How much to save monthly to have $1.7 million in retirement

On average, American workers think they need to save $1.7 million for retirement, but just under half believe they are likely to meet their savings goals, according to a recent study by Charles Schwab.

That’s understandable: Financial planners typically recommend saving between 10% and 15% of your gross annual salary for retirement, which is no small feat.

But don’t panic if you can’t save that much just yet. According to Vanguard’s How America Saves 2022 report, workers with employer-sponsored retirement plans contribute, on average, only about 7% of their income to their retirement fund.

With that in mind, CNBC calculated how much you would need to save to save $1.7 million by age 65, and how much you would need to earn to get there without saving more than 15% of your income.

While these calculations can give you an idea of ​​what you should be saving to reach a $1.7 million retirement goal, they do not take into account various factors beyond your control, such as: B. Market volatility, unexpected life events, salary increases, periods of unemployment or the interest you earn on your savings.

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Here’s how much you need to put aside each month to save $1.7 million by age 65.

If you start at 25

Earn a 4% Annual Return: $1,433.51 per month

  • Annual salary required if you save 10% of your income: $172,021
  • Annual salary required if you save 15% of your income: $114,686

Earn a 6% Annual Return: $853.63 per month

  • Annual salary required if you save 10% of your income: $102,436
  • Annual salary required if you save 15% of your income: $68,294

Earn an 8% Annual Return: $486.97 per month

  • Annual salary required if you save 10% of your income: $58,436
  • Annual salary required if you save 15% of your income: $38,959

When you start at 30

Earn a 4% Annual Return: $1,860.50 per month

  • Annual salary required if you save 10% of your income: $223,260
  • Annual salary required if you save 15% of your income: $148,848

Earn a 6% Annual Return: $1,193.23 per month

  • Annual salary required if you save 10% of your income: $143,187
  • Annual salary required if you save 15% of your income: $95,463
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Earn an 8% Annual Return: $741.10 per month

  • Annual salary required if you save 10% of your income: $88,932
  • Annual salary required if you save 15% of your income: $59,291

When you start at 40

Earn a 4% Annual Return: $3,306.56 per month

  • Annual salary required if you save 10% of your income: $396,787
  • Annual salary required if you save 15% of your income: $264,538

Earn a 6% Annual Return: $2,453.12 per month

  • Annual salary required if you save 10% of your income: $294,375
  • Annual salary required if you save 15% of your income: $196,260

Earn an 8% Annual Return: $1,787.54 per month

  • Annual salary required if you save 10% of your income: $214,505
  • Annual salary required if you save 15% of your income: $143,010

As the calculations show, the earlier you start saving for retirement, the less you need to save each month because your money has more time to save Connection.

In fact, one of the biggest mistakes people make when it comes to retirement planning is not starting early enough and not increasing their contributions over time, says Nathan Voris, director of investments, insights and consultant services at Schwab Retirement Plan Services.

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“You don’t have to start with a bang,” says Voris. “Even if you start small, you get engaged to it and then you can build on it every year.”

Up until this point, it’s wise for workers in their 20s and 30s to take advantage of opportunities like an employer-sponsored 401(k) match, if available, says Joe Duran, co-chair of Goldman Sachs’ Personal Financial Management Group.

For workers in their 40s, Duran recommends working with a financial advisor to discuss your retirement goals and priorities. “This will help you create a holistic financial plan to create a meaningful retirement for you,” he says.

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