Despite the challenging economic situation, the US continues to produce more billionaires. The total number of US-based billionaires more than doubled between 2020 and 2023, reaching nearly 22 million.
How have many reached this major financial milestone? It wasn’t through a wealth of trends, including joining Crypto and launching apps. Most people achieve their American dreams by prioritizing retirement savings.
First, let’s clarify what it means to be a billionaire. Certainly being a billionaire means you’ve accumulated at least a million dollars, but there’s a bit more nuance than that.
By definition, a billionaire is someone with a net worth at least $1 million, and the total amount of all assets (cash, real estate, investments) is over $1 million, minus any outstanding liabilities. The term is very broad, as it includes anyone with at least $1 million in assets but under $1 billion.
Does being a billionaire mean you’re ready for the rest of your life? That’s not necessarily the case. In the past, being a billionaire meant you were rich, but the value of $1 million has declined over time due to inflation. For example, it would take over $1.6 million in 2025 to have the same payouts as it did in 2005 for $1 million.
Being a billionaire doesn’t exactly guarantee happiness. According to one study, happiness peaks when your salary reaches $100,000 a year.
Still, increasing your net worth can help you overcome financial challenges, such as relying on social security as your sole source of income during your retirement. It also gives you a greater sense of autonomy than your own situation.
Read more: How much does a rich man cost?
So, what is the surest way to raise $1 million? Most people who become US billionaires will reach this milestone in a very simple way. By automatically contributing to your retirement account from any salary over the years.
Was it surprising to hear that? This method certainly doesn’t appeal to the rich kick skim, but here are some reasons why a consistent retirement contribution works so well.
Hold: Automatic contributions from each salary help to prioritize saving money and teach you to live less than your full income.
Maintain Level Head: Consistent investments help you reduce the temptation to look at bigger pictures and make impulsive (and expensive) movements based on headlines and trends.
Free Money: Many retirement plans come with employer matches. In other words, when you contribute, your employer puts free money in your account.
Risk-Based Adjustment: Most retirement plans automatically adjust your portfolio based on your age. He is also planning to retire and is also known as eligible investments.
It may be counterintuitive, but there are certain financial goals that should be prioritized over retirement savings.
If you have a high profit (i.e. credit card), pay it back as soon as possible. When you do, you eliminate high profit claims that eat investment returns in your retirement account.
Next, put your money into emergency savings. In this way, you will not be tempted to make an expensive early withdrawal from your retirement account when a financial emergency occurs.
Read more: How much money should I have in an emergency savings account?
The earlier you start contributing to your retirement account, the longer your money needs to grow.
Even better, if your employer offers a 401(k) or other retirement plan, you can sign up immediately and even a small amount of it, if you have access to your employer’s matches, then you’ll put free money into your retirement savings.
If your employer does not sponsor a retirement plan, you can open a Solo 401(k) and/or IRA.
Read more: 401 (k) vs. IRA: How to choose the difference and how to suit you
If your retirement savings are worth $1 million by the age of 65, you roughly need to contribute at each age (assuming your average return rate is 8% and you don’t include planned fees).
If you are hesitant to put money into retirement, start small. Second, aim to increase your contribution at least once a year. There are several ways to make sure this can be done.
Increase in income: Your goal is to raise wages, promotions, side hustles, or switch jobs to increase your income each year. Continuing education is also useful as earning a degree is strongly correlated with income growth and net worth. But you are working to increase your income, but try to increase your retirement contributions instead of your spending.
Cost reduction: With each cost reduction, additional cash will automatically be involved in retirement contributions. For example, if you have a car loan that pays $250 per month, once the loan is paid back, add $250 to your monthly 401(k) donation.
Ideally, you want to be able to contribute the maximum amount allowed each year. For 2025, the largest contributions of the 401(k)s, 403(b)s, and the Frugal Savings Plan (TSP) are $23,500 for people under the age of 50 and $30,500 for people over the age of 50.
When changing jobs, don’t forget to save money after you retired. Of course, you can leave money in an account provided by your old employer, but there are great benefits to getting it into a new 401(k) or IRA.
After leaving your employer, you may need to pay higher fees in your old account.
You can no longer contribute to the old plans.
There are fewer accounts to manage.
You can avoid having trouble accessing old plans.
Investing in retirement is the main way that Americans build wealth, but that’s not the only way. Another big driver for net worth growth is owning a major residence.
Buying and owning a home is not cheap. You will need to cover down payments, closure costs, real estate maintenance, and more. But it can be rewarding in the long run.
If you don’t have enough money to buy a home, look into your First Home Buyer (FTHB) program through your state or local agency. Unless you own a residence in the past three years, you may be eligible for FTHB assistance.
Read more: Do you save money by buying a house? This is where you need to park your down payment money
