Over time, compound interest can build even small amounts into significant savings, particularly if you’re delaying your retirement until age 75. That’s a full 8 years after what the Social Security Administration considers “full retirement age” for those born in 1960 or later. While starting early is the best way to generate long-term wealth, your choice of investments will also play a role.
To determine how much you should save each month to retire by 75, GOBankingRates analyzed what it would take to reach $1 million or $2 million in savings starting at various ages, using sample annual returns of 6% and 10% .
Monthly savings to reach $1 million, earning 6%: $193
Monthly savings to reach $1 million, earning 10%: $35
Monthly savings to reach $2 million, earning 6%: $386
Monthly savings to reach $2 million, earning 10%: $70
If you have the foresight to start an investment plan at age 20, your chances for a sizable retirement account by age 75 are high. With even less than $100 per month, you’ll likely be able to build a seven-digit nest egg over time.
Monthly savings to reach $1 million, earning 6%: $363
Monthly savings to reach $1 million, earning 10%: $96
Monthly savings to reach $2 million, earning 6%: $726
Monthly savings to reach $2 million, earning 10%: $191
If you start your retirement savings program at age 30, you’ll be 10 years behind where you would be if you started at age 20. However, you’ll also likely be earning more money, helping to make up the time that you’ve lost. A $1 million or even $2 million nest egg is still within reach if you start funneling more of your money towards your investments.
Age 40
Monthly savings to reach $1 million, earning 6%: $702
Monthly savings to reach $1 million, earning 10%: $264
Monthly savings to reach $2 million, earning 6%: $1,404
Monthly savings to reach $2 million, earning 10%: $527
Once you reach age 40, you still have a few decades to save up for retirement, but things won’t be as easy as when you were younger. But if you’re not retiring until age 75, you still have 35 years for compound interest to build, doing a lot of the work for you.
Age 50
Monthly savings to reach $1 million, earning 6%: $1,443
Monthly savings to reach $1 million, earning 10%: $754
Monthly savings to reach $2 million, earning 6%: $2,886
Monthly savings to reach $2 million, earning 10%: $1,508
The good news about reaching your 50s is that you’ll likely be in your peak earning years. The bad news is that you’ll have less time for your investments to grow. Waiting to retire until age 75 helps considerably, however, as you’ll still have 25 years to build your account value.
This is the time to maximize your retirement contributions by taking advantage of the catch-up contributions that are allowed for IRA and 401(k) participants after age 50.
Age 60
Monthly savings to reach $1 million, earning 6%: $3,440
Monthly savings to reach $1 million, earning 10%: $2,413
Monthly savings to reach $2 million, earning 6%: $6,880
Monthly savings to reach $2 million, earning 10%: $4,826
At age 60, you won’t have much time to build a seven-figure retirement plan, although retiring at age 75 will certainly help. Still, if that’s your plan, count on setting aside thousands of dollars per month if you want to crack the $1 million barrier by the time you retire.
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