How much you’ll have for retirement if you invest $100, $500 or $1,000 a month, broken down by age (2024)

FAQs

How much you’ll have for retirement if you invest $100, $500 or $1,000 a month, broken down by age? ›

Investing $100 per month will grow to more than $160,000 when you are ready to retire in 47 years. At $500 a month, the same 20-year-old would retire with more than $800,000 if they stuck to their saving. If you bump that number up to $1,000 per month, your total will grow to over $1.6 million for retirement.

After analyzing many scenarios, we found that 75% is a good starting point to consider for your income replacement rate. This means that if you make $100,000 shortly before retirement, you can start to plan using the ballpark expectation that you'll need about $75,000 a year to live on in retirement.

Inflation

Let's assume an average inflation rate of 2%. The real rate of return would be 4% for a 6% nominal return. Thus, investing $1,000 per month for 30 years at a real return of 4% would give you approximately $697,363 in today's dollars.

Retiring at 65 with $1 million is entirely possible. Suppose you need your retirement savings to last for 15 years. Using this figure, your $1 million would provide you with just over $66,000 annually. Should you need it to last a bit longer, say 25 years, you will have $40,000 a year to play with.

Taking the same calculations as if you plan to retire at 50, suppose you plan to retire at 60 with $100k in savings, and you need this money to last for now 20 years until the age of 80. Without including income from other sources, this would leave you with a monthly income of just $417.

One example is the $1,000/month rule. Created by Wes Moss, a Certified Financial Planner, this strategy helps individuals visualize how much savings they should have in retirement. According to Moss, you should plan to have $240,000 saved for every $1,000 of disposable income in retirement.

Let's say the annual return is rounded off to 10%. Investing $500 monthly would compound itself and eventually earn you about $1 million in just under 29 years. Source: Investor.gov. Calculations are based on a $0 initial investment, $500 invested monthly, a 10% average rate of return, and compounding monthly.

Investing $1,000 a month for 20 years would leave you with around $687,306. The specific amount you end up with depends on your returns -- the S&P 500 has averaged 10% returns over the last 50 years. The more you invest (and the earlier), the more you can take advantage of compound growth.

Now, let's consider how our calculations change if the time horizon is 10 years. If you are starting from scratch, you will need to invest about $4,757 at the end of every month for 10 years. Suppose you already have $100,000. Then you will only need $3,390 at the end of every month to become a millionaire in 10 years.

For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money.

Is $500 a good investment? ›

Even $500 is more than enough, and it can grow to thousands of dollars if you pick a good investment and give it time. For example, had you invested $500 into the Vanguard Growth ETF (NYSEMKT: VUG) when it was created in 2004, you would have nearly $4,000 today.

What is the average and median retirement savings? The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances.

Average Monthly Retirement Income

According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.

You can generate monthly income from 100k by investing in a mix of assets, such as dividend-paying stocks, bonds, or REITs. Depending on the assets you choose and their performance, you may expect to yield a monthly income ranging from a few hundred dollars to over a thousand dollars.

To help you get an idea of how long $100,000 would last you in retirement, GOBankingRates performed a study to compare the cost of living in every state. In some locations, you can live off that fund for about two years if you don't receive a pension or Social Security income.

“With a nest egg of $100,000, that would only cover two years of expenses without considering any additional income sources like Social Security,” Ross explained. “So, while it's not impossible, it would likely require a very frugal lifestyle and additional income streams to be comfortable.”