A considerable number of Americans aim to retire with $1 million, according to Bankrate’s latest savings survey. While this may seem daunting, achieving this goal is possible with proper planning. To reach your retirement savings goal, it’s important to start saving as early as possible.
The sooner you start saving for retirement, the less money you need to set aside each month. If you start saving at age 25, you would need to save $655 per month with a 5% annual rate of return, $381 per month with a 7% annual rate of return, or $214 per month with a 9% annual rate of return. If you start saving at age 30, you would need to save $880 per month with a 5% annual rate of return, $555 per month with a 7% annual rate of return, or $340 per month with a 9% annual rate of return.
If you start saving at age 35, you would need to save $1,202 per month with a 5% annual rate of return, $820 per month with a 7% annual rate of return, or $546 per month with a 9% annual rate of return. If you start saving at age 40, you would need to save $1,679 per month with a 5% annual rate of return, $1,234 per month with a 7% annual rate of return, or $892 per month with a 9% annual rate of return.
Starting young for $1 million
These calculations assume a starting balance of $0 and do not account for unexpected life events such as market volatility, layoffs, or promotions. The good news is that even if you start saving later, you can still retire with $1 million by substantially increasing your monthly contributions. If you are in your 30s or 40s and have not yet started saving, you will need to significantly increase your contributions to catch up.
Anne Lester, a retirement expert, advises setting high contributions if you’re a late starter. Mark Hamrick, Bankrate’s senior economic analyst, emphasizes the importance of having a clear goal and a solid plan for achieving it. For a detailed estimate of how much you need to save, consider using calculators that incorporate factors like age, current savings, and income.
Achieving a comfortable retirement is attainable with early and consistent saving. Plan wisely and start saving today to secure your financial future.
- CNBC.”You could retire with $1 million even if you don’t start saving until your 30s: How much money you need to set aside per month”.
- Morningstar.”How to Spend More in Retirement”.
- Kiplinger.”Need to Save More for Retirement? You’re Not Alone, Says Study”.