How Much Should I Save Each Month to Have $1 Million for Retirement?

If you’ve ever been a fan of the famous, long-running game show, “Who Wants to Be a Millionaire,” you are likely familiar that contestants can walk away with a cool million by correctly answering a series of questions – either on their own or with the help of a “lifeline.” 

Unfortunately, saving $1 million isn’t that easy – and the later you get started, the more money it can take to save and invest every month to reach your goal. But the good news is that there are strategies available that could still get you there, regardless of how old you are when you get started.


Monthly Savings Needed to Reach $1 Million

There can be a wide range of answers to the question, “How much do I need to save to have a million dollars in retirement.” That is because everyone’s ideal time frame until they retire, as well as their risk tolerance can differ. 

So, even though saving a certain amount of money each month can help, how long it takes to reach a certain goal can depend in large part on how much your money earns – and your return can be based on a wide range of different criteria, such as:

  • Interest rate (either fixed or variable)
  • Market performance 
  • Principal protection
  • Various “caps,” or limits on the earnings 

In other words, if you plan to retire in 10 years, and the regular up and downswings of the stock market don’t cause you to lose sleep at night, you may not have to save as much each month as someone else who doesn’t plan to retire for 15 or 20 years and who also gets queasy any time the stock market trades in negative territory.

There can be other factors involved, too, in terms of how fast it takes you to accumulate $1 million. One of the biggies here is whether your money is invested in a taxable or a tax-advantaged account. 

For instance, many employer-sponsored retirement plans – such as the 401(k) – as well as IRAs (Individual Retirement Accounts) offer tax-deferred growth. This means that there is no tax due on the gain until the time of withdrawal. This, in turn, can allow your money to grow and compound faster than it would if it were in a taxable account (with all other factors being equal). 


Taxable versus Tax-Deferred Growth

Just for the sake of example, though, let’s say that you already have $100,000 saved, and you plan to retire in 20 years. If your money earned a 5% return (compounded annually), it would require you to set aside $1,851.53 each month in order to reach your goal.

Given these same parameters, if you were able to increase your return, you could set less aside on monthly. The same is true if you were to lengthen your time frame from retiring in 20 years to 25. 






Using a savings calculator can help you to better determine the amount of money you would have to save on a regular basis to reach a particular goal. To get an idea of what you need to save in order to reach a particular dollar amount, you can go to our savings calculator HERE: 


How Much Should You Really Save for Retirement?

While $1 million is certainly a large sum of money, it may not be enough to generate enough for many people to live comfortably in retirement. Given the volatile stock market, coupled with low interest rates, some economists believe that today’s “safe” withdrawal rate is under 3%. 

This means that if you draw 3% each year from a $1 million portfolio, you would generate less than $30,000 annually, which equates to under $2,500 per month. Is that enough to live on in the future?

If not, how much more should you save?

The answer to that is, it depends. In fact, when it comes to planning a successful retirement, the truth is that a much heavier focus should be placed on income, not savings or overall net worth.

One reason for this is because a high net worth or account value doesn’t necessarily mean that an adequate amount of income will be generated that can go towards paying your living expenses. 

Assets can also be subject to a long list of risks, such as stock market volatility, low interest rates, and inflation. Plus, drawing down too much from a portfolio could end up depleting much sooner than intended, and while you still require money to live on during retirement. 

Then what?

If your goal is to live worry-free in retirement, a key step is to ensure that you’ll have income arriving on a regular basis, regardless of what is happening with the stock market, or even in the economy overall.

Knowing that you have enough income for covering your essential living expenses (as well as possibly some extra for non-essentials, like travel, entertainment, and fun) can allow you to focus on more important things in retirement, like spending time with family and friends. 


How to Make Sure You Have Steady, Reliable Income in the Future

Do you have a retirement income plan in place that will continue to produce incoming cash flow for the remainder of your (and your spouse’s) lifetime – even in a volatile stock market and low interest rate environment?

If not, it is recommended that you talk over your short- and long-term financial objectives with a retirement income specialist. Doing so can help you with building a plan that best meets your specific goals and needs.


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