Millennials might be falling behind on saving and investing, but they're confident in their financial futures.
A new survey from TD Ameritrade found that 53 percent of millennials expect to become millionaires at some point in their lives, if they aren't already. The survey included responses from 1,519 Americans ages 21 to 37.
While 23 percent believe they'll hit $1 million by age 50 or older, many expect to get there more quickly. A full 19 percent say they'll become a millionaire by age 40 and another 7 percent predict they'll become a millionaire by 30.
For millennials (or anyone) to actually reach that milestone, they need to start putting away a significant chunk of cash each month, beginning as early as possible. Here's how much you'd need to put in an an investment account in order to become a millionaire over certain periods of time, using Investopedia's millionaire calculator. All calculations assume no prior savings.
To become a millionaire in 10 years:
With a 4 percent rate of return: $6,791.18 per month
With a 6 percent rate of return: $6,102.05 per month
With an 8 percent rate of return: $5,466.09 per month
To become a millionaire in 20 years:
With a 4 percent rate of return: $2,726.47 per month
With a 6 percent rate of return: $2,164.31 per month
With an 8 percent rate of return: $1,697.73 per month
To become a millionaire in 30 years:
With a 4 percent rate of return: $1,440.82 per month
With a 6 percent rate of return: $995.51 per month
With an 8 percent rate of return: $670.98 per month
To become a millionaire in 40 years:
With a 4 percent rate of return: $846.05 per month
With a 6 percent rate of return: $502.14 per month
With an 8 percent rate of return: $286.45 per month
The average annualized total return for the S&P 500 index is more than 9 percent. But it's important to keep in mind that these calculations don't account for the many variables that can affect wealth over several decades, including windfalls, emergencies and rises or dips in the market.
It's also worth noting that some young people are depending on an inheritance to achieve financial stability. That includes 63 percent of Generation Z and almost a third of millennials (ages 23 to 40), according to new data from Merrill Edge, which surveyed "mass affluent" Americans who have investable assets worth between $50,000 and $250,000.
For those without an inheritance to rely on, saving hundreds or thousands per month can be daunting. But getting into the habit of putting away any amount pays off in the long run.
A simple way to get started is to sign up for your employer's 401(k) plan and take full advantage of any company match, which essentially gives you free money. You can also contribute to a Roth IRA or traditional IRA, which are both individual retirement accounts that offer tax breaks.
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