Americans Think It Takes $1.7 Million To Retire Comfortably: Here’s How Much You Need To Save Each Month To Reach 65

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

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

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

With that in mind, CNBC calculated how much you’d need to set aside to save $1.7 million by age 65, as well as how much you’d need to earn to achieve this without saving more than 15% of your income.

While these calculations can give you an idea of ​​how much you would need to save to reach a retirement savings goal of $1.7 million, they do not take into account various factors beyond your control, such as the volatility of the market, unforeseen life events, salary increases, unemployment rules or the interest you will earn on your savings.

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

Earning an annual rate of return of 4%: $1,433.51 per month

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

Earn a 6% annual rate of return: $853.63 per month

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

Earning an 8% annual rate of return: $486.97 per month

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

Earning an annual rate of return of 4%: $1,860.50 per month

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

Earn a 6% annual rate of return: $1,193.23 per month

• Annual salary needed if you save 10% of your income: $143,187
• Annual salary needed if you save 15% of your income: $95,463

Earning an 8% annual rate of return: $741.10 per month

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

Earning an annual rate of return of 4%: $3,306.56 per month

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

Earn a 6% annual rate of return: $2,453.12 per month

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

Earning an 8% annual rate of return: $1,787.54 per month

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

As the math shows, the sooner you start saving for retirement, the less you’ll need to save per month, since your money will have more time to compound.

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

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

At this point, it makes sense for workers in their 20s and 30s to take advantage of opportunities such as an employer-sponsored 401(k) match if available, says Joe Duran, co-director of the management group. personal finance of Goldman Sachs.

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

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