Everyone sometime in their lives asks the following question? How much do I need to save to retire a millionaire? The answer is not that hard to come up with. It really depends how old you are and how much you have already saved for retirement. Consumers who start early and stick to it, have an advantage. Their savings work for them and their investment income continues to build towards their retirement objective. In the following paragraphs we will give you some examples. You decide where you are and whether you can meet the objective of having a million dollars by the time you retire.
How much do I need to save to retire a millionaire
Assuming a 10% average annual rate of return which is the historical average of the S&P 500. Assume you are going to 40 years, a 25-year-old could build a $1 million retirement nest egg by saving just $175 a month in their investment accounts. Their total contributions over those 40 years would amount to less than 10% of that total, just $84,000. All the rest would come from the income from your investments.
If you are 35-years old and starting from scratch, your monthly contributions would have to be more than twice as great as a 25-year-old’s. Saving $470 each month in your retirement investment accounts over the next 30 years will yield $1 million, assuming the average 10% annual rate of return. Your total contribution over the years would be $169,000.
At 45, if you’re starting from scratch, then your monthly payments will need to be significantly higher. To reach $1 million by age 65 with 10% annual growth, you’ll need to contribute $1,330 a month. Your total contribution will be about $319,000.
As you can see it pays to start early! During your 40’s and 50’s it can be your prime earning time where you make the most money. However what if you get laid off or there is a health issue. Or perhaps you don’t like your boss. Would you not like to have the flexibility to make your own decision regarding when you retire. Start saving now!