Save a Million at Virtually Any Age

[Bosco]

The sooner you start saving the better off you are going to be.

You can easily turn a goose egg into a nest egg if you begin early. For those who have been slow to get started, here are calculations for how much you need to put aside each month.


By Kiplinger's Personal Finance Magazine

The road to $1 million starts early, but there's hope, and help, for late bloomers.

Check your age category below to see how much you need to save each month to accumulate $1 million by age 65. (Because of rounding, some savings calculators may show slightly different numbers.) You'll also find strategies to fit retirement saving into the rest of your life.

At age 25, you're starting from scratch. At ages 35, 45 and 55, we assume you already have money in savings on which you're earning 8% annually. Even if you can't save quite this much now, our step-by-step guide will help you set priorities for every stage of life.

Calculator: Run the numbers on your retirement http://moneycentral.msn.com/retire/planner.aspx

How to save a million at age 25


If you've saved zero, to reach $1 million by age 65 you need to save $286 a month.

Successful savings strategies:

You're just starting your career, so this is your chance to build a solid financial foundation. Time is on your side.

Contribute enough to your company 401(k) plan to capture your employer match. If you don't have a retirement plan at work, fund an individual retirement account.

You'll be investing for 30 years or more, so you can afford to keep 100% of your account in stocks.

Pay down credit cards and other high-interest debt. That will free up money to save for a house.

Set up an emergency fund equal to three to six months of take-home pay. (See "Save your 'emergency fund' for the real thing.") Stash it in a readily accessible account in an online bank that pays interest of 4% or more.


How to save a million at age 35


If you've saved zero, to reach $1 million by age 65 you need to save $671 a month. If you've got $50,000, you need to save $304 a month.

Successful savings strategies:

You may be starting a family or preparing to buy a home. Balance your short-term needs with long-term savings goals.

Although you have added responsibilities, don't neglect retirement.

Aim to save 15% of your gross income, including an employer match in your 401(k). If one parent leaves work to care for the kids, consider opening a spousal IRA.

Shift your assets to 90% stocks and 10% bonds.

Invest in a 529 college-savings plan. Many states offer a tax deduction for your contribution, and qualified distributions are exempt from federal taxes. (See "Your 5-minute guide to saving for college.")

How to save a million at age 45


If you've saved zero, to reach $1 million by age 65 you need to save $1,698 a month. If you've saved $50,000, you need to save $1,298 a month. If you've saved $100,000, you need to stash away $861 a month.

Successful savings strategies:

You may be juggling the needs of a growing family and aging parents, but don't take a break from retirement savings.

You can contribute up to $15,500 to a 401(k) or similar workplace-based retirement plan this year or $5,000 to an IRA. Roll over retirement savings from previous jobs into an IRA.

Adjust your asset allocation to 80% stocks and 20% bonds.

Your kids can get grants or loans for college, but there's no financial aid for your retirement. Don't put your kids' college costs ahead of retirement.


How to save a million at age 55


If you've saved zero, to reach $1 million by age 65 you need to save $5,466 a month. (See "What to do if you're 55 and haven't saved a dime.")

If you've saved $50,000, you need to save $4,859 a month to reach $1 million by 65. If you've saved $100,000, you need to save $4,253 a month. If you've saved $200,000, you need to put away $3,040 a month.

Successful savings strategies:

Take advantage of your peak earning years to top off your savings.

Add $5,000 in annual catch-up contributions to your 401(k) savings and an additional $1,000 to your IRA.

As you near retirement, reallocate your portfolio to 70% stocks and 30% bonds.

Estimate your retirement expenses and your projected income. If you're coming up short, consider working a few more years.


http://articles.moneycentral.msn.com/RetirementandWills/RetireInStyle/SaveAMillionAtVirtuallyAnyAge.aspx

[dasaybz]

I'm on track.

[treydawg]

I heard a rule of saving 20 percent at age 21 or 22 will allow you to retire at 40.

[Mouldsie]

i recently started saving half my paycheck and putting the other half into checking.... prob earn around 160 bucks a week during school... even if thats all i save in the summer 80*52 = $4160/yr + interest

so, I'll pay off my student loans immediately when I graduate in 3 semesters and have around 4k in savings entering the job market. that'll give me a good start on a plan like this

[Bosco]

I heard a rule of saving 20 percent at age 21 or 22 will allow you to retire at 40.

Well treydawg I have found someone on the internet that backs up what you have heard.

I’m Twenty Years Old And Have No Debt - When Can I Retire And Live Off My Investments?

A young, forward-thinking man wrote to me and asked this simple question:

Right now, I’m twenty years old. I am willing to take a large percentage off the top of my salary for the rest of my working life in order to be able to retire very young and live off of the proceeds of my investments and do volunteer work. How many years would I have to work if I saved 20% of my income?

He went on to name a number of other specifics about his situation, but they’re really not important. If you were to take 20% of your annual income starting at age 20 and put it in a S&P 500 index fund, that index fund continues to grow at the long-term historical rate (12%), and you received a 4% raise each year, you could walk away from your job and live off the interest at age 41 matching your current salary, or quit at 43 and be able to give yourself a 4% “raise” each year from the interest, which is probably the better plan because it combats inflation. Raise the amount to 25% and you’re done at age 38 and able to live in perpetuity at age 40.

Obviously, some people are going to balk at this and state that it “can’t” be done. The truth is that it can be done if you have the willingness to live below your means and authentically behave as if 20% of your total salary doesn’t exist.

It is challenging, don’t get me wrong. Let’s take the case of Roger, who makes about $60,000 a year. He brings home a paycheck every month in the amount of $3,200. In order to save 20% of his whole annual salary ($12,000), Roger would have to be willing to immediately take $1,000 of that take-home paycheck and put it straight into an investment and not touch it at all. This takes an amount of financial fortitude and willpower that, quite honestly, most Americans don’t have the courage to do.

My advice to this young man is that if this is truly your goal, then it is achievable, and I offer the following points of advice:

Make that saving automatic. Figure out what exact dollar amount you need to remove from each paycheck to equal 20% of your total salary, then set things up so that amount is withdrawn automatically. Since you’re planning on retiring so young, it will have to be placed into a non-tax sheltered investment account, which is fine if you invest it right…

Buy and hold. Buy into a very broad-based investment, like the Vanguard 500, and just keep adding money to it and don’t move it around. This will set you up to pay only long-term capital gains tax when you withdraw it, meaning that your tax time in the future when you start liquidating it to live will actually be quite pleasant (just long-term capital gains tax, if that even exists then).

Learn to appreciate frugal living. With an email like that, I’m already sure that you are more likely to buy a sturdy late model used car than a new Lexus, but it’s important to state just the same: you can easily save that 20% you’re wanting to save by making good lifestyle choices. You’ll find that if you’ve made the investments automatic, you’ll easily learn to live on whatever’s left over.

Good luck, and I hope to hear from you when you’re 40 and retired!


http://www.thesimpledollar.com/2007/05/08/im-twenty-years-old-and-have-no-debt-when-can-i-retire-and-live-off-my-investments/

[JLB]

good stuff love this forum!! :rockon:

[Merk]

Good read

Glad to see I'm ahead of schedule