Saving a fixed percentage of your salary each month is a simple way to grow your retirement account over time. But it can be difficult to determine how much your monthly contributions are worth decades later.
As a general rule, most financial advisers suggest that you save 10-15% of your salary. But if your goal is to reach $1 million, the percentage you need to invest will vary greatly depending on your age at the start.
This case study looks at how much you’ll need to save if you earn an annual salary of $60,000, broken down by the age you start investing. If you’re starting in your 20s, retiring with $1 million won’t be that hard, but the older you get before you lose money, the larger the portion of your paycheck you’ll need to set aside each month.
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The model used here assumes you start with no savings, plan to retire at age 65, and have investments that earn 6% per year. It doesn’t take into account variables such as salary increases, employer matches, inflation, or any other financial bends that life can throw at you.
Watch the video to find out the best way to save $1 million for retirement on a salary of $60,000.
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