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Friday, June 22, 2007

Retirement Saving Challenge - Daily Targets

In preparation for the July 1 beginning of the My Wealth Builder Retirement Savings Challenge, the table below provides the DAILY SAVINGS target by salary and by age. The assumptions are:

  1. Retirement at 65
  2. Target savings of 12 times salary
  3. Retirement lifestyle of 80% of working lifestyle
  4. Social security is available at 65
  5. Average investment return of 8% per year
  6. Nothing saved currently
Daily Savings Amount by Age
Salary203040 5060Target 12X salary
$20,0001.48 3.418.24 22.68106.97$240,000
$30,0002.225.1112.3524.02160.45$360,000
$40,0002.966.8116.4745.35213.94$480,000
$50,0003.708.5220.5956.69267.42$600,000
$60,0004.4310.2224.7168.03320.91$720,000
$70,0005.1711.9228.8279.37374.39$840,000
$80,0005.9113.6332.9490.71427.87$960,000
$90,0006.6515.3337.06102.05481.36$1,080,000
$100,0007.3917.0441.18113.38534.84$1,200,000
$110,0008.1318.7445.29124.72588.33$1,320,000
$120,0008.8720.4449.41136.06641.81$1,440,000
$130,0009.6122.1553.53147.40695.30$1,560,000
$140,00010.3523.8557.65158.74748.78$1,680,000



A few observations from the table:

Start young. For example, saving $1,680,000 requires $10.35 per day at 20, $57.65 per day at 40 and $748.78 at 60. That's a monthly amount of $310, $1729, and $22,463, respectively. By starting young, the power of compounding works in one's favor.

Saving over a million is doable, especially if one starts young. Saving as little as $6.65 per day ($200 per month) can get one over $1,000,000 by 65.

Delaying saving makes saving much harder. If the saving amount at 20 is a factor of 1. The factors required to reach the same amount are: 2.3x at 30, 5.6X at 40, 15.3X at 50 and 72.4X at 60.

Remember, the Retirement Saving Challenge will begin on July 1, 2007 and last for six months.

For more on Reaping the Rewards , check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

1 comment:

Super Saver said...

Dimes,

Thanks for your comment.

If it helps, saving at these levels have made a big difference for us. If Mr. Dimes retires from the Navy at 20 or 30 years, that will be a big benefit also. My father-in-law retitred from the airforce after 30 years as a Colonel and has a great pension.