I always like incorporating this idea (or some form of this chart) in my presentations to company employees when talking about their company 401k plan. In fact, I think it is one of the most poignant examples showing employees (or clients) why they should start saving earlier rather than later.

Simply put, it is easier to save $350 per month in your twenties than it is to save $2,000 per month in your forties. Some caveats regarding the values listed below: it is assumed that you save the same amount each year, you earn 7% on your investments each year, and that you have utilized a tax-deferred savings vehicle, e.g., a 401k or IRA.

How much do I need to save (each year) to reach $1,000,000?

20 years old - $3,270

30 years old - $6,760

40 years old - $14,770

50 years old - $37,200

60 years old - a depressing amount

Now you can see why I preach to my clients to “invest early and often” because the earlier you start, the more time you have on your side and the more compounding can work in your favor.

Now that you know how much you need to save, if you are interested in how to spend these savings in retirement, click here for a post about your retirement withdrawal rate.

If you have any questions about investing, shoot me a quick request here https://www.mynmfp.com/new-clients/. For more information about amounts needed for different age groups click on the title above!