Here’s the salary you need to earn to retire in 20 years with $1 million—without saving more than 15% of your income

Post date: Nov 21, 2019 1:06:34 PM

To have enough money in retirement, experts typically recommend building up at least $1 million in savings. But if you wait to start putting money away, the amount you need to save each month to reach seven figures skyrockets.

If you aren’t planning to sock away half of your paycheck, or more, each month, you need to bring in a sizable income. CNBC calculated the salary you’d need to earn to save $1 million in 20 years without putting away more than 15% of your income.

Keep in mind that these calculations assume you’re starting with nothing in savings and don’t take into account the many ups and downs you may experience over your lifetime, including pay raises, periods of unemployment or sudden financial windfalls or losses.

• With a 4% rate of return, you’d need to earn $217,393 per year and save $2,717 per month to reach $1 million in 20 years.
• With a 6% rate of return, you’d need to earn $172,283 per year and save $2,153 per month to reach $1 million in 20 years.
• With an 8% rate of return, you’d need to earn $134,919 per year and save $1,686 per month to to reach $1 million in 20 years.

As the numbers show, building up a $1 million retirement fund on such a short timeline requires a high salary. That’s why it’s smart to start saving as much as you can as early as you can. You’ll be able to take advantage of compound interest, in which any interest you earn then accrues interest on itself, which builds your savings faster.

If you do end up starting later in life, it would be wise to put away more than 15% of your income to make up for lost time.