Oct 22, 2020 07:19 AM EDT
Are you thinking of your retirement with millions in your savings account? It won't be just a dream, but somehow you need to work harder to make it.
According to a survey from Charles Schwab, the average American expects to need $1.9 million to afford retirement approximately. To enjoy your senior years comfortably, you may need to reach millionaire-status.
If you want to have savings of at least $2 million at the age of 62, you need to start early, preparing and saving consistently. Here is how much you need to keep monthly to reach that goal depending on your age, according to Motley Fool:
The younger you start saving, the less you'll need to save monthly to build a strong foundation. It's due to the compound interest that does the most of the work for you.
The longer you let your money be untouched in your retirement fund, the faster it will grow, as per Fool.
To reach the $2 million retirement savings by age 62, it would be easier to start in your 20s. So, it is not impossible if you are off to a late start, but you need to set aside a considerable amount of change each month.
No matter how old or young you are to begin saving, reaching $2 million for your retirement is challenging.
Unless you can afford to contribute some thousand dollars per month to your retirement fund, waiting too long to begin saving could make it possible for you to achieve your goal.
Though you are investing in a 401(k) that offers employer matching contributions, you don't have to save as much on your own. It is easier to reach your goal as a portion of your monthly savings would come from your employer.
The amount that you should save for your retirement will depend on your financial situation. Instead of targeting an arbitrary number, determine a savings goal based on what you expect to spend during your senior years.
You may use a retirement calculator to run your numbers and estimate how much you need to retire comfortably. Then, start your retirement savings goal.
If you think that the goal is impossible for you to achieve, you may tweak your budget to find more money, put toward your retirement savings, and think of how much money you are willing to sacrifice.
Remember that if you can't or are not willing for financial sacrifices, you may need to make them by living on less in retirement later. Although it's hard to retire in your early 60s with $2 million in your retirement bank, it is still not impossible.
Even if you can't reach the $2 million retirement fund, you could still live comfortably in your old age by saving as much as you can, rather than saving nothing at all.
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