Save a million at virtually any age

By Kiplinger's Personal Finance Magazine

The road to $1 million starts early, but there's hope, and help, for late bloomers.

Check your age category below to see how much you need to save each month to accumulate $1 million by age 65. (Because of rounding, some savings calculators may show slightly different numbers.) You'll also find strategies to fit retirement saving into the rest of your life.

At age 25, you're starting from scratch. At ages 35, 45 and 55, we assume you already have money in savings on which you're earning 8% annually. Even if you can't save quite this much now, our step-by-step guide will help you set priorities for every stage of life.

• Calculator: Run the numbers on your retirement

How to save a million at age 25

If you've saved zero, to reach $1 million by age 65 you need to save $286 a month.

Successful savings strategies:

• You're just starting your career, so this is your chance to build a solid financial foundation. Time is on your side.

• Contribute enough to your company 401(k) plan to capture your employer match. If you don't have a retirement plan at work, fund an individual retirement account.

• You'll be investing for 30 years or more, so you can afford to keep 100% of your account in stocks.

• Pay down credit cards and other high-interest debt. That will free up money to save for a house.

• Set up an emergency fund equal to three to six months of take-home pay. (See "Save your 'emergency fund' for the real thing.") Stash it in a readily accessible account in an online bank that pays interest of 4% or more.

How to save a million at age 35

If you've saved zero, to reach $1 million by age 65 you need to save $671 a month. If you've got $50,000, you need to save $304 a month.

Successful savings strategies:

• You may be starting a family or preparing to buy a home. Balance your short-term needs with long-term savings goals.

• Although you have added responsibilities, don't neglect retirement.

• Aim to save 15% of your gross income, including an employer match in your 401(k). If one parent leaves work to care for the kids, consider opening a spousal IRA.

• Shift your assets to 90% stocks and 10% bonds.

• Invest in a 529 college-savings plan. Many states offer a tax deduction for your contribution, and qualified distributions are exempt from federal taxes. (See "Your 5-minute guide to saving for college.")

How to save a million at age 45

If you've saved zero, to reach $1 million by age 65 you need to save $1,698 a month. If you've saved $50,000, you need to save $1,298 a month. If you've saved $100,000, you need to stash away $861 a month.

Successful savings strategies:

• You may be juggling the needs of a growing family and aging parents, but don't take a break from retirement savings.

• You can contribute up to $15,500 to a 401(k) or similar workplace-based retirement plan this year or $5,000 to an IRA. Roll over retirement savings from previous jobs into an IRA.

• Adjust your asset allocation to 80% stocks and 20% bonds.

• Your kids can get grants or loans for college, but there's no financial aid for your retirement. Don't put your kids' college costs ahead of retirement.

How to save a million at age 55

If you've saved zero, to reach $1 million by age 65 you need to save $5,466 a month. (See "What to do if you're 55 and haven't saved a dime.")

If you've saved $50,000, you need to save $4,859 a month to reach $1 million by 65. If you've saved $100,000, you need to save $4,253 a month. If you've saved $200,000, you need to put away $3,040 a month.

Successful savings strategies:

• Take advantage of your peak earning years to top off your savings.

• Add $5,000 in annual catch-up contributions to your 401(k) savings and an additional $1,000 to your IRA.

• As you near retirement, reallocate your portfolio to 70% stocks and 30% bonds.

• Estimate your retirement expenses and your projected income. If you're coming up short, consider working a few more years.

This article was reported and written by Mary Beth Franklin for Kiplinger's Personal Finance Magazine.

Published Feb. 21, 2008