If I had a dollar for every time I read the words “if you want to save enough for retirement, start early” I would be able to retire. But what’s usually left out of most articles about saving for retirement is specific instructions about how much we should be saving.
The answer, for most of us, is more than we think we can afford to set aside each month.
Andy Kiersz of Business Insider put together a chart of how much you have to save each month if you want to have $1 million when you retire at 65.
There are two important takeaways:
1) The earlier you start saving, the better. If you start at age 20, you’ll only have to save $361 per month to hit $1 million at 65. If you wait until age 30, the number climbs to $700. You don’t want to know what happens if you wait until 40 or 50.
2) You’ll probably have to save a lot more than you think. Socking away $700 a month from the age of 30 will be a big burden for most people, especially if you don’t take advantage of tax incentives. (The chart assumes a 6% annual return.)
To calculate how much you should have saved already, here’s the “retirement savings checkpoint” from JP Morgan Asset Management’s 2014 “Guide to Retirement.
This guide suggests that if you’re 50 years old and make $100,000 a year, you should have saved $390,000 by now, “assuming you continue annual contributions of 5% going forward.”
Read more: http://www.businessinsider.com/retirement-savings-guide-2014-3#ixzz2xCWypNAa