How Much Do You Need
A common estimate is 25 times your annual retirement spending (the same as the FIRE number). If you need $40,000 per year beyond Social Security or pension income, the target is $1,000,000. The actual amount varies based on lifestyle, healthcare costs, housing, and longevity assumptions.
The Compounding Advantage
To accumulate $1,000,000 in 30 years with zero returns, you need to save $2,778 per month. At 5% compound annual return, you need only $1,202 per month. At 7%, just $820 per month. Compounding cuts the required monthly savings by more than half, and starting earlier reduces it further.
Starting Age Makes All the Difference
At 7% annual return targeting $1,000,000: starting at 25 requires $381/month, at 35 requires $820/month, at 45 requires $1,920/month. Every decade of delay roughly doubles the monthly requirement. The cost of procrastination is not linear; it compounds against you. A retirement planning guide provides age-specific savings plans and strategies.