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When should I start saving for retirement?

As a rule of thumb, the sooner you start saving for retirement the better. If you start by contributing $1,000 a month to a retirement account at age 30 or younger, your savings could be worth more than $1 million by the time you retire. But even for those well past 30, it's not too late to start.

Here's how much you should expect to have in your account by the time you retire at 67:

  • If you start at 20 years old you should have $2,024,222 saved.
  • If you start at 30 years old you should have $1,150,036 saved.
  • If you start at 40 years old you should have $613,361 saved.
  • If you start at 50 years old you should have 283,890 saved.
  • If you start at 60 years old you should have $81,623 saved.

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How’d we get those numbers?

The average annual return on a 401(k) can run as high as 8% a year, but we opted to use a low-end estimate of 5% to account for management fees (usually 0.40% to 1% of your total assets invested) and inflation (3.3% a year on average). We also assumed an age of 67, the full retirement age for anyone born in 1960 or later.

However, you may reach different estimates from different sources because in addition to average annual returns, retirement account management fees and inflation, there are a number of variables that impact how your retirement savings will grow.

Our projections also don’t include taxes due upon distribution, since tax brackets adjust annually and tax rates are based on income.

How you can save $1,000 a month

According to the Bureau of Labor Statistics, the median wage for full-time workers aged 20 to 24 is $712 a week, or $3,085 a month. Many in that group might find it difficult (if not impossible) to save $1,000 a month for retirement — especially if they’re only working part time or going to school full time.

But if you want to set aside some income for retirement, here are a few ways to increase your contribution:

  • Follow the principles of the FIRE movement: The financial independence, retire early, or FIRE, movement encourages people to live well below their means and invest as much as possible into retirement, with the goal of retiring early. Even if you don't follow the guidelines to a T, FIRE principles can help you to prioritize retirement savings.
  • Live with family: Eliminate one of your biggest expenses by moving in with your parents or other family, even if just for a few years, while you kick off or jump-start your retirement savings.
  • Employer match: If your employer matches your retirement contributions, try to qualify for the maximum available match. (Typically this is 6% of compensation, but can run as high as 25%.)
  • Avoid lifestyle inflation: When your income increases, resist the temptation to spend more. Instead, adjust the balance of your entire budget — and consider upping how much you’re putting in savings.

All that said, you can overdo it.

Keep in mind it's inadvisable to put every spare cent into retirement. You’ll still need emergency cash available for one-off expenses such as car repairs or dental work. If you don't have emergency savings handy, you may be tempted to make an expensive, early withdrawal from your retirement account — and then not only will you face fees and taxes, but there goes your chance at compound interest on those sums.

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Meet Your Retirement Goals Effortlessly

The road to retirement may seem long, but with WiserAdvisor, you can find a trusted partner to guide you every step of the way

WiserAdvisor matches you with vetted financial advisors that offer personalized advice to help you to make the right choices, invest wisely, and secure the retirement you've always dreamed of. Start planning early, and get your retirement mapped out today.

About the Author

Sarah Brady

Sarah Brady

Freelance Contributor

Sarah Brady is a (self-)certified money nerd. She's a personal finance writer and speaker who's been helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah has written for Forbes Advisor, USA Today's Blueprint, FORTUNE, Experian, Investopedia and more,

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The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.