Retirement with $2 Million if You Make $100,000 Per Year

No matter what your age, it’s always a good idea to save a portion of your salary for retirement.  The problem with designing a cogent financial plan for retirement is that there are so many variables that come into play.

Generally, there are five main variables: the age you begin saving, the percentage of your income you tuck away, the interest rate that you accrue annually, the amount you want to have at the age you retire, and the number of years you commit to your objective.

Recently, CNBC in collaboration with NerdWallet crunched some numbers for scenarios of retiring with a cool $2 million on a $100,000 salary. Like most things in life, financial advisors say the earlier you start, the better off you’ll be.   Let’s break down the basics of an ideal scenario:

  • Age You Begin Saving: 25
  • Percentage of your Earnings Income: 12%
  • Interest Rate: At Least 6% Annually
  • The Goal at Retirement Age 65: $2 million
  • Length of Commitment: 40 years

Many Variables Means Many Options

But what if you don’t make a six-figure salary, are over 30, or are unable to contribute double-digit percentages of your income to retirement savings? Financial advisers say there are still other paths to get there; however, adjustments to the formula are needed depending on your circumstances.

For example, if you wait until your 30s, here are the guidelines:

  • Age You Begin Saving: 35
  • Percentage of your Earnings Income: 17%
  • Interest Rate: At Least 6% Annually
  • The Goal at Retirement Age 65: $2 million
  • Length of Commitment: 30 years

If you wait until your 40s, the numbers adjust upward aggressively because the process is much more impacted:

  • Age You Begin Saving: 45
  • Percentage of your Earnings Income: 35%
  • Interest Rate: At Least 6% Annually
  • The Goal at Retirement Age 65: $2 million
  • Length of Commitment: 20 years

It’s important to remember that no matter what age you start the process, none of these scenarios account for variables such as a possible pay increase or decrease, employer matching, inflation, or any other unexpected life events.

Keep Your Retirement Fluid by Making Adjustments

Generally speaking, finance experts suggest you save 10% to 15% of your income. However, if you are unable to put that much away now, then expect to put away a higher percentage later to make up the deficit.

If interest rates are low and you’re only accruing 4%, then you’ll have to increase the amount you save each month to make up for the loss in compound interest. If you have a period of unemployment or another life event that defers your plan, then you might have to consider staying in the workforce a bit longer in order to reach your goal.

On the flip side, if you get a sweet windfall from the sale of a house, receive a hefty holiday bonus, or get a significant pay raise, you can also change your savings formula. For example, you could adjust monthly savings percentages down to free up spending, move your retirement age down to 60 or just increase your end goal to an amount over $2 million.

Analysts say it’s not a “set it and forget it” situation – continually analyzing your budget monthly or quarterly will ensure you’re making the necessary adjustments to your spending and savings habits.

Many Resources Are Available

For more detailed tracking and planning, try using an interactive retirement calculator to create a comprehensive savings and spending plan as you work towards retirement.

If you want to plug and play with specific numbers and scenarios to see what it takes to work towards a secure retirement, you can also use Bankrate’s retirement calculator tool to help create your retirement plan.

When designing your retirement formula, also consider Roth IRA contributions and tax-saving strategies to add to the bottom line.

It all can be complicated and overwhelming, so as always, consider a certified, licensed, chartered financial advisor who can offer customized advice and design a comprehensive plan to meet your needs.


The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.


Chris Lean

Chris is a Chartered Financial Planner who writes blogs and articles to simplify and explain some of the financial issues that affect UK expats. Subjects include; hot topics, regulation and the ever-changing world of finance.

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