Skip to comments.Want To Retire With $1 Million? Here's How Much You Need To Be Saving Right Now (Based on your age)
Posted on 03/24/2014 6:37:38 PM PDT by SeekAndFind
We recently pointed out that starting to save early for retirement is extremely helpful, and also a useful chart showing how much you should have saved at different stages of your career to ensure a comfortable retirement.
To show how these ideas work, we figured out how much money you would have to set aside monthly, starting at different ages, and under different rates of return, to end up with $1,000,000 in savings when you are ready to retire at 65.
Here is how much you would need to save each month at a 6% annual rate of return, starting at different ages.
So if you're 20, and you want to retire a millionaire, you should be socking away $361 per month. If you're starting at 25, that jumps to $499. You can see how as you get older, you need to be saving much, much more:
(Excerpt) Read more at businessinsider.com ...
In 50 years you’ll have a million dollars. But a loaf of bread will cost $100,000.
LOL. I have to save more than twice my income each month...
... save each month at a 6% annual rate of return...
The above statement pretty well reduces the whole article and associated chart to nonsense. Author probably never heard of the Federal Reserve or Central Banks.
Easy, sell my company. Now the hard part is building its value up so someone wants to buy it.
Inherit $2,000,000 and blow half of it on hookers and liquor.
So, my assets are already there. It’s just a matter of keeping up the property values, and keeping down the debt.
Slow and steady....
Well, that’s a little depressing. In order to retire at 65 (I’m 62) with a million bucks I’d have to save a million bucks a year until then. The federal government gets the rest.
My husband and I are set; however, our investments were originally for a beach house. Now it’s for healthcare and whatever we can’t hunt, plant, and harvest.
Work till you drop, then you don’t have to worry.
I'm now 51 years old. My youngest son graduates high school in three years. As soon as he's out of high school, I'm retiring. Going to zero wage income. Why? First, because I can afford it. Second, because the College Education system is a rip-off and if I'm still working when my sons go to College, I make enough that I'll get charged full boat for both.
Retired with zero wage income, they qualify for all kinds of Government grants and assistance.
About effing time I started getting some of the high tax dollars I've been paying all these years.
I was wondering about that 6% myself. I double-checked date on article to see if it was originally published on paper in 1970s.
My Daughter and Son-in-Law should be millionaires before too long. They are both just wage earners and will not inherit much from me but they will from her Maternal Grandfather.
They might would have made it anyway as their combined income is over $100,000 a year. I bet they are paying a lot in taxes tho.
Well that’s depressing.
There are a number of some families who have decided to do just that. The parents decide to retire - or - the child emancipates himself/herself. Either case they get more financial aid.
There was a student who emancipated herself. She then hired herself out as a nanny. She was able to get a full ride to an expensive private university. Actually there were many students who have done this.
Part of the problem with these charts is that they seem unattainable for those in their 20s.
Save early. Save often. Live within your means. Invest in the stock market. American business will always find a way to turn a profit no matter who’s in office.
As you get older, it may be easier to put more aside. Make saving a priority.
But the very worst thing you can do is to say the sky is falling, I might as well spend all my money today.
They sky may fall. But chances are that it won’t.
Chances are that you will reach 65, the world will still be turning, politicians will still be politicians, and American businesses will still be turning out profits.
If you have spent all your money, taxpayers like me will make sure you don’t starve. But, then again, I won’t envy your life.
All I need is the 14% that the government currently takes from me in Social Security taxes at the point of a gun.
I was about bust 17 years ago. Started over and worked on the road for much of the last 17 and now I am about to retire set up better than I ever dreamed.
Hard work with God’s help can work wonders if you don’t live to impress the neighbors.
I hate stupid financial stories like this. I know how to calculate how much I have to save and all that. That is just cookbook stuff. What I need to know how do I get the G-D 6% without risking all my cash or spending all day every day watching the G-D stock market.
I've known you here on FR for a long time now. We run across each other's path now and then and I always thought you were a smart guy.
Once again you just proved why ... if you don't live to impress the neighbors.
Exactly right. We've lived well below our means for many years. The Bible tells us to prepare for the hard times, which we've always done. I've been fortunate that in the 27 1/2 years I've been married, I've only lost my job once. Even then, I was re-employed within weeks and that was during the 90-92 recession.
I don't drive the best or newest vehicle (mine is 11 years old, wife's is now 6) and we don't live in a house that one might think I would with my salary. We live in a very modest home in a modest area. I'm the guy most people look right past thinking I don't have the money and savings I do. Frankly I prefer it that way.
For a period of time when my kids were growing up, all their friends had the latest and greatest of everything. My kids always wondered why they didn't have "like their friends did."
This recession has caused quite a few of their friends to move out of their homes when mommy and daddy lost their job and couldn't afford to keep the house along with the rest of their lifestyle. Between my two sons, six or seven friends "had to move" when their homes were reposessed.
My kids NOW see why we live the way we do. They get the value of money, and they're learning entrepreneurial skills. The two of them cleared over $1,100 each shoveling snow this winter. From that, they built a customer list of lawns they're going to mow for the summer. See, they cannot find jobs around here. All the adults are working McDonalds, Panera Bread, and all the retail level jobs the kids would be working. So they've had to "make their own way" and find things to do to make money. They even scrap metal using their bicycles to haul metal back to the house. They probably collect about two tons a month which nets them about $500/mo ($250 per ton) also.
You and me, we have the right idea. The trick is to make sure kids learn the lesson also so they don't come back after college is over, live in our basements and play x-box all day, hihi!
There are many ways to wealth.
But I point people to http://www.bogleheads.org/. The folks there believe in investing in low expense index funds. They recommend only owning a handful, and reallocating on a regular basis, but not terribly often. They don’t recommend watching the stock market on a daily basis. Just check out their wiki, ask questions at their forum. I think they make sense. If it makes sense to you, try it out.
My son and his wife make about $160K a year and get nowhere because they live in California.
They live in Oklahoma where the cost of living is fairly low. I would love for them to move to this part of Florida since we have no state income tax and real estate taxes are also low. Also no sales tax on food or medicine but mostly to be near the grandchildren.
There are a lot of folks in California who don't make $160K/year. Maybe your son and wife really can't do anything. But do they have cable? Do they buy new cars or used? Do they have the latest cell phones and the expensive plans?
In some ways it was so much easier starting out in the '70s. Credit cards were not ubiquitous. If you wanted something, you saved up for it. Your first car, most likely, was used. Monthly cable bills? Monthly cell phone bills? Unheard of.
(Of course, when we bought our first house in 1980, our FHA mortgage was 14%.)
Making the first million is the hardest, I’m working on my second Million now.
I gave up on the first...
Of course they do ...this is the 21st century.
They live comfortably and are raising two wonderful boys who do not go to government school. -- The irony is they both work for the state. My son is a Fire Department Captain. his wife a lobbyist for CPS. They feel a calling as did I when I was younger.
Who gets 6% rate of return these days?
Save to revisit later
“Here is how much you would need to save each month at a 6% annual rate of return, starting at different ages.”
LOL- Those days are long gone. Now recompute at .1% for something at least useful though not by much.
These days if you want to save 1 million then you are pretty much going to have to Save an actual 1 million.
Nice to dream......
How To Turn $10,000 Into 1.5 Million In As Little As 2 Years!
I have a friend who turned a million into around a hundred thousand. On his financial trip he turned the million into 10 million then lost it all plus a lot of his orgiginal funds.
He did manage to hang onto a nice house and a Rolls Royce.
I don't care what's written about the stock market. I'm a strong believer in American business making a profit.
I own a good number of shares in the stock of my former employer, a large American manufacturer. The stock hit a high in 07/2007, a low in 03/2009, and a new high this year. If I ignore the intervening years, I have earned an 11% annual compound return for the seven years from 2007 until now.
My husband owns a good number of shares in the stock of his employer, another even larger American manufacturer. That stock hit a high in 05/2008 before it dropped, then recovered to a new high this year. For his stock, it's a 7% annual compound return for the six years from 2008 until now.
You don't invest in the stock market for the short term. I know a lot of people state that values are artificially high right now. But I don't know of a better place for our money right now.
Just my 2 cents.
When I remarried 17 years ago I got a hard working business woman for a bride who does have her hobbies but she can be fiercely regimented about knocking down bills and expenditures. She retired early but only after we paid off our principle residence.
We probably could have bought and lived in a home three time the cost of what we had, we certainly would have “qualified” for it in the 90s. We kept the one we had, kept it up and had all we needed for a nice suburban newer home.
The key to our retirement will be that we both put away in 401k and other savings over ten percent of what we made and I still do that today even in my last year of work.
It took a long time for me to develop that discipline — I was a guy who needed a choke chain and a leash in my youth, new sports car at 22 — party animal. But doesn’t life have a way of showing us our errors?
Yep - just try to retire with a million bucks when the government takes fifty cents of every dollar in taxes and half the remainder in inflation.
That is a fact of life. Except once. In 1776 the rich sacrifice EVERYTHING they had for the betterment of everyone. It just blows my mind. Never happened before, never happened again.
Correction: In 50 years a loaf of bread will cost you 500 Yuan.
The point of the article is that early savings, or starting NOW whatever the day is, will get you a long way with time. Saving is a habit. Not touching it except for capital improvement is a habit. Diversification to avoid down turns is a habit.
I can see you wish they had this one habit in their well behaved life — perhaps they can pick it up because, of course, they never listen to we parents.
Your buy and hold strategy is very sound. The only thing I would consider is some diversification. Anything can happen to one company, remember all those people that had their money in that wonderful company they worked for — Enron.
Not sure I agree with that - sorta depends what you mean, specifically, by “rich.”
To me, these days, that indicates maybe, say... fifty million in the bank or something like that.
The primary reason we've gotten involved in Bogleheads in the past few years is that they seem to have a reasonable approach to diversification. Over the next few years my husband and I will be moving to mostly index funds. I stopped working in '99 and I'm trying to get my husband to retire (he will be 60 this summer). All the more reason to be diversified!
It is very difficult to save $1,000,000.
OTOH it is not difficult to save 15%, invest the money and end up with well over that number.
I highly recommend Dave Ramsey’s approach. He recommends four good performing growth stock mutual funds invested in for the long term (and real estate purchased with cash only). Let the professional mutual fund managers watch the markets all day. That way, the only way you get hurt riding the roller coaster of the market is if you jump off....
I got to listening to him as the market turned down in late 2008 and 2009. While I was never “over my head” with debt, I had made the mistake of believing there was such a thing as “good debt” used to buy assets. But when those assets stopped producing as much income, it got uncomfortable... and my wife and I made some changes. We are now pretty much debt-free except for the house and can easily get by on my military retirement. — anything we earn is extra....And we are doing decently with our investments
Anyway, it works for us. V/R Bill
These theories never bother to tell people that by the time they retire a gallon of milk or gasoline might cost a million dollars.
That’s nice, you’re a millionaire. Did you forget about inflation?
Retire with $1 million - so the nursing home can eventually get it...
Back when my son was in college his bank (I think it was BofA) had a debit card feature where every purchase made was rounded up to the next dollar and the change balance was auto deposited into a savings account. By using that card for everything he did in college and the first two years at work afterward graduation he had enough for a down payment on his first house.
Does it account for the 3.8% ACA TAX on “unearned” income over $200k?
Pieces of $hit in Washington DC need to be tarred and feathered and then get to test their swimming abilities with a concrete block tied around their legs...
Inherit $2,000,000 and blow half of it on hookers and liquor.
How do you make a million dollars playing bluegrass music?
Start with 2 million.
What did the bluegrass musician say he would do with his million dollar lottery win?
Keep playing til the money runs out.
“In 1776 the rich sacrifice EVERYTHING they had for the betterment of everyone. It just blows my mind. Never happened before, never happened again. “
Thankful it happened once, but BEYOND thankful Jesus sacrificed Himself “once for all”. He did tell believers not to worry about food and clothing, since God knows we need them. Of COURSE this doesn’t set aside work and prudent saving (see Proverbs), but God cares for birds. How “much more” will He care for us (who will not have a million banked)!
“How to Become a (Public Pension) Millionaire”
Data from the Bureau of Labor Statistics’ Occupational Employment Statistics survey show that the average retired state-government employee has an income higher than 72% of full-time workers in his state. Generous public pensions ignore political bounds.