Want to retire at 65? This is how much you should be saving each month
If you start early, it’s no big deal to save enough to retire comfortably at 65, but even if you feel like you’re behind, there are still ways.
If you’re in your 20s, there’s a good chance that retirement isn’t on your mind at all. But it should be! The earlier you get started saving for retirement, the more comfortable you’ll be when you reach it, and you can guarantee you’ll be able to retire by 65.
However, if you’re a little older and wishing someone had told you that advice sooner (or that you’d listened), you’re not a lost cause either. It’s never too late to start saving! Here, we’ll break down how much you need to set aside monthly to be able to retire at 65.
How much money to save to retire by 65
According to Jake FitzGerald of Motley Fool Money, there’s a rule of thumb to follow that works well for this and it’s called the “25x rule”. The 25x rule suggests you should save 25 times your expected annual expenses. For argument’s sake, we’ll say you want to live on $50,000 a year. That means you’ll need around $1.25 million by the time you reach 65.
That sounds way out of reach, but it’s not as far-fetched as it sounds, especially if you’re still in your 20s or early 30s. Assuming an annual return of 7%, here’s how much you’ll need to save each month based on your current age.
| Starting Age | Monthly Savings Needed (Assuming 7% Annual Return) |
|---|---|
| 25 | $476 |
| 30 | $694 |
| 35 | $1,025 |
| 40 | $1,543 |
| 45 | $2,400 |
| 50 | $3,944 |
Source: Motley Fool Money
If this feels overwhelming and you feel off track, don’t worry. If you start now and keep the saving consistent, even if you have to delay retirement by a few years, having savings will help you tremendously.
FitzGerald also suggests three valuable tips: taking advantage of your employer’s 401k match, use tax-advantaged accounts like an IRA, and opening an online brokerage account to invest in stocks and bonds.
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