# How Much Do You Have to Save and Invest Each Year to Have a Million Dollars at Retirement? (by age)

How hard is it to become a millionaire? What benefits are there to beginning saving and investing early? Consider the table below.

Assuming you have no savings currently, how much would you have to save each year to get a million dollars by age 65?

Also shown, the annual contributions broken up to show how much you need to save monthly.

Here we assume the investor gets a 7% annual return on their investment.

Want to find out how better returns, early retirement or larger savings affects your total?

Try out our interactive compound interest calculator

Example from the table below:

If you started saving at age 20 and invested \$3,499 per year (\$291 per month) every year until age 65, you would have a million dollars at age 65. Compare that to if you waited and started saving at age 30, where you would have to save \$7,233 per year every year until age 65 for the same result.
Look at the affects starting to invest early has!

 Age Years Remaining Annual Contributions Amount Per Month 20 45 \$3,499.57 \$291.63 21 44 \$3,757.69 \$313.14 22 43 \$4,035.90 \$336.32 23 42 \$4,335.91 \$361.33 24 41 \$4,659.62 \$388.30 25 40 \$5,009.14 \$417.43 26 39 \$5,386.76 \$448.90 27 38 \$5,795.05 \$482.92 28 37 \$6,236.85 \$519.74 29 36 \$6,715.31 \$559.61 30 35 \$7,233.96 \$602.83 31 34 \$7,796.74 \$649.73 32 33 \$8,408.07 \$700.67 33 32 \$9,072.92 \$756.08 34 31 \$9,796.91 \$816.41 35 30 \$10,586.40 \$882.20 36 29 \$11,448.65 \$954.05 37 28 \$12,391.93 \$1,032.66 38 27 \$13,425.73 \$1,118.81 39 26 \$14,561.03 \$1,213.42 40 25 \$15,810.52 \$1,317.54 41 24 \$17,189.02 \$1,432.42 42 23 \$18,713.93 \$1,559.49 43 22 \$20,405.77 \$1,700.48 44 21 \$22,289.00 \$1,857.42 45 20 \$24,392.93 \$2,032.74 46 19 \$26,753.01 \$2,229.42 47 18 \$29,412.60 \$2,451.05 48 17 \$32,425.19 \$2,702.10 49 16 \$35,857.65 \$2,988.14 50 15 \$39,794.62 \$3,316.22 51 14 \$44,344.94 \$3,695.41 52 13 \$49,650.85 \$4,137.57 53 12 \$55,901.99 \$4,658.50 54 11 \$63,356.90 \$5,279.74 55 10 \$72,377.50 \$6,031.46 56 9 \$83,486.47 \$6,957.21 57 8 \$97,467.76 \$8,122.31 58 7 \$115,553.22 \$9,629.43 59 6 \$139,795.80 \$11,649.65 60 5 \$173,890.69 \$14,490.89 61 4 \$225,228.12 \$18,769.01 62 3 \$311,051.67 \$25,920.97 63 2 \$483,091.79 \$40,257.65

Just another example of how important saving early really is!

Start saving at age 40, and you need to save a little more than \$1,300 per month to reach \$1 million by age 65. Start saving just 5 years earlier, at age 35 and your required monthly contribution drops \$500 to under \$900 each month.

It is easier to sacrifice a little bit at age 20 to scrounge up \$3,500 a year (\$291 per month), than if you are age 40 and have to find a way to cut \$16,000 (\$1,317 per month) out of your budget.

This also doesn’t include any taxes. Again, stressing the importance of tax-friendly investment accounts like a Roth IRA.

Start saving early and reap the benefits later.

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Categories: Budgeting and Saving

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The best thing you can do for someone, especially if you have children or grandchildren is help them fully fund their retirement when they are still children. It’s actually not very difficult or costly… Just consider this:

1. A dependent minor can earn (this year) roughly \$6,800 before they have to file a tax return.

2. Anyone with earned income can contribute to an IRA up to the (this year) \$5,500 maximum contribution or as much as they earned, whichever is lower.

3. A child can be paid the “customary and traditional” rate for the work that they do. Even if it could be considered a “chore” instead of a “job” – for example, cutting the lawn might have a customary and traditional prevailing rate of \$20 – you could pay this hypothetical child that \$20.

4. Accounting for money earned would be simple, just keep a ledger with three data fields: When earned, How much earned, and what it was earned for. Keep that for each tax year and you’ll be fine…

5. Contribute the money to a ROTH IRA and invest in a market index tracker. (i.e. a Vanguard fund, or similar) A ROTH is the best choice because the tax rate of a child earning only a few thousand dollars is going to be 0% and because the ROTH is a post tax account, the money would be taxed at that 0% and then distributed tax free.

6. Note that the money contributed to the IRA doesn’t have to be the money that was earned by the child, it could be a gift, the key is the contribution to the IRA is limited to how much “earned” income the child made. (And the child doesn’t need a W2, this is provable by showing the accounting ledger.)

7. Marvel at the power of compounding interest: If the account earns “only” 6.8% – and the NYSE has a historical market year-to-year return average of 7.9% – the child in question will have quite a bit of money waiting for them when it’s time to retire.

The math shows:
Deposit \$20,000 total by age 15
Earn an average 6.8% rate of return per year
Retire at 65
50 years at 6.8% will equal almost \$900,000 of tax free money waiting for retirement.

If that kid took over their account when they became an adult and then kept putting \$100 or \$200 in the account every month, increasing that amount by inflation and by the percentage of their pay increases? Well, the answer is: What would you have done with your life if you didn’t need to even consider how to pay for your retirement?

This is a much better deal than paying for someone’s school, you can borrow money for school but not for retirement. Also, the compounded rate of return for the retirement account is MUCH better because of the extra 30+ years it’s earning a return. (And, I shouldn’t need to say this, but: NEVER borrow against this account for any reason or withdraw any of it prior to retirement…)

Do this for a child you love and you can change their world!