The Most Important Retirement Table You'll Ever See

Here are some scary statistics: More than 50% of older workers have less than $50,000 saved for their retirement, according to a 2021 report from the Insured Retirement Institute. Even worse, 25% of workers have no retirement savings at all, according to a 2020 report from The Federal Reserve.

If you're one of those people who are behind -- and perhaps way behind -- on saving for retirement, take heart. There's a good chance you can improve your situation a lot. The table below might spur you to take some action.

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The most important retirement table you'll ever see

That's quite an introduction to a single, fairly simple table, but it's not overstating things. The information conveyed by the table below really is vital. It shows how much you might amass over various time periods if you sock away $10,000, $15,000, or $20,000 each year and earn an average annual return of 8%:

Data source: Calculations by author.

Why 8%? Well, the overall stock market has averaged an annual return of close to 10% over long periods, but there's no way to know what its average will be over your particular investing time frame. So 8% is being a little conservative.

The $10,000, $15,000, or $20,000 sums are there because they're amounts many people can aim to invest every year. Breaking them down into monthly sums, they'd be $833, $1,250, and $1,667, respectively. Those are still meaningful amounts, but they're reachable by many -- especially those in two-income households.

If you haven't already done so, take a little time to estimate how much money you'll need in retirement. It's rather critical to have a solid retirement plan that includes how much you need to amass -- and how you'll get it.

Many people are aiming to amass $1 million dollars, while others believe that they will need $2 million. (Reading up on withdrawal strategies can help you figure out how long various-sized nest eggs can last in retirement.) See what kind of number seems right for you -- much will depend on what you're expecting from Social Security, whether you have any annuity or pension income coming to you, and so on.

Can you do even better?

Since the results in the table are not guaranteed (you might end up with more, or less), you might reasonably want to aim to do even better, just to reduce your risk. The good news is you can. Here are several ways:

Invest longer

Most of us can't tack on an extra decade of saving and investing, so this strategy isn't the most widely applicable. But if you know someone younger, getting them to think about their futures and perhaps starting to save and invest now is a great move. A 25-year-old might not think they need to save for retirement, but a glance at the table can show them that they might be able to retire a multimillionaire.

Invest more

This is an obvious strategy. Invest more each year. If you were looking at the $15,000 column, look at the $20,000 one. You might find an extra $5,000 per year by taking on a side gig, reining in some expenses, or perhaps landing a better-paying job. Note that if you are still a decade or two from retiring, you'll likely be earning more in the future and may be able to easily save and invest more.

Get a better return

You might also aim for a bigger return than just the stock market's average. This is only for those with the time and interest to learn more about investing. If that's you, consider focusing on growth stocks and adding some to your portfolio. Most folks might just stick with simple low-fee index funds, though, as they are quite effective over long periods. You might even invest mainly in index funds, with some individual stocks added as well.

So scroll back up and study that all-important retirement table again, as it can inspire you to get going on your retirement savings. Even if you can only save and invest $5,000 or less each year, you'll still be making progress toward a more secure financial future.