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Here's How Much You Need to Invest to Retire With $1 Million

By Christy Bieber - Jan 25, 2020 at 3:17PM

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Can you afford it?

For many Americans, retiring with $1 million saved would be a dream come true. A nest egg of this size would provide around $40,000 in annual income, assuming you follow the 4% rule. When combined with Social Security benefits, this could provide a pretty comfortable lifestyle. 

But while $1 million is a nice number to aim for, is it actually possible to achieve?

To determine that, you'll need to know what it would take for you to retire with seven figures saved up. And that answer depends on when you start saving as well as the returns your investments earn. 

Smiling woman putting money into piggy bank.

Image source: Getty Images.

What to save to end up with $1 million 

Here is what you'd need to save to have $1 million by age 65, depending on your annual rate of return and how old you are when you begin putting money aside for retirement

Starting Age 

Savings Per Month at a 6% return

Savings Per Month at a 7% return

Savings Per Month at an 8% return

Savings Per Month at a 10% return

20

$363

$264

$190

$95

25

$502

$381

$286

$158

30

$702

$555

$436

$263

35

$996

$819

$670

$442

40

$1,443

$1,234

$1,051

$754

45

$2,164

$1,920

$1,698

$1,317

50

$3,439

$3,155

$2,890

$2,413

Calculations by author. 

If you start saving in your 20s, it's not too difficult to hit your goal, especially with a reasonable return on your investment. But the longer you wait, the harder it becomes. For those who begin investing in their 50s, hitting $1 million will be all but impossible without a very high income and a lot of spare cash. 

How can you hit $1 million?

Depending on how old you are, you may need to get very aggressive about cutting your budget or even earning extra income to hit your monthly savings target. In some cases, this may mean switching to a less expensive vehicle, downsizing your home, or starting an extra job. 

You'll also want to make sure you're earning a reasonable return on investment, since this helps determine the amount you need to save.

To maximize your returns while minimizing risk, you'll want a diversified portfolio with the right asset allocation. The younger you are, the more of your money should be invested in stocks. A good rule of thumb is to subtract your age from 110 to see the percentage of your funds that should be in the stock market. 

If you're not sure how to buy individual stocks, you can learn the fundamentals or build a simple ETF portfolio. These model portfolios include some suggestions for funds to include.  

The sooner, the better

The chart above should tell you that you don't want to waste time if you want to invest a reasonable amount and still end up leaving work with a seven-figure investment account. 

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