More than a third of all Americans believe they need at least $1 million to retire according to the Employee Benefit Research Institute. While it's important to do your own calculations for how much retirement income you'll need, aiming for around $1 million is a good starting point if you're not sure how much you'll actually require to see you through your golden years.

If saving $1 million seems like an insurmountable goal, there's one key thing to remember: It's much easier to save when you have time on your side. That's why the most important retirement chart you'll ever see is one showing you just how much less you'll need to save each year to retire a millionaire if you start when you're young. 

401(k) letters next to piggy bank

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The Most Important Retirement Chart You'll Ever See

This chart shows the amount of money you'd need to invest each year to save $1 million by age 65, depending when you begin saving.

The required annual savings amount is based on earning 7% returns on investments and investing in a tax-deferred account, such as a 401(k) or IRA. It assumes you save the exact same amount each year through age 65.

Chart showing annual savings needed to become a millionaire by 65

Calculations by Author

As you can see, if you start early, the annual savings you'll need to reach $1 million is reasonable. In fact, if you start at age 20, you'll need to save less than $275 per month to set yourself up to be a millionaire by age 65. 

Unfortunately, if you wait just a decade, the annual amount you'll need to save more than doubles if you hope to hit $1 million.  That's because the sooner you start investing, the sooner you begin to benefit from compound interest.

As you invest and make money, the returns on your investment are added to your principal balance. This added money also earns money.

  • If you invested $100 and earned a 7% return in one year, you'll have $107 by the end of that year.
  • The next year, you'll have $107 to invest. If you earn a 7% return again, you won't just make $7 -- you'll make $7.49, and end up with $114.49.
  • The next year, you'll earn a 7% return on $114.49, and make $8.01.

This continues year after year, and your money keeps growing -- and the returns you make keep growing as well, because you're earning returns on a bigger pot of cash. 

You Can Hit Your $1 Million Goal -- You Just Need to Start Now

You may not be 20 anymore, and it may be too late for you to hit $1 million just by saving $3,271 per year. But if you're 30, it's a lot easier to start now and put aside $6,761 than to wait another decade and have to come up with almost $15,000 annually to hit $1 million by age 65.

It may seem hard to find the cash, but making a budget that prioritizes savings, taking advantage of an employer 401(k) match if you have one, and trying out some of these 20 ways to cut spending can help you put aside enough for a secure future.

Consider this: If you're 30, you need to save $6,761 annually to save $1 million by 65. But say you have a 401(k) at work and your employer matches 50% of your contributions up to 4% of your $45,000 annual salary -- which isn't a particularly generous match, or an extremely high salary.

Your employer would contribute up to $1,800, so you'll only need to invest $4,961 to hit your $6,761.

Now, factor in the fact you get a tax break for 401(k) contributions. If you're making $45,000, you're probably in the 22% tax bracket, so you'll save $1,091.42 on your taxes because you're not paying 22% tax on the $4,961.

Your contribution thus costs you around $3,870 per year -- or around $75 per week. Skipping a few lunches and dinners out or doing a few hours of side work weekly would easily allow you to make that cash. 

Start Saving Today to Meet Your Retirement Savings Goals

You'll never be as young as you are now, so get your money working for you ASAP and start benefiting from compound interest to hit your retirement savings goals. 

Hopefully, this chart -- the most important retirement chart you'll ever see -- will convince you that it's worth the effort to start saving today.