The Mega Millions jackpot is huge this week — an estimated $512 million, according to lottery officials, with a cash option worth $303 million.
But according to mathematicians, it is far more likely for any one person to die from an asteroid strike, get struck by lightning, or become president than to actually win.
To make the odds even more one-sided, lottery officials have changed the rules to make it even harder to win the big bucks. According to the Washington Post, the formulas for the Mega Millions and Powerball jackpots have been tweaked so that more people — even skeptics — buy tickets. While that means more people may win smaller prizes, fewer people have a chance to become millionaires.
So if you want to have a million dollars, but you don’t win the lottery, what should you do?
Bet on yourself to hit that winning number
Since the odds are so incredibly low that any of us would win the lottery, why not bet on yourself and make a plan to ensure you hit that number, instead of relying on the game of chance?
The average working person earning $35,000 per year and working over the course of 40 years will earn $1.4 million throughout his or her lifetime. That’s the average salary of the American worker, according to the U.S. Census.
Obviously, you won’t actually be able to save all that money — you still need a place to live and you still need to eat. So how do you actually make it to millionaire status?
Compound interest is your friend
Even though you may not be able to stash away your entire salary, compound interest — plus time — is definitely your friend when it comes to investment and retirement.
If you took 20% of the gross income of the average worker (around $7,000), and invested it for 40 years, receiving the market’s last 40 year average return of 8% (adjusted for inflation), you’d be left with a whopping $2,110,538.93.
That’s right — $2,110,538.93!
But, say you started late and you only have around 30 years to invest instead of 40, where does that put you?
Investing for 30 years, putting away $7,000 per year and receiving the market’s last 30-year average return of 8%, (adjusted for inflation), you’d be left with just under a million — $926,859.67. Add one more year to your 30 years of investing and you’ll hit the mark at $1,008,568.45!
If you had 20 years to invest, you’d need to invest $10,000 to start, and $25,000 every year after that to hit the magic $1M number. So as you can see, the difference between starting early and starting late is enormous.
The reality is, if you control your spending, invest correctly, and keep it up consistently over time, you’ll have a nearly 100% chance of hitting that $1 million mark over the course of your lifetime. And you don’t even have to play the lottery to get there — you just need a little planning, diligence, and the will to keep saving over time.
Check out these links to get started!
- Why compound interest is a saver’s best friend
- 8 dos and don’ts for young workers planning an early retirement
- 7 habits of financially successful people
- Get 12 more years in retirement with one simple tip
- The #1 factor for when you’ll be able to retire
- What it takes to retire a millionaire at any age