How Much Do You Need To Save Each Month at Different Ages To Hit $1 Million in Retirement?
Written by
John Csiszar
Edited by
Ashleigh Ray
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The lofty $1 million figure is often cited as the ideal number for a retirement portfolio — although it keeps creeping ever higher. However, most Americans are still falling woefully short of achieving a seven-digit nest egg.
According to the Federal Reserve’s most recent Survey of Consumer Finances, the median retirement account balance was only about $87,000. Those relying on Social Security aren’t faring much better, as the average monthly retirement check was just $1,867.83 as of May 2024, amounting to just $22,414 per year. This is the reason why it’s so important to save and invest as much as you can as early as you can.
To that end, GOBankingRates performed an analysis of just how much you’d need to save each month at different ages to hit $1 million by age 65. As is apparent below, the earlier you begin, the more time compound interest has to work its magic, making it easier to reach the $1 million level. But even if you come up a bit short, investing consistently is the key to boosting your portfolio value as much as possible.
At Age 20
- Earning 10% annually (the approx. long-term average of the S&P 500 index): $96
- Earning 8.2% annually (the approx. long-term average of a portfolio consisting of 60% S&P 500 index and 40% long-term government bonds): $178
- Earning 5.5% annually (the approx. annual average of long-term government bonds): $424
At Age 30
- Earning 10% annually: $264
- Earning 8.2% annually: $416
- Earning 5.5% annually: $787
At Age 35
- Earning 10% annually: $443
- Earning 8.2% annually: $645
- Earning 5.5% annually: $1,095
At Age 40
- Earning 10% annually: $754
- Earning 8.2% annually: $1,018
- Earning 5.5% annually: $1,560
At Age 45
- Earning 10% annually: $1,320
- Earning 8.2% annually: $1,655
- Earning 5.5% annually: $2,300
At Age 50
- Earning 10% annually: $2,415
- Earning 8.2% annually: $2,850
- Earning 5.5% annually: $3,600
At Age 55
- Earning 10% annually: $4,900
- Earning 8.2% annually: $5,400
- Earning 5.5% annually: $6,300
3 Tips To Help You Reach $1 Million Starting at Any Age
As you can see above, starting early is one of the most important steps in accumulating $1 million by the time you retire. In fact, if you start as early as age 20, you won’t even have to save that much on a monthly basis to reach that target.
But regardless of when you start, there’s a path to a seven-digit nest egg. Here are three additional tips that can help get you to millionaire status.
Automate
Life is full of surprises that can derail even the most dedicated saver‘s path to investment success. This is why automating your savings and investment is so important.
When your bank automatically transfers money every month to your investment account, you can’t forget about making your payment or talk yourself into skipping “just this one month” because you’d rather spend that money on something else.
After a short while, you’ll get used to having your money automatically transferred to your investment account and likely won’t even miss it. At that point, you can even consider bumping up your monthly contribution to get to your savings goal even faster.
Maximize Your Employer Match
One of the greatest tools of all in terms of wealth-building is the employer 401k match. Most employers that offer a 401(k) plan will match a certain percentage of employee contributions every year to boost their accounts.
For example, if you put away 5% of your income every year into your 401(k), your employer might make an additional contribution matching between 50% and 100% of what you put into your account. Over a 40-year investing career, that can add up to a significant amount of money.
Choose the Right Investments
Over the long run, the amount you earn on your investments plays a pivotal role in your ultimate account balance — and even a few percentage points can make a huge difference. As shown above, the difference between earning 8.2% on your investment and 10% can amount to tens of thousands of dollars over the period of a few decades.
For this reason, even conservative investors are best served over the long run by having at least some of their portfolio invested in stocks. As volatile as the stock market can be, over a long period of time, the risk of losing money diminishes greatly. In fact, the S&P 500 has never lost money over any 20-year rolling period, making it a solid investment for long-term investors.
Please note that values are approximate and in the real world can vary based on the sequence of investment returns you earn.
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