Saving enough money to retire is crucial to your future financial stability. Your retirement investment accounts should be a major source of income in your golden years, especially as Social Security benefits alone are designed only to replace about 40% of pre-retirement income. Simply put, Social Security benefits aren't enough to live on

Unfortunately, figuring out how much to actually save for retirement isn't so easy -- which is why more than half of Americans don't know how much money they'll need to retire comfortably. This lack of knowledge is just one reason why the chart below is so important -- and is perhaps the most important retirement chart you'll ever see.

Binder labeled retirement savings with calculator and coffee sitting on it.

Image source: Getty Images.

The most important retirement chart you'll ever see

The chart below shows how much income different retirement account balances would produce if you follow the 4% rule. The 4% rule says you can take out 4% of your retirement investment account balance in your first year of retirement and then adjust your withdrawals upward for inflation each year. While some argue you should withdraw less than 4%, this can give you a baseline idea of how much income nest eggs of different sizes would produce. 

The chart also shows about how much you'd need to save to accumulate the retirement account balance necessary to produce each income amount by the age of 65. It's based on the assumptions you'll save the same amount each year, and that you'll earn a 7% return on investment. 

Retirement Account Balance

Annual Income Produced Following 4% Rule

Monthly Savings Needed If You Start Saving at 30

Monthly Savings Needed If You Start Saving at 40

Monthly Savings Needed If You Start Saving at 50





























































Table calculations: Author

Why is this chart so important?

There are a few reasons why this chart is so important. First and foremost, it can help you set a realistic savings goal. If you estimate that you'll want $60,000 of annual income from your savings in retirement, you know you'll need to save between $832 and $4,732 per month if you start saving anywhere between the age of 30 and the age of 50. This can help you to get at least a rough idea of how much you should save for retirement -- although you should do the calculations to figure out exactly how much you'll need. 

It also demonstrates that even a big nest egg is likely to produce only a small amount of income. If you have $500,000 saved for retirement, that would produce just $20,000 in annual income if you follow the 4% rule. In 2019, the average Social Security monthly benefit was $1,461. If you had a $500,000 nest egg and received average Social Security benefits, you'd have a household income of just $37,532. Median weekly earnings in the second quarter of 2019 were $908, which amounts to an annual income of around $47,216. That means your $37,532 would give you about 79% of pre-retirement income if you earned the median -- which may not be enough. And, sadly, most people don't -- and won't -- have anywhere close to $500,000 saved for retirement. 

Finally, the chart shows you the importance of starting to save as early as possible. If you start to save a little over $300 per month at the age of 30, you could end up with around $600,000 invested by the age of 65. But, if you start to save this amount at 50, your nest egg would only grow to around $100,000. Likewise, starting to save $1,110 per month at the age of 50 would leave you less than $400,000 for retirement, while the same amount set aside starting from age 30 would give you around $2 million. Obviously, this chart should strongly encourage you to save ASAP because it's a lot easier to save smaller amounts for a longer time than to come up with huge sums of money later in life. 

Start saving for retirement today

As the chart makes clear, you can't afford to wait to save for your future if you want your retirement investments to produce a reasonable amount of income. Start investing as much as you can for retirement today and hopefully you can hit that $1 million or even $2 million mark necessary to have a hefty income during your senior years and enjoy retirement to the fullest.