Who Doesn't Want to be a Millionaire?

The popularity of today's quiz shows suggests that many people would make "Lady Luck" their final answer to the question: How does one become wealthy? Now a study by the Consumer Federation of America confirms that 25% of us think that the lottery is the best bet for becoming a millionaire.

But, if it weren't for bad luck, most gamblers would have no luck at all. The person who spends $15 per week on lottery tickets probably will be close to $23,400 in the hole at the end of 30 years. If the same money were invested in a 401(k) plan with a 50% company match yielding 11% compounded annually, it would total $258,468 in the same time span, including $223,368 of tax-deferred interest. Enough to buy a comfortable retirement condo. (If you can't be a millionaire, I say, at least live next door to one!)

The number of millionaires now tops 3.5 million and you might be surprised at who they are. According to a best-selling book, "The Millionaire Next Door," they're your local welding contractor, auctioneer, farmer, paving contractor and self-employed professional. Nearly half of them have taxable household incomes of less than $131,000 a year. More than half never inherited so much as one dollar. Most of them got their money the old-fashioned way: they lived well below their means and saved regularly.

Just how much do you have to save each month to become a millionaire? The table below shows what you'd have to invest each month in a tax-deferred retirement plan yielding 11.3% compounded annually, which is the historic annual total return for the S&P 500. (Of course, past performance is no guarantee of future results.) To be conservative, the table assumes you have no savings or investments now.

Monthly Investment In A Tax-Deferred Plan To Become A Millionaire By Age 65 (figures rounded)

Current Age:_________25__________30__________35__________40________45

Monthly Invest.______$118________$204________$355________$625_____$1,127

A million dollars looks like a huge sum when you're saving it, but when you're spending the money, it can go pretty fast, says the American Savings Education Council. For example, a 35-year-old couple planning to retire at age 65 on $62,000 a year (plus Social Security) would need a $1,000,000 nest egg. And that assumes their money earns 3% compounded monthly after inflation.

The good news is that you probably are already worth more than you think. When you add up the value of your savings, investments, retirement plan, home and cash value life insurance, then subtract your debts, you could have a sizeable net worth today. In fact, you're already a "thousandaire." Congratulations! Now, you simply have to start saving regularly to be sure you retire comfortably. The sooner you start to save, the less you have to save each month to achieve your goal.