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

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


Dimes said...

We're in the $10-a-day range, but I'm having a real hard time convincing the spouse to get on board. Maybe showing him this table will provide much needed motivation!

Super Saver said...


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.