There are plenty of charts showing how much money you need to save at different points in your life to hit a balance of $1,000,000. If you ever read down to the comments section though, you’ll see a variety of points brought up.
- A million dollars isn’t enough to retire on, you’re going to need two or three (or more!) million to retire comfortably
- Inflation will eat into those returns, so a dollar won’t go as far in the future (see the previous point)
- X% interest rate isn’t realistic, savings accounts are only paying around 1%, if you’re lucky
What’s the solution to try to please everyone? Create a calculator where you can put in your own numbers. To use it, put in the amount of money you’d like to have at age 67 and the annual return you expect to get (I use 7%). You optionally can change your retirement age and include your current age to see values relevant to you.
The first line shows the amount you’d need to save each day, week, or year to meet your goal at your current age, along with the amount you’d need to save if you started at age 25, 30, 35, 40, 45, 50, 55, and 60.
What this chart demonstrates is the huge impact time has on meeting your retirement goals. It’s also useful to demonstrate how much more (or less) you need to save every day if you’d like to retire early. A 30-year-old who wants to have $2,000,000 at retirement would have to save $34.17 a day to meet that goal. To retire at age 66 with the same amount, he would have to bump up his daily contribution by $2.62. It might be worth finding a way to cut back spending $2.62 a day to retire a year earlier. Start saving at age 23, and you’ll only need to come up with $1.52 a day to retire a year earlier.
If you have any questions or comments, you can reach out below or continue the discussion in the forum. If you are interested in receiving a notification of new posts, you can subscribe here.