Retiring as a millionaire may seem like a fantasy rather than a practical financial goal, yet it’s possible with savvy monthly saving.
Reaching that milestone, however, takes determination, especially if you don’t start until later in life. Luckily, personal finance site NerdWallet crunched the numbers, broken down by age group, to demonstrate how much you’ll need to stash away on a month-to-month basis.
First, let’s go over how they got the numbers. The math assumes you are starting with no money in savings, that your investments will earn six percent in annually, and that you plan to retire at the age of 67.
Saving programs to help you reach that mark could include your employer’s 401(k), which is a tax-advantaged retirement savings account, or a Roth IRA or traditional IRA. Investment options include low-cost index funds.
Now let’s dive into the figures.
If you start saving when you are 20 years old, you’ll need to stash $319 a month toward retirement to hit your goal of a million dollars in 47 years. That might seem like a lot to someone so young, but putting off your savings will only cost you more in the long run.
If you are 40 with no savings, that number jumps all the way to $1,240 a month straight to savings to reach a million for retirement. That’s almost quadruple the amount than if you had started saving at 20.
As you can see, the longer you wait, the more you will have to pay. Do yourself a favor, and start saving early.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.