Retiring comfortably is a goal for many Americans. A recent Bankrate survey found that over a third of workers believe they need $1 million or more saved up. The median amount these workers estimate they’ll need is about $875,000.
Calculations show it is possible to reach $1 million, even if you start saving in your 30s. The amount you need to save each month depends on when you start and the rate of return on your investments. If you start at age 30, you would need to save $880 per month assuming a 5% annual return.
With a 7% return, you would need to save $555 monthly. And at a 9% return, saving $340 per month could get you to $1 million by age 65. Starting at age 35, the monthly savings targets are higher.
You would need to save $1,202 per month at a 5% return, $820 monthly at 7%, or $546 per month at a 9% annual return.
Tips for achieving retirement goals
If you wait until age 40 to begin, reaching $1 million will require saving $1,679 monthly at a 5% return.
You would need to put aside $1,234 per month at 7% or $892 monthly at a 9% annual return. These calculations assume you are starting from $0 and do not account for unexpected life events. The sooner you begin saving, the less you will need to contribute each month to hit your goal.
While having a retirement savings target is important, many factors like stock market swings can impact your final balance. Experts advise focusing on what you can control, like the percentage of your income you consistently save. If you are starting to save in your 30s or 40s with no prior savings, you will need to boost your contribution rate significantly.
Nearly 25% of workers are unsure how much they actually need in retirement. Taking the first steps includes setting a goal, making a plan, and regularly adding to your retirement accounts. With commitment and the right strategy, accumulating $1 million for a comfortable retirement is achievable for many people.
Online courses are available with practical tips to budget, pay off debt, and build wealth.
