,<\/p>\n The Accumulator<\/em><\/p>\n Note: We\u2019ve updated this article with 2026 salaries and other details. Comments below may refer to the original article. Or they may be sour grapes from those still chasing that elusive seventh digit!<\/em><\/p>\n<\/p><\/div>\nA million through your fingers<\/h4>\n
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<\/a><\/p>\nHow to earn a million pounds on today\u2019s wages<\/h3>\n
in your pocket<\/del> on your banking app screen has gone down.<\/p>\n\n
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<\/a><\/p>\n\n
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But, but, but\u2026<\/h4>\n
The best way to earn a million pounds<\/h2>\n
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<\/a><\/p>\nWhat does a million pounds buy these days?<\/h2>\n
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How to save a million<\/h3>\n
20 years to save a million<\/h3>\n
30 years to save a million<\/h3>\n
A country estate is something I\u2019d hate<\/h3>\n
Pension pots of gold<\/h4>\n