Want To Retire With $1 Million? Here's How Much You Need To Be Saving Right Now
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:
Business Insider/Andy Kiersz
Bottom line: It is much better to start saving young. Two things are happening here. First, by starting to save at 20 instead of 40, you have many more individual monthly payments, and can spread out your total principal investment over a longer period of time.
Second, and much more importantly, by saving earlier, you can better take advantage of compound interest. If you start saving when you are 20, your first payment of $361.04 will, at 6% return, grow into $5336.16 when you are 65.
How much you need to save also depends on the return rate. This chart shows how much you need to put into your savings account each month for a variety of annual return rates:
Business Insider/Andy Kiersz
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