How To Save $1 Million By Age 65 Based On Your Current Age

Albert Einstein often receives credit for claiming compound interest as the most powerful force in the universe and the 8th wonder of the world. Whether he actually said that or not, the beauty of your money building on itself over long periods is still really, really cool. Below is an illustration of how much you need to save each month in order to accumulate $1 Million by age 65.

Each scenario assumes an average annual return of 7%:

• Starting at age 25, you only need to contribute $381 per month to reach $1M by age 65;
• Starting at age 35, you need to contribute $820 per month to reach $1M by age 65;
• Starting at age 45, you need to contribute $1,920 per month to reach $1M by age 65;
• Starting at age 55, you need to contribute $5,777 per month to reach $1M by age 65.

Now, is $1 Million enough to retire on? That depends on whether you can live on a safe withdrawal rate of 4% each year – or $40,000 - plus Social Security. How does one invest in order to earn 7% on average? Two topics for another day.

Steve Byars, CFP®