Here's how you can save $1 million for retirement on an annual salary of $70,000 (2024)

FAQs

Here's how you can save $1 million for retirement on an annual salary of $70,000? ›

If you want to retire with $1 million, you'll need to invest about 9% of a salary of $70,000 starting in your 20s. Waiting until you're older will require a larger portion of your pay. If you wait until your 40s, then that number jumps to 25% of your salary.

You will need $1.75 million in retirement savings to withdraw 4% and earn $70,000 a year. If you were just saving money and not investing, you would need to save $3,645 a month. But of course you will invest – so you don't have to put that much money away each month.

According to the Federal Reserve's latest Survey of Consumer Finances, only about 10% of American retirees have managed to save $1 million or more.

You'd need to invest around $13,000 per month to save a million dollars in five years, assuming a 7% annual rate of return and 3% inflation rate. For a rate of return of 5%, you'd need to save around $14,700 per month.

For an income of $80,000, you would need a retirement nest egg of about $2 million ($80,000 /0.04). This strategy assumes a 5% return on investments, after taxes and inflation, no additional retirement income, such as Social Security, and a lifestyle similar to the one you would be living at the time you retire.

According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.

Here, say that you have $1 million in a 401(k) or IRA, and expect to receive $2,500 per month in Social Security payments, a number right in the mid-range of possible benefits. Can you retire at 65? Well, it certainly depends on your standard of living. But for most people the answer is yes.

The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances.

Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.

According to the latest data from the Federal Reserve, the median net worth for Americans aged 65 to 74 was $409,900. For those 75 and older, it was $335,600. This makes sense, as older retirees generally spend more than they earn and draw down their retirement nest egg as they age.

Can I live off interest on a million dollars? ›

Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.

Based on this, if you retire at age 65 and live until you turn 84, $1 million will probably be enough retirement savings for you. However, it's important to remember there is no one-size-fits-all amount.

Many retirees fall far short of that amount, but their savings may be supplemented with other forms of income. According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.

Here's the starting benefit for each of those same final annual incomes, if you wait until age 70: Final pay of $80,000: benefit of $2,433 monthly, $29,196 yearly. Final pay of $100,000: benefit of $2,811 monthly, $33,737 yearly.

With $6,000 a month, you have more money than the average retiree—Americans aged 65 and older generally spend roughly $4,000 a month—and therefore more options on where to live. Below, we list five spectacular places where you might consider spending your golden years.

If you earned around $50,000 per year before retirement, the odds are good that a $300,000 retirement account and Social Security benefits will allow you to continue enjoying your same lifestyle. By age 55 the median American household has about $120,000 saved for retirement, and about $212,500 in net worth.

You'll need $450,000 saved by the time you're 67, which is the full retirement age for many Americans and when they can receive full Social Security benefits. If you make the median pay of $60,000, your estimated savings number is $600,000.

An income of $70,000 surpasses both the median incomes for individuals and for households. By that standard, $70,000 is a good salary.

There is no one-size-fits-all savings guideline for retirees. If you want to replace 75% of your current $50,000 salary, you'll need $420,000 saved. If you want to replace your entire current salary, aim for $750,000.

Retiring at 65 with $1 million is entirely possible. Suppose you need your retirement savings to last for 15 years. Using this figure, your $1 million would provide you with just over $66,000 annually. Should you need it to last a bit longer, say 25 years, you will have $40,000 a year to play with.