The average worker expects to need around $1.8 million in savings to enjoy a comfortable retirement, a 2024 survey from Charles Schwab found.
While that may be an intimidating number, it's likely accurate for many Americans. Between surging retirement costs -- like housing, healthcare, and long-term care -- and Social Security facing financial challenges, workers may need to rely on their savings more than ever.
If you're looking to give your savings a boost, small steps can go a long way. Regardless of your retirement goals, time is your most valuable asset in building exponential wealth. In some cases, it can turn just a couple hundred dollars per month into $1 million or more.
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The key to building life-changing wealth
Compound earnings can help your money grow faster the longer it sits in your account. Waiting even a year or two to invest can make it more difficult to reach your goals, sometimes requiring hundreds of dollars more per month.
If you're looking to beef up your nest egg, one of the best things you can do is start saving -- or increase your savings -- right now.
For example, say you have a goal of reaching $1 million by retirement age. Let's also say that you're earning an average rate of return of around 10% per year, which is in line with the market's long-term average.
At that rate, here's approximately how much you'd need to invest each month to reach your goal, depending on how many years you have until you retire:
| Number of Years | Amount Invested per Month | Total Savings |
|---|---|---|
| 20 | $1,500 | $1.031 million |
| 25 | $850 | $1.003 million |
| 30 | $525 | $1.036 million |
| 35 | $325 | $1.057 million |
| 40 | $200 | $1.062 million |
Data source: Author's calculations via investor.gov.
For every year you put off saving, it becomes exponentially more difficult to build significant wealth. Waiting even five years might mean having to nearly double your monthly contributions to reach your goal.
No matter how much you can afford to invest right now for retirement, you're better off getting started sooner rather than later. Every year counts, and saving now will pay off big time down the road.
Small contributions can go further than you might think
Getting started saving sooner makes it easier to build substantial wealth, but for many people, investing even $200 per month is out of reach. It's tempting, then, to consider putting off saving until you can afford to contribute more.
If you're struggling to find cash to invest, that's OK. But saving even a little is far better than doing nothing, and small amounts can add up.
For example, say you can either invest $50 per month now or wait five years and then begin investing $75 per month. In both cases, say you're earning a 10% average annual return. Here's approximately how your total savings would add up in both situations.
| Number of Years | Total Savings: Investing $50 per Month Now | Total Savings: Investing $75 per Month Starting in Five Years |
|---|---|---|
| 5 | $4,000 | $0 |
| 10 | $10,000 | $5,000 |
| 15 | $19,000 | $14,000 |
| 20 | $34,000 | $29,000 |
Data source: Author's calculations via investor.gov.
Even after a couple of decades, you could still accumulate more in total by saving a smaller amount but giving your money more time to grow. You can always increase your monthly contributions later if you have the funds, but you'll never get this time back.
Taking advantage of time is perhaps the single best way to grow your wealth with less effort, and it can turbocharge your savings. By investing whatever you can afford now and staying consistent over decades, you'll be on your way to building a robust retirement fund.
