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SALT LAKE CITY -- College graduates may have a lot of goals when they enter the workforce. A new car and possibly a house or condo may top the list. Some are hoping to earn $1 million by the time they reach age 40. The lofty goal is not impossible, but improbable.
For someone making about $40,000 a year to save $1,300 or $1,500 a month, that's about 40 percent of their income.
–Shane Stewart, financial planner
"For someone making about $40,000 a year (which is the average salary for the typical person coming out of college) to save about $1,300 or $1,500 a month, that's about 40 percent of their income," according to Deseret Mutual financial planner Shane Stewart. But that's not all.
Stewart said you would need an incredible rate of return.
"Getting a 10 percent return now-a-days on average is very difficult. In fact, at any time on average it is difficult," he said.
Stewart said it is more likely to get 7 percent to 8 percent. He said people saving money before the 2008 downturn on Wall Street took a hit but still could reach their million dollar goal if they didn't rely on a high rate of return during that time period.
So how old would a college graduate be if they saved aggressively, got a decent rate of return and received a raise annually? Stewart said they would probably be in their mid-50s. But Stewart believes people shouldn't get stuck on the million-dollar mark. He says any goal is good.
And what if you are over 40?
"It's never too late to start saving for retirement, especially if your company is going to match your contribution," said Stewart.
E-mail: cwall@ksl.com
