How realistic is it for a new college graduate to retire with $10 million? Turns out, a million dollars isn’t what it used to be.
The movie “How to Marry a Millionaire” was released back in 1953. It seems at that time—70+ years ago—being a millionaire was the epitome of financial success.
Yet today, instead of millionaires, you hear references to becoming a billionaire!
I understand that a million dollars isn’t what it used to be. In fact, to have the equivalent purchasing power of a millionaire back in 1953, you need about $12 million today.
But $12 million and $1 billion are very different numbers. A billionaire today has 83x more wealth than a millionaire back in 1953.
The yardstick for peak financial success has gotten a little out of hand!
How to Accumulate $10 Million
But back to our original question. How realistic is it for 22-year-old to accumulate $10 million by the time they retire?
Turn out, it is fairly straightforward. That is assuming they get a well-paying job and don’t have any student debt inhibiting their ability to invest for retirement.
I know, a couple of big assumptions.
But this blog is aimed at technology company employees. And large technology companies tend to pay fairly well.
For this example, I am assuming a recent college grad with a degree in Computer Science who gets an entry level job at Microsoft as a software development engineer.
Microsoft Software Development
Verifiable data on starting salaries is hard to come by, but a simple Google search gives enough insight. New graduates with Computer Science degrees appear to make at least $120,000 per year at Microsoft.
Microsoft also provides a generous 401(k) match at 50%.
Hence, an employee contributing the maximum pre-tax to the Microsoft 401(k), would increase their balance each year by $34,500. The max employee contribution in 2024 is $23,000. Then the 50% Microsoft match adds another $11,500.
And these numbers increase each year based on an inflation adjustment written into the regulations.
A 22-year-old, contributing the max each year to the Microsoft 401(k), would potentially accumulate $10 million in retirement savings before they reach age 60.
| Year | Age | Beginning Value | Employee Contribution | Company Match | Total Contribution | Earnings | Ending Balance |
| 2024 | 22 | $0 | $23,000 | $11,500 | $34,500 | $1,380 | $35,880 |
| 2025 | 23 | $35,880 | $23,600 | $11,800 | $35,400 | $4,286 | $75,566 |
| 2026 | 24 | $75,566 | $24,200 | $12,100 | $36,300 | $7,497 | $119,364 |
| 2027 | 25 | $119,364 | $24,800 | $12,400 | $37,200 | $11,037 | $167,601 |
| 2028 | 26 | $167,601 | $25,400 | $12,700 | $38,100 | $14,932 | $220,633 |
| 2029 | 27 | $220,633 | $26,000 | $13,000 | $39,000 | $19,211 | $278,844 |
| 2030 | 28 | $278,844 | $26,700 | $13,350 | $40,050 | $23,909 | $342,803 |
| 2031 | 29 | $342,803 | $27,400 | $13,700 | $41,100 | $29,068 | $412,971 |
| 2032 | 30 | $412,971 | $28,100 | $14,050 | $42,150 | $34,724 | $489,845 |
| 2033 | 31 | $489,845 | $28,800 | $14,400 | $43,200 | $40,916 | $573,961 |
| 2034 | 32 | $573,961 | $29,500 | $14,750 | $44,250 | $47,687 | $665,897 |
| 2035 | 33 | $665,897 | $30,200 | $15,100 | $45,300 | $55,084 | $766,281 |
| 2036 | 34 | $766,281 | $31,000 | $15,500 | $46,500 | $63,162 | $875,944 |
| 2037 | 35 | $875,944 | $31,800 | $15,900 | $47,700 | $71,983 | $995,627 |
| 2038 | 36 | $995,627 | $32,600 | $16,300 | $48,900 | $81,606 | $1,126,133 |
| 2039 | 37 | $1,126,133 | $33,400 | $16,700 | $50,100 | $92,095 | $1,268,328 |
| 2040 | 38 | $1,268,328 | $34,200 | $17,100 | $51,300 | $103,518 | $1,423,146 |
| 2041 | 39 | $1,423,146 | $35,100 | $17,550 | $52,650 | $115,958 | $1,591,754 |
| 2042 | 40 | $1,591,754 | $36,000 | $18,000 | $54,000 | $129,500 | $1,775,254 |
| 2043 | 41 | $1,775,254 | $36,900 | $18,450 | $55,350 | $144,234 | $1,974,839 |
| 2044 | 42 | $1,974,839 | $37,800 | $18,900 | $56,700 | $160,255 | $2,191,794 |
| 2045 | 43 | $2,191,794 | $38,700 | $19,350 | $58,050 | $177,665 | $2,427,509 |
| 2046 | 44 | $2,427,509 | $39,700 | $19,850 | $59,550 | $196,583 | $2,683,642 |
| 2047 | 45 | $2,683,642 | $40,700 | $20,350 | $61,050 | $217,133 | $2,961,825 |
| 2048 | 46 | $2,961,825 | $41,700 | $20,850 | $62,550 | $239,448 | $3,263,823 |
| 2049 | 47 | $3,263,823 | $42,700 | $21,350 | $64,050 | $263,668 | $3,591,541 |
| 2050 | 48 | $3,591,541 | $43,800 | $21,900 | $65,700 | $289,951 | $3,947,192 |
| 2051 | 49 | $3,947,192 | $44,900 | $22,450 | $67,350 | $318,469 | $4,333,012 |
| 2052 | 50 | $4,333,012 | $46,000 | $23,000 | $69,000 | $349,401 | $4,751,413 |
| 2053 | 51 | $4,751,413 | $47,200 | $23,600 | $70,800 | $382,945 | $5,205,158 |
| 2054 | 52 | $5,205,158 | $48,400 | $24,200 | $72,600 | $419,317 | $5,697,074 |
| 2055 | 53 | $5,697,074 | $49,600 | $24,800 | $74,400 | $458,742 | $6,230,216 |
| 2056 | 54 | $6,230,216 | $50,800 | $25,400 | $76,200 | $501,465 | $6,807,882 |
| 2057 | 55 | $6,807,882 | $52,100 | $26,050 | $78,150 | $547,757 | $7,433,788 |
| 2058 | 56 | $7,433,788 | $53,400 | $26,700 | $80,100 | $597,907 | $8,111,795 |
| 2059 | 57 | $8,111,795 | $54,700 | $27,350 | $82,050 | $652,226 | $8,846,071 |
| 2060 | 58 | $8,846,071 | $56,100 | $28,050 | $84,150 | $711,052 | $9,641,272 |
| 2061 | 59 | $9,641,272 | $57,500 | $28,750 | $86,250 | $774,752 | $10,502,274 |
| 2062 | 60 | $10,502,274 | $58,900 | $29,450 | $88,350 | $843,716 | $11,434,340 |
| 2063 | 61 | $11,434,340 | $60,400 | $30,200 | $90,600 | $918,371 | $12,443,311 |
| 2064 | 62 | $12,443,311 | $61,900 | $30,950 | $92,850 | $999,179 | $13,535,340 |
| 2065 | 63 | $13,535,340 | $63,400 | $31,700 | $95,100 | $1,086,631 | $14,717,071 |
| 2066 | 64 | $14,717,071 | $65,000 | $32,500 | $97,500 | $1,181,266 | $15,995,837 |
| 2067 | 65 | $15,995,837 | $66,600 | $33,300 | $99,900 | $1,283,663 | $17,379,400 |
| 2068 | 66 | $17,379,400 | $68,300 | $34,150 | $102,450 | $1,394,450 | $18,876,300 |
| 2069 | 67 | $18,876,300 | $70,000 | $35,000 | $105,000 | $1,514,304 | $20,495,604 |
Assumptions to Retire with $10 Million
The above calculations assume the maximum employee contribution increases with inflation at 2.5% each year. And the retirement account earns a return of 8% annually.
I believe, these are fairly realistic assumptions. An all-stock portfolio historically has returned around 10% annually. And there is no reason to assume the contribution limits on 401(k) accounts will not continue to increase per the current laws.
The biggest assumption is that a 22-year-old would be willing to set aside $23,000 for retirement (even if they are making well over $100K). And of course, that they continue these contributions for 38 years.
Retire with $20 Million
As you can see in the table, assuming this person worked until full retirement age, they would have over $20 million.
Full retirement age for younger workers is currently age 67. This is the age you qualify for full Social Security benefits.
Retire with Even More!
For those who really want to accumulate assets for retirement, even these assumptions may be too conservative.
There are a number of factors that would allow a worker’s 401(k) account to grow even larger.
- In addition to pre-tax (or Roth) contributions, many 401(k) plans allow additional after-tax contributions. For 2024, an employee can have total contribution of up to $69,000. This includes the $23,000 pre-tax limit, any employer match, and after-tax contributions.
- Invest more aggressively. The table above assumes an 8% return. A more aggressive investment portfolio, that returned 10% annually, could potentially result in about $17 million prior to age 60. Or around $37 million by age 67.
- Catch-up contributions. Once an employee reaches age 50, they are allowed to make larger pre-tax/Roth contributions. For 2024, catch-up contributions are limited to an additional $7,500. Hence, someone 50+, can contribute $30,500 in 2024.
Alas, $10 Million Isn’t What It Is Today
The gotcha is that when our hypothetical software engineer is ready to retire, $10 million won’t seem like nearly as much as today.
Even with just 2.5% annual price inflation over the next 40 years, prices will have increased by about 170%. Meaning, $10 million in 2064, will be the equivalent of only about $3.7 million today.
So, I guess at some point in the next 100 years or so, maybe they can make the “How to Marry a Billionaire” movie sequel!
