Beer money, champagne taste is a criticism that can be leveled at a few acquaintances of mine – not least a good friend who lives in fine style for the present but reacts like Dracula to sunlight to the word “Pension”.

Recent jousting over our contrasting lifestyles (“You can’t take it with you!” comes his counter jibe) reminded me of research from the Prudential that reckons the average Brit will have earned a million pounds by age 46. ((Notwithstanding a raft of exciting caveats, like losing an arm and a leg to taxes.))

That’s a great headline, but a million ain’t what it used to be.

According to the research, it would take a man (I’m one of those) 28 years to notch up his millionth pound earned (assuming he earned the average wage for his age, starting at 18).

After 28 years, a million would only be worth around £492,000, ((Assuming a steady rate of 2.5% p.a.)) as inflation gets to work like woodworm on Pinocchio.

Of course, you’ll have to pay the bills along the way that will consume much of your million pound in 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.

And then there are taxes.

By the time the average worker has earned their first million pounds they will have paid approximately £138,500 in tax and £99,680 in national insurance – a total of more than £238,000.

Maybe I’ll put that Ferrari catalogue back on the shelf for now.

What does a million pounds buy these days?

The real 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 is that you can withdraw 4% a year without going bust.

My million pounds equates to a £40,000 annual income in that instance:

£1,000,000 x 0.04% = £40,000

However retirement researcher Wade Pfau has smashed lumps out of the 4% rule with his data sledgehammer, so let’s use a more cautious 3% to keep us out of harm’s way.

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

So if you can’t live on less than £30,000 a year then you’re gonna need to be a millionaire by the time you retire ((Not accounting for taxes or the state pension.)).

A real millionaire.

How to save a million

All you need is the saving ethic of a Swedish tramp, an eye on inflation, the magic of compound interest, and a fair wind for your stock-heavy portfolio.

Well I say that, but although the average Brit may see a million pounds slip through their fingers by age 46, in reality it’s going to be an absolute b’stard for most to become a millionaire.

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 new normal growth rate of 5.5% ((Nominal return subtracting investment costs of 0.5%.)) 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.

The problem is that inflation of 2.5% a year will wear down that million to around £600,000 in today’s money. You’d draw an equivalent income of £18,000 per year from that, given a 3% withdrawal rate.

So just how much do we need to put away to earn a real million, given 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 is for me. So 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 2046 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 make a real million after 30 years.

So let’s think more optimistically. Thirty years is a long time, who knows what might happen? What if growth was a more normal 7% for a 60:40 portfolio of equities and bonds over that time?

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 now burning on the fire because I can’t afford the central heating.

A country estate is something I’d hate

Millionaire status will stay beyond the reach of the average Brit for a long time to come, barring a dose of Weimar inflation. Little wonder just one in 65 of us had achieved millionaire status at the last count, and those mainly due to soaring property prices in the South East.

Even comfortable retirement status looks like a steep climb for many. You’re going to need a pot well into six figures as a minimum. Hitting seven figures, unless you’re rolling in it already, is going to be tough, but it can be done.

You’ve got to save hard, live on less, and work long. Who wants to be a millionaire, eh?

Perhaps I’ll re-read The Investor’s tips on how to live like a billionaire in the meantime.

Take it steady,

The Accumulator

Hello! Just a quick note to say that after several months of fiddling, faffing, and scouring the thesaurus for other alliterative synonyms for fannying-about-in-frustration, we’ve finally put our new version of Monevator live.

We believe we’ve caught most of the bugs, but would appreciate it if you could report any you see in the comments below.

Now I know what you’re thinking: What new website? It looks just the same!

Well, leaving aside website caching issues – a fun feature of the Internet that means it can be hard to tell when your changes go live – the redesign actually aims to look pretty much the same as the old Monevator we know and love tolerate.

The main tweaks:

• The body copy text is larger and the maximum width of the article text area is wider. This should make it easier to read, especially on bigger screens.

• On desktop the site is now responsive – so as you resize your browser window to suit you, it narrows the body copy rather than you losing half of our unmissable words from the right-hand side.

• On iPad and most other tablets, there’s now a single column for the main article text. The right hand menu column of links and so forth is pushed to the bottom of the site. Again, easier to read.

• Mobile remains the super clean version that you guys love (and that has cratered our advertising income. 🙁 )

• The category and other menu pages have been given a spruce-up to make them easier to read and scroll through.

• Comments are paginated once more into blocks of 50, so you don’t have to wait for those huge 1,000-strong comment threads to load (such as on our broker comparison table). The most recent 1-50 comments are shown first; you can browse back through the rest.

• Monevator should in general be a little bit quicker to load.

• A few other fiddly things you probably don’t need to notice.

Now, updating a ten-year old website that is held together in places with gaffer tape is never a foolproof process, and as I say we had to deal with a few hurdles along the way.

Here’s what I think we’re left with:

• The Search feature isn’t working at the moment. Don’t know why. We’re on it.

• The 404 ‘page not found’ page has, er, vanished and needs to be found.

• When articles are closed to new comments, there’s no notification of this at the end of the thread. The comment box just vanishes. Annoying, and we’re fixing it.

• On old articles, any links to Amazon embedded in the body text are forcing line breaks, which I can live with but looks ugly. Again we’re exploring a workaround.

If you spot any other bugs, please let us know below.

Spare any change, guv?

Of course changing the site design has messed up the look-and-feel of some of the older articles. That’s not really a bug, more a symptom of progress.

Your gran doesn’t look her very best these days, but you still love her, right?

Over time I’ll try to fix the most egregious design disruptions in the archives. But to be honest I’ve got so much updating of real information to do, that it’s not a top priority. So unless you see something really broken looking, that’s probably not a bug to report. More a bugbear.

Finally, what didn’t we change?

The biggest is we experimented with sophisticated commenting options where you could log-in via Facebook or Twitter, or where you could reply to a specific comment, say. They all had drawbacks, so in the end we’ve stuck with what has worked for a decade.

Also we need to update the logo and perhaps the old Monevator armchair. (Can’t decide.)

Anyway, please let me know if you find anything is not working. Otherwise, set your stopwatches for 2026 when we’ll do it all again!

Good reads from around the Web.

I warned in the aftermath of the EU Referendum that I wouldn’t be letting the subject of Brexit go in the months ahead.

And sadly for my ego – though happily for the country – that means it’s time to eat a bit of humble pie.

Because… so far, so meh.

Don’t get me wrong, I still believe there will probably be a long-term economic price to pay for any true Brexit. I can’t see much in economic theory that allows for anything else.

I repeatedly stressed I wasn’t forecasting an economic catastrophe – but that I did think in 20 years the economy will likely be smaller and more unequal than if we’d stayed in Europe. I haven’t changed my mind on that.

As for the cultural and social issues, I will remain a Remainer even if Brexit ultimately boosts our economy. I’ve seen how Brexit has made many people feel first hand, and I’ve read reports of far worse. Brexit is, for me, a step backwards for our society.

But with those caveats out of the way, I’ve got to admit that the big economic shock I expected in the aftermath of the result simply isn’t materializing.

Consumers are still spending. Manufacturing is expanding. Company directors who said they were fearful in the aftermath of Brexit have changed their mind. Most housebuilders report no change in demand following the vote. Early PMI readings looked terrible, but they increasingly seem to reflect panic rather than predicting the near-future of the economy. Employment has held up well.

I would link to articles citing all the latest data and reversals, but to be honest at this point the evidence is pretty much universal.

What went right?

For me, the tone began to change the minute Theresa May formed her new government. You could feel confidence returning. If we’d still been in the midst of a Conservative leadership battle, as initially planned, things might be different.

I also suspect the Bank of England’s decision to act dramatically has – contrary to the claims of many Brexiteers – made things better, and indeed risked derailing its own forecasts of a dramatic slowdown. (A sort of bittersweet result one imagines for BoE insiders…)

Carney’s quick actions mean liquidity has continued to flood into an economy that wasn’t doing badly anyway. It has kept the banks willing to lend. Forcing down interest rate expectations has helped keep the pound low, which has only been good for the economy so far.

True, imported inflation from a lower pound will take a while to come through.

There are signs, too, that the housing market is softening despite the wall of money being thrown at it (though to be honest this seems to be down to the stamp duty hikes and BTL tax treatment changes as much as Brexit.)

And then there’s the elephant in the room – we haven’t actually Brexit-ed.

Our economy – which contrary to Leave’s claims was doing perfectly well in Europe before the vote – has surely continued to motor on partly because nothing has yet changed in terms of trade deals, market access, or regulation.

If Brexit really does mean Brexit, that cannot last.

Strong voter, swing trader

I improved as an active investor when I learned to admit my mistakes quickly, change my thinking, and cut my losses.

And the reality is I expected the massive uncertainty introduced by the Brexit vote to shock the economy. It hasn’t.

None of this means I now believe the EU Referendum was a good idea, let alone that I should have voted Leave.

Far from it. I still consider it was a dangerous gamble, that there will be long-term harm, and that in general the motivations behind the vote to Leave are the antithesis of the sort of society I’d prefer to live in.

But so far, so wrong, from an economic standpoint anyway.

For the sake of the country I hope my confounding continues.

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