Makin' Money

What to do with money over a lifetime

Chris Farrell Jan 28, 2011

Our guest blogger this week is Barbara Friedberg. she wants to “to educate, inspire, and motivate for wealth in money and life.” Her advice in this post is targeted at the recent college graduate.

Your Four Million Dollars


Are you a 23 year old new college graduate making the average $46,000 salary? Are you feeling down about money and wondering how you will ever earn the “big bucks?” Do not despair.

With 3% raises each year, at age 65 you will have earned almost $4 million dollars throughout your lifetime, $3,773,067.00 to be precise. Take a moment and let that sink in. That’s a lot of money.


Here’s where you take a global view. Consider what type of life you wish to live and what you want to do with your FOUR MILLION DOLLARS. Of course, you can spend all your income as you go along. Or, spend some of it, give some to charity, and save some for the future. Maybe you’ll have a bit less fun along the way and maybe not. Remember, wealth in life is not only about money!

Still confused about how to maximize living now and have some cash left for later? Here’s some help with the decision-making.

Option 1: Spend it all along the way.
Choose this strategy and you forgo a comfortable retirement because you chose not to save. Your only retirement income will be social security, at a fraction of your prior salary! After age 65 you will be POOR.

Option 2: Spend some, give some to charity, and save 10% per year.
Invest that 10% per year in a diverse portfolio yielding 7% annually. At age 65 not only will you have your retirement income, but after 42 years, your modest annual contribution will have grown to $1,499,905.00 by age 65. And, don’t forget, you will have social security income in addition to your million and a half nest egg!

That’s correct; your 10% savings will grow to almost one and a half million dollars. How is that possible?

Year 1, save $4,600, it grows at 7% per year.

Year 2, salary increases 3% to $47,3800.00. You save $4,738 and it grows at 7% per year.

Year 3, salary increases 3% to $48,801.00. You save $4,880 and it grows at 7% per year.

Year 4, salary increases 3% to $50,265.00. You save $5,027.00 and it grows at 7% per year.


END OF YEAR CONTRIBUTION- ADD prior years End of year value
with 3% growth value With 7% return

1 $4,600 $4,922
2 $4,738 4922+4738=$9,660 $10,336
3 $4,880 10,336+4,880=$15,216 $16,281
4 $5,027 16,281+5,027=$21,308 $22,800

And so on……….

Your financial future is your decision. Is it worth saving to ensure a long and prosperous life? The choice is up to you.

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