According to CNBC’s August “Your Money” survey, only about half of American workers earning $100,000 or more feel that they’re contributing enough to their 401(k)s to comfortably retire in the future. The survey also found that for those earning between $100,000 and $149,000, the median retirement account balance is $104,155, per Vanguard’s 2023 “How America Saves” report. For those earning over $150,000, the retirement account balance jumps to $201,301.
The amount of money needed for retirement depends on various factors, including the age of retirement, whether part-time work is planned, and living expenses in the chosen retirement location. The average American believes they’ll need around $1.8 million saved by the time they retire, according to Charles Schwab’s 2023 401(k) Participant Study.
To help individuals calculate the monthly savings required to retire with $2 million at age 67, CNBC has provided estimates based on different starting ages and annual rate of return. For example, if starting at 25, earning a 7% annual rate of return, individuals would need to save $657 per month.
Additionally, it’s essential to be aware of the contribution and income limits for different types of retirement accounts. For 2023, the contribution maximum for 401(k), 403(b), and most 457 plans is $22,500, with an additional $7,500 allowed for those over 50.
Financial experts advise focusing on savings rates and taking action to save, rather than solely growing the account balance. Fidelity recommends an annual savings rate of 15%, including any employer match, if available.
In conclusion, it’s important to evaluate retirement savings and take steps to increase contributions as needed, even if the milestone has not been reached. With proper planning and saving, catching up to future milestones is possible.
Finally, readers are encouraged to sign up for CNBC’s free Warren Buffett Guide to Investing and explore the article related to how much money would be needed to save each month to retire with $1.5 million if earning $80,000 a year.
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