- To earn $1.01 million by age 62, a 22-year-old needs to start saving $325 a month.
- Analysis reveals how much each age group needs to save to reach seven figures
- But experts estimate that even $1 million may not be enough for a comfortable retirement.
- Are you a 401(K) millionaire? Have you been able to make important sacrifices and make ends meet despite reduced income? Email us at Money@dailymail.com
This is traditionally considered the standard for a comfortable retirement. But how can he save $1 million into his 401(K)?
Experts have analyzed how much you need to stash away each month to generate a comfortable nest egg, depending on your starting age.
And it may not be as difficult as you think.Depending on your personal financial situation Motley FoolTo be able to retire with $1.01 million by age 62, a 22-year-old would need to save $325 per month throughout their career.
If a worker starts saving into a 401(K) at age 27, they would need to save $500 per month to reach $1.03 million by the same age.
This amount increases to $750, $1,200, and $1,900 for ages 32, 37, and 42, respectively.
![Experts have analyzed how much you need to stash away each month to generate a comfortable nest egg, depending on your starting age.](https://i.dailymail.co.uk/1s/2023/12/18/22/79103933-12877955-image-a-3_1702937079385.jpg)
Experts have analyzed how much you need to stash away each month to generate a comfortable nest egg, depending on your starting age.
The analysis assumes that the investment generates an average annual return of 8%, which is slightly less than the 10% average return guaranteed by the stock market.
according to Motley Fool, A general investing rule of thumb is to subtract your age from 110. The result is the percentage of your portfolio that should be allocated to stocks.
For example, if you’re 35 years old, your portfolio should consist of about 75 percent in stocks, with 25 percent set aside in bonds and other conservative investments. The idea behind this theory is that younger investors can take greater risks.
Experts also point out that returns vary depending on what you invest in. A 401(K) or Individual Retirement Account (IRA) provides different returns than investing solely in stocks.
Earlier this year, an analysis by asset management firm Fidelity found that the number of 401(K) savers with at least $1 million jumped 25% between 2022 and 2023. This increase can be attributed to the rise in the stock market.
In 2021, approximately 442,000 Fidelity 401(K) accounts and 376,000 IRAs held $1 million or more. This figure fell by 32 percent in 2022 as stock market turmoil hit workers’ savings.
With balances above $1 million, Fidelity customers are in the top 1.64 percent of accounts. For her IRA owners, who tend to be more affluent, a seven-figure balance puts them in the richest 2.5%.
![The stock market boom has increased the number of savers with $1 million in 401(K)s by 25% this year, according to Fidelity Investments statistics.](https://i.dailymail.co.uk/1s/2023/12/19/15/74432027-12877955-A_stock_market_boom_has_pushed_up_the_number_of_savers_with_1_mi-a-1_1702998141815.jpg)
The stock market boom has increased the number of savers with $1 million in 401(K)s by 25% this year, according to Fidelity Investments statistics.
![Certified financial planner Marissa Reale told DailyMail.com that a $1 million pot is unlikely to provide most people with a comfortable retirement.](https://i.dailymail.co.uk/1s/2023/12/18/22/75433947-12877955-Certified_financial_planner_Marissa_Reale_told_DailyMail_com_a_1-a-37_1702937217936.jpg)
Certified financial planner Marissa Reale told DailyMail.com that a $1 million pot is unlikely to provide most people with a comfortable retirement.
Still, experts warn that this number is not necessarily a strong indicator of a comfortable retirement. Assuming someone retires at her age of 65 and life expectancy is her age of 90, her annual living expenses will be just $40,000 for him.
“$40,000 a year is not enough for most people to survive,” certified financial planner Marissa Reale told DailyMail.com.
“I always advise my clients to keep some of their money invested in stocks as well, so you won’t get all of it in cash.
“If you really want your money to last, most people will need more than $1 million.”
But she points out that retirees can also receive increased Social Security benefits.
Social Security payments are scheduled to increase by 3.2% in 2024 to keep pace with inflation. This means that the average retired worker’s monthly income after January is expected to increase from her $1,848 to his $1,907.
To protect your retirement savings, Reale supports the “4 percent” rule. This means that the saver looks at a lump sum in retirement and assumes that she will spend 4% of that total amount each year.
To figure out how much money you need, she recommends that each household look at their cost of living and calculate how much it actually costs each year.
From there, multiply by the number of years you expect to spend in retirement based on when you want to quit your job and your life expectancy.