If you are in the generation y age group (as I am) you have grown up thinking about how awesome it would be to be a millionaire. And if I was already a millionaire I would probably be driving around in my money truck with a funnel out the back making it rain ones on you all like we are in the middle of a rap song. Eehh except I am not so I have to resort to helping out giving financial advice.

Back to the original point, as we look toward retirement the once-far-off idea of millionaire is not too hard to reach. Infact lets say you are making $40,000.00 a year at age 25 and putting 5% toward your 401k with a company match of 4%. If you get your index return of 10% on investments you’ll be over a million by 59 1/2, hurray! Except uh oh…

Starting total: $1,000,000.00 

Well first there is inflation so lets adjust for yearly inflation of 3.5% (the rough average over the last 100 years).

New total: $450,000.00

Oh and then there are taxes. Lets say you get taxed at 15%

New total: $330,000.00

Hey, where the hell did my million go?

Don’t worry its not all doom and gloom. Chances are very great that you will be making more than $40,000.00 throughout your life.  If you are married, that doubles the retirement income.  The lesson is this: don’t become relaxed about the rest of your financial life because you can “pay it all off in retirement.”  Pay it all off before then, get other investments going before then, get your roth IRA going before then.  Do all that, and Ill see ya on the golf course.

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