Want to Be a Millionaire by Retirement? Here's How Much You'll Need to Save Each Month


Saving for retirement is one of the biggest investments you’ll ever make, and it’s not cheap. The average person spends upward of $738,000 in retirement, but depending on your lifestyle and expenses, you could need at least a million dollars to be able to retire comfortably.

For example, say you currently need about $50,000 per year to cover all your expenses. According to the 4% rule — which states, in a nutshell, that you should withdraw roughly 4% of your retirement savings the first year of your retirement and then adjust your withdrawals each following year based on inflation — if you’re withdrawing $50,000 the first year, your total retirement savings would need to amount to around $1.25 million (assuming you’ll spend 30 years in retirement).


Large pile of hundred dollar bills

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Of course, your income in retirement doesn’t need to come solely from your own savings. Social Security benefits also provide a cushion, but that cushion may not be as big as you think. The average beneficiary receives around $1,294 per month in Social Security benefits, according to the Social Security Administration, which amounts to around $15,500 per year. While that money can go a long way in helping cover expenses, a significant portion will need to come from your own savings.


While saving $1 million by the time you retire may sound like an impossible task, it’s much easier the earlier you start. By waiting even a few years to start saving, it will be harder to catch up — even if you save more each month.

Let’s say you want to have $1 million saved by the time you retire at age 65. Assuming a 7% annual rate of return, here’s what you’ll need to save each month starting at different ages:

Age 25

At age 25, you still have 40 years left until retirement — which means the power of compound interest is on your side. Assuming you’re starting with zero savings, if you contribute $400 per month, you’ll end up with$994,207 by the time you turn 65.


Age 30

While $400 per month may seem steep, by waiting just a few more years to get started saving, you’ll need to set aside even more each month to hit the $1 million mark by retirement age. If you start saving at age 30, you’ll end up with$998,232 by age 65 if you contribute $580 each month.

Age 40

25 years is still a long time to save, but you’ll need to kick your savings into overdrive if you plan to save $1 million in that amount of time. You’ll need to save roughly $1,275 each month to end up with around$1,004,023 by age 65.


Age 50

It is possible to make it to $1 million in just 15 years, but it’s going to take some work — you’ll need to fork over $3,200 each month to have a total of$1,001,164 by the time you turn 65.

The good news is that once you turn 50, you can take advantage of catch-up contributions with your 401(k) or IRA — meaning you can contribute more than the maximum amount per year. For 2018, you can contribute an additional $6,000 to your 401(k) (bringing your total yearly contribution limit to $24,500) and an extra $1,000 to your traditional or Roth IRA (bringing the annual limit to $6,500).


How to boost your retirement savings

You can’t turn back time and start saving earlier, but you can make the most of the years you have left to save.

One of the best ways to jump-start your retirement savings is by taking advantage of employer matching 401(k) contributions if your company offers them. This can potentially double your savings, and by not taking advantage of the employer match, you’re essentially leaving free money on the table.

For instance, say you’re 40 years old earning $50,000 per year, and your employer will match 100% of your contributions up to 3% of your salary (in this case, that’s $1,500 per year). If you also contribute $1,500 per year, bringing your total yearly contributions to $3,000, assuming a 7% annual rate of return on your investments, you’ll end up with around$203,029 after 25 years.


While it’s not $1 million, it is a good chunk of cash. And if you didn’t take full advantage of your employer contributions and only contributed, say, $1,000 per year, you’d end up with just$135,353 in the same time frame. In other words, an extra $500 per year on your end (which is less than $50 per month) can amount to roughly $68,000 after a couple of decades.

Saving for retirement is never easy, but it can be a little easier if you start early and plan ahead. Even lofty goals — like saving $1 million by the time you retire — can be achieved if you start early and take advantage of all the resources you have available.