The old quip “Beer money, champagne taste” can be levelled at several acquaintances of mine – not least a good friend who lives in fine style for the present, but reacts like Dracula to sunlight when he hears the word ‘pension’.

Jousting over our contrasting lifestyles – “You can’t take it with you!” comes his retort – reminds me of our different visions of what we can do with our money.

After all, we will see a good deal of the stuff over our working lives. Research from the Prudential in 2014 reckoned that the average Brit would have earned a million pounds by age 46. ¹

That made for a great headline back in the day. But in truth a million wasn’t what it used to be even then. And it certainly isn’t now, after several years of especially uppity inflation.

For what it’s worth, Prudential calculated it’d take a man (I’m one of those) 28 years to notch up his millionth pound earned (assuming average wages for his age, starting at 18).

But after those 28 years, a million would only be worth around £492,000 ², as inflation got to work like woodworm on Pinocchio.

Worse, while a million pounds still sounds like – and is – a lot of money, it’s worth a lot less than it was in 2014.

You’d now need £1,428,000 to live it up like a millionaire back when Prudential ran the numbers.

Remember: inflation is the first reason why we invest.

A million through your fingers

There’s more bad news for anyone aiming to barge into the seven-figure club.

Obviously, you’ll have to pay bills along the way. This will consume much of your million pound earnings.

Food, water, a roof over your head – even the most extreme frugalists can’t avoid spending a few pennies over the course of nearly three decades.

Then there are taxes. It won’t have escaped your notice that income tax thresholds and most personal allowances have been frozen for – technically-speaking – ‘yonks’.

Chuck in a cost-of-living crisis, and it’s tougher for us to pile up our hard-earned loot than it was for would-be millionaires a decade ago.

Time to put that Ferrari catalogue back on the shelf?

How to earn a million pounds on today’s wages

Everything has gone up in price, and the value of the pound in your pocket on your banking app screen has gone down.

But the silver lining is that wages have risen, too.

Well, a bit:

• In 2014, the UK median wage for full-time employees was £27,000 a year.
• As of the latest numbers, that figure is £39,039.

Here’s the direction of travel in pretty graphical form:

Source: Sage / ONS

There are many ways to slice-and-dice earnings data. We’ll stick to full-time employees, as working a 9-to-5 for five days a week seems like the least one can do in the pursuit of millionaire status.

• On a gross income basis, it would take an employee earning £39,039 exactly 25.6 years to pass through the £1m in lifetime earnings mark.

But of course there are taxes. Very generally we can assume annually:

• Income Tax (at 20%): £5,294 (after the £12,570 personal allowance)
• National Insurance (8%): £2,118
• Annual take-home pay: £31,628 per year

On this basis it would take 31.6 years of continuous work to see £1,000,000 in take-home earnings.

Just three decades, then, on average wages, to become a millionaire. Assuming someone is paying for all your living costs so you can save every penny.

Ahem.

But, but, but…

I hear you! What about high earners? How much faster if you stashed your spare cash in a pension? What if you’d invested the lot in nVidia – would it even have taken a decade?

Clearly there are a gazillion permutations in reality. We’re just spitballing.

I will look at savings in a moment, though. (Think of it as the cavalry coming over the hill!)

The best way to earn a million pounds

Leaving out those who enjoy a leg-up from their parents, a lot of people who get very rich do it by starting a business, or otherwise operating outside the mainstream.

However as we’ve seen above, millionaire status and wage money are not incompatible these days. Albeit that’s because a million pounds is worth so much less than when everyone was writing songs about it.

Accountancy software firm Sage compiled a handy list of the highest-paying industries for all you financially-motivated wage slaves:

Source: Sage

Before you rush to Heathrow to ask about a job in the control tower, I’d take this list with a pinch of salt. It’s suspiciously short of bankers and others in finance.

If you really want to make money, go where the money is!

What does a million pounds buy these days?

The big question is what could I do with a million pounds if I had it now?

There are plenty of answers to that, but essentially I’d like to live it up, draw an income, and never work again please.

The standard rule of thumb for living off your assets in retirement is that you can withdraw 4% a year without going bust before your clock runs out.

On this basis, a million pounds equates to a £40,000 annual income:

£1,000,000 x 4% = £40,000

However many people around these parts want to retire early. And questions persist about how sustainable 4% will be going forward, given it was originally based on US investors and their dream team returns from the US stock market.

For today, let’s plump for a more cautious 3% to keep us out of harm’s way:

• Our million pounds now delivers an income of £30,000 a year.

So if you can’t live on less than £30,000 a year, you’re going to need to be a millionaire by the time you retire. ³

A real millionaire. ⁴

How to save a million

We have our roadmap. All we need now is the saving ethic of a Swedish tramp, an eye on inflation, the magic of compound interest, and a fair wind for a stock-heavy portfolio.

Well I say that, but while the average Brit may see a million pounds slip through their fingers long before they’re 50, it’s going to be a b’stard for most to become millionaires.

The key factors are:

• How much you save

• How long you save

• The growth rate you achieve

If you’ve got nothing in the bank now and we assume a growth rate of 5.5% ⁵ for your portfolio, then you’d need to save around £28,000 per year for 20 years to hit the magic million.

You can use Dinky Town’s investment return calculator to run your own numbers. Or check out Monevator’s millionaire calculator for a quick estimate.

The snag, again, is inflation.

At 2.5% a year, inflation will wear down that million to around £600,000 in today’s money after two decades. On that you could draw an equivalent income of £18,000 per year, at a 3% withdrawal rate.

So just how much do we need to put away to earn a ‘real’ million, assuming annual growth conditions of 5.5% nominal return and 2.5% inflation?

20 years to save a million

To earn the equivalent of a million pounds in today’s money, we need to invest nearly £46,000 a year for 20 years.

By that point, we’ve amassed around £1,640,000 in nominal terms. That’s just over £1 million in real terms.

Impossible you say? It would have been for me.

Let’s take a more leisurely 30-year route to Millionaire City.

30 years to save a million

Annual investments of just over £13,000 a year would balloon into a million after 30 years, given the same growth and inflation assumptions as above.

But, tragically, a cool million in our hypothetical 2056 will only be worth a very uncool £468,000 in today’s money.

You’ll need over £2m to have the same spending power as a millionaire does now, which means you’d need to invest nearly £28,000 a year to hit a real million after 30 years.

Hmm, let’s be more optimistic. Thirty years is a long time. Who knows what might happen?

What if growth was a not unreasonable 7% nominal for a 60/40 portfolio of equities, bonds, and other bits over that time?

Well, you’d still need to find almost £22,000 a year to achieve the £2m target that would make you the equivalent of a millionaire in today’s money.

My Ferrari catalogue is burning on the fire because I can’t afford central heating.

A country estate is something I’d hate

Clearly millionaire status will be beyond the reach of the average Brit for a while yet, barring a dose of Weimar inflation.

UBS estimates that just one in 29 or so Britons are US dollar millionaires – and the number would be lower in pound sterling terms.

On the other hand, the same estimate was one in 65 back in 2014, when I first wrote about this topic.

Eventually inflation will make millionaires of us all!

Pension pots of gold

The truth is even a comfortable retirement status is a steep climb for many of our fellow citizens. You’ll need a pot into six figures, as a minimum.

Going on to hit seven figures in a hurry – unless you’re already rolling in it – is a tough ask. But it can be done.

Indeed a seven-figure pension pot is arguably becoming a necessity for the typical higher-earning Monevator reader, given the latest estimates on retirement spending.

Who wants to be a millionaire, eh? Perhaps I’ll re-read The Investor’s tips on living like a billionaire in the meantime.

Take it steady,

The Accumulator

Note: We’ve updated this article with 2026 salaries and other details. Comments below may refer to the original article. Or they may be sour grapes from those still chasing that elusive seventh digit!

1. Notwithstanding a raft of exciting caveats, like losing an arm and a leg to taxes.[↩]
2. Assuming a steady rate of 2.5% p.a.[↩]
3. Not accounting for taxes or the state pension.[↩]
4. In other words, you’ll need a lot more due to inflation.[↩]
5. Nominal return after 0.5% investment costs.[↩]