A million dollars. Sounds like a lot of money doesn’t it? You’re right – it is! But it’s also a quite reasonable goal for many Americans. Let’s see how much money you would need to save each month, week, or day – to retire a millionaire.

How much do you need to save to retire a millionaire? A financial coach answers.

A million dollars

First, let me say that a million dollars is just an arbitrary number. You might need more, or less, to fund your retirement. Based on estimates using the 4% rule, you could draw about $40,000 each year from that balance. That might or might not be enough. Your best bet is to calculate how much money YOU personally need to retire comfortably.

Next, when I talk about how much you need to save, I mean invest. You save the money so you can invest it. Money sitting in a bank savings account doesn’t grow very quickly at all.

Last, let me state the obvious. I have no idea how old you are. I also don’t know when you plan to retire. So I’ll use some assumptions and estimates to calculate the amounts needed.

Calculation assumptions

For the purpose of this post I’m assuming a retirement age of 65. I’m also calculating investment needs based on the ages 20, 25, 30, 35, 40, 45, 50, and 55 years old. Additionally, I’m going to assume a 9% average annual return on the money. That’s less than total average annualized returns of the S&P 500. (What is the S&P 500 Index?) Depending on how you invest, and market cycles, your returns could be higher or lower. We need a number though to run calculations and this number seems quite reasonable based on historical returns.

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For a 20-year-old to reach a million dollars by age 65

This is the “easiest” to achieve. The earlier you start investing, the less you need to invest. It’s the magical power of compounding.

“Compound interest is the eighth wonder of the world.” – Einstein

Given the assumptions noted above, a 20-year-old would only need to save and invest $135 each month to reach a million dollars by retirement. Another way to look at it would be just $31.15 each week or $4.44 each day. Can you young people find a way to save just under five dollars per day? I bet you can. In fact, here are three tips for living within your means.

For a 30-year-old to reach a million dollars by retirement

At age 30 it is still isn’t that bad. Yes, the amount needed to save and invest each month has more than doubled – to $339/month. But think of this: That’s about the total of what the average cell phone bill plus the average cable TV bill total. It’s quite a lot less than the average car payment. This is still very achievable for many people.

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To retire with a million starting at age 40

Would you be surprised to hear that the amount has more than doubled again? This is the power of compounding. The earlier you start to save and invest, the easier it is to achieve big goals. It’s exponentially easier when you start earlier.

Okay, let’s say you’re 40-years-old and just remembered that you haven’t saved anything toward retirement (but you have, right?) – I mean starting with literally a $0 balance. In that case you are going to need to save $892/month or $205/week.

It’s starting to sound like big numbers now! But this is still quite reasonable for many people. About half of Americans have two car payments. The average car payment in American is right around $500/month ($503 when I recently checked). Knocking out the car payments and investing that money instead can put you well on the path to millionaire retiree status.

Something else to consider: If you have a 401k plan at work that will match 50%, you might only need to contribute about $8,000/year. With the match you’ll likely exceed the target goal amount. Also, remember that a 401k is pre-tax, so that $8k you put in there might only impact your take-home pay by around $6k in a year – $500/month. That sounds a lot more reasonable, right?

Here’s how much you’ll have if you max out your 401k plan

For a 50-year-old to retire a millionaire

The power of compounding is a great thing when you start early. But it really works against you when you get started late.

To reach a million dollars in just 15 years – from age 50 to age 65 – you’ll likely need to invest$2,643 each month. That’s $31,716 over a year.

Here’s some good news though. Starting at age 50 you get to make “catch up” contributions to your retirement plan. That means that on top of the regular $18k/year (for 2017) you can put in an additional $6k/year. That $24,000 plus an employer match gets you pretty close to your goal. Remember too, as noted above, that’s pre-tax dollars. So at a 25% tax rate it only “feels” (and looks) like $18k to your take-home pay.

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The full charted results I calculated

Here is the chart of numbers I calculated for this post. I figured ages 20, 25, 30, 35, 40, 45, 50, and 55. I also split the numbers into monthly, weekly, and daily amounts. Before you comment that the weekly times four doesn’t equal the monthly amount, remember there are 52 weeks in a year, not 48 (not 12 months x 4 weeks) – so that’s expected.

how much to save to retire a millionaire?

What do you think?

There you have it. That’s how much you need to save and invest each month to retire a millionaire.

As a financial life planner I can help you clarify your dreams and priorities, then develop an actionable plan to achieve your goals. Having a financial plan for your life includes much more than just investing, but intelligent investing is definitely part of the solution. Reach out and let's talk about how I can help you achieve the life of your dreams.

What do you think? Are you surprised by any of the numbers? Do you think it will be easier or harder to achieve than you guessed? Will you make this goal a priority and work to achieve it for yourself?


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