Photo by Khachik Simonian on Unsplash

How To Retire With A Million Dollars

By making slow and steady progress

It’s never too early to think about retirement and set yourself up for success. The amount you need for retirement looks different for each person. What are your goals in retirement? Do you want to travel the world? Visit your kids? Go live abroad? The lifestyle you want to live will impact how much you need to save.

For many people, having a million dollars saved for retirement is a good place to start.

Where does this number come from? The rule of thumb is that you should have 80% of your current salary for every year of retirement. So if you want to retire at age 62 and you expect to live to be 87, it works out like this:

Take home salary of $50,000 a year * 80% = $40,000

$40,000 * (87 years life expectancy — 62 years old at retirement) = $1,000,000

A million dollars seems like a big number, and it is. But you can get there. And you can get there by slowly saving now. Here’s how you can do it.

Let’s say your 32 years old and you want to retire when you’re 62 with a million dollars in the bank.

One of the best ways to do it is by putting your money in a Roth IRA. A few highlights and restrictions about Roth IRAs.

  • With a Roth IRA, you pay taxes on money going into your account and then you get to withdraw the money tax free.
  • There are limits to how much you can make and contribute to a Roth IRA. In 2020, the limit for singles is $139,000, and for married couples, the limit is $206,000.

When you put your money in a Roth IRA, put it in mutual funds that match the S&P 500. By doing this, you’re banking on the fact that the average rate of return on the stock market is 10%. Now, this number fluctuates year over year, but with a Roth IRA, you’re leaving your money alone for decades — so fluctuations are ok.

Over the lifetime of your investment, though, you’ll get a large rate of return. Account for 2% inflation, so you can safely bet you’ll make around 8% on your investment.

Given all of this then, how do you get to a million dollars. The following example assumes you’re 32 years old right now and will retire at age 62.

Availalbe at

If you put in an initial investment of $1,000, and then add $700 a month, by the time you retire at age 62, you’ll have $1,054,187.

Investing over the long term takes advantage of slow and steady progress. By adding in $700 a month for 30 years, you’ll have added $252,000 but you’ll have earned nearly $900,000 in interest!

But for many, saving $700 a month seems daunting. With rent prices, school debt, and the cost of living these days, saving this much can seem hard. But there are some small things you can do to help yourself put away $700 a month.

  1. Make a list of all of your subscriptions and cancel the ones you don’t really need or use. Many of these subscriptions are $15 dollars a month which adds up. See if there are two subscriptions you can cut out to get back $30 a month.
  2. Do you have cable? And do you really need it? Save $50 or $60 by getting rid of cable.
  3. Do you have a gym membership you don’t really use? Get outside instead and save $30–70 a month.
  4. Look at how often you eat out a week. Can you reduce this by just one time per week? Over a month, this will save you about $100-$200.
  5. How much do you spend on Uber and Lyft? Can you walk or bike two or three times a week or take the bus instead? This will save you another $100-$150 a month.
  6. Do you really need that new pair of shoes or outfit? Cut back on buying 2 clothing items a month. That’s $100-150 in savings a month.
  7. Instead of buying books new, go to your local library and rent them. This will save you $20–30 a month.
  8. When you go out to eat, ask for water instead of buying a drink. This will save you $40-$60 a month.

Add this all up and the savings work out to about $750 a month on the high end. Which, if you add to a retirement account, slowly and consistently, will get you a million dollars by the time you retire.

You can do this!

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Andrew lives and work in San Francisco. He does budget and operations at Airbnb full time.

Dad. Husband. Army vet. Enjoy running, cycling, cooking, & guitar. Sign up for my monthly humor newsletter:

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