If you save $10,000 annually you can become a millionaire in 30 years, no matter your age.

Staff Writer

Conventional wisdom tells us that the sooner you start saving for retirement, the sooner you can retire. Unfortunately, that’s sometimes easier said than done. After all, life has a habit having constantly throwing a monkey wrench into your savings goals.

To make matters worse, we all have different plans for retirement. That can make saving for retirement a bit tricker to map out.

Despite these challenges, it’s better to have something planned than nothing. If you do you’ll be more likely to live more comfortably.

But, how can you determine when you’ll actually be able to retire? You can start by taking a look at what you currently have in your savings account to get a better picture.

Find your multiplier.

According to Fidelity, if you want to enjoy a more comfortable lifestyle by the time you reach 67, then you’ll want have 10x their annual salary saved.

Fidelity also provided a timeline with some valuable benchmarks that you should use to achieve the recommended amount of savings if you want to retire on track:

  • By 30: Have the equivalent of 1x of your salary saved
  • By 35: Have 2x your salary saved
  • By 40: Have 3x your salary saved
  • By 45: Have 4x your salary saved
  • By 50: Have 6x your salary saved
  • By 55: Have 7x your salary saved
  • By 60: Have 8x your salary saved
  • By 67: Have 10x your salary saved

Of course, if you want to retire sooner then you’ll have to make some adjustments. For example, if you’re 45 and want to retire by 65 then you’ll have to increase the savings factor up to 6x (times) salary.

To find your specific retirement savings factors based on your current age, when you want to retire, and desired lifestyle expense needs Fidelity has also has this handy tool.

However, Charles Farrell argues in his book Your Money Ratios that you should actually by aiming for:

  • By 35: 1.4x your annual income
  • By 45: 3.7x your annual income
  • By 55: 7.1x your income
  • By 65: 12x your income

Want something more specific?

Then check out this chart from personal finance blogger Zach of Four Pillar Freedom.

According to Zach, if you have zero savings and earn a seven percent rate of return and put away $333 per month at age 20 you could retire as a millionaire by 65. If you put away $24,000 annually at 30 then you can reach that milestone by age 50.

Here’s the most interesting observations from Zach:

  • If you save $10,000 annually you can become a millionaire in 30 years, no matter your age.
  • If you save $20,000 annually you can become a millionaire in 22 years, no matter you age.
  • If you save $40,000 annually you can become a millionaire in 15 years, no matter you age.
  • Anyone can become a millionaire by 65 if they save $4,000 a month if they start when they’re 20.

How much should you save for retirement?

Remember, the figures listed above are just guidelines. The first step to take is determining when you want, and how much you’ll need, to retire. If you want to work until 65 then you’re obviously not saving as much as you would if you wanted to retire at 50.

You next need to take into account your salary. For example, if you’re 22 and make $35,000 annually, then you would start your retirement savings at around $5,250 per year. Remember this as well when you’re starting your own business. You should be saving similar amounts as a business owner.

Next you have to take the following into account.

Estimate future spending and determine your future salary.

This is a ballpark figure based on your current spending. It simply involves entering your monthly expenses in a spreadsheet or writing them on a piece of paper. For varying expenses, think if they’ll stay the same, increase, or decrease. For example, your mortgage payment will probably be non-existent down the road.

In a second column jot down the expenses you may have in retirement. This could be anything from travel to medical expenses. It doesn’t have to be exact, but adding this with your current spending can give you an estimate of your future spending.

Now that you have an idea on how much you’ll need each month in retirement, you can now determine how much income you’ll need each month. As a general rule of thumb, you should aim to replace 80 percent of your pre-retirement income. Remember, this isn’t what you’re earning now, it’s what you expect to be making in the 10 years prior to retirement.

You can use this calculator to make this projection.

Use a retirement calculator.

For a more personalized glimpse in determining if you’re saving enough to reach your retirement goal that use a retirement calculator.

There are plenty of free calculators from AARPBankrateCNN, and NerdWallet that can help you figure out how much you need to save to retire at your desired age.

Write down your retirement plan.

This doesn’t have to be formal or overly complicated. It’s simply a long-term goal that will influence your current spending habits. For example, if you want to retire at the beach by age 55, then you’ll need to drastically cut back on unnecessary purchases so that money can be placed in your savings.

Keep that goal somewhere you can see it, look on your fridge, so that you have a daily reminder to keep you on track.

Revisit your plan.

Even if you’ve planned thoroughly, circumstances will change throughout your life. Maybe you had another child, lost your good paying job, or experienced a medical emergency. To ensure that you’re still on track, you need to revisit your retirement plan so that you can plan accordingly.