How much is $100 a month for a year?

finance.yahoo.com - How Much Would You Have for Retirement If You Saved $100 a ...

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The figures thrown around Americans in regards to how much they should have saved for retirement can be very daunting. How is one supposed to save $1 million by age 65 with the rising costs of living and unprecedented levels of household debt?

In order to help put retirement savings in perspective, GOBankingRates conducted a study to determine how much you’d have saved for retirement if you saved $100 a month. First, the retirement savings was calculated based on $100 a month put into a savings account earning 0.10% APY, which is the current national average, according to the Federal Reserve Bank of St. Louis. The study then determined retirement savings based on contributing $100 a month to a 401k with an annual rate of return of 6.5 percent.

How Much You’d Have for Retirement If You Saved $100 a Month

Saving $100 a month via a traditional route, such as a basic savings account, results in much lower retirement savings than in a 401k. If you’re age 25, and have 40 years to save until retirement, depositing $100 a month into a savings account earning the current national interest rate of 0.10% APY would leave you with $48,974.93 in before-tax savings. Click to See: How Long $1 Million in Retirement Will Last in Every State A rather depressing figure is that 49 percent of employers with 401k plans match 0 percent of employee salary. But even with no match from your employer, the retirement savings you earn from a 401k, with a slightly conservative rate of return of 6.5 percent — The Motley Fool found the rate of return to be 7 percent over the last five years — is considerably higher. If you started putting your money into a 401k today at age 25 and saved for 40 years, based on the current median income of $57,652, you’d have $272,214 saved by age 65 — and that’s with no employer contribution. Take a look below at how much you’d have saved by 65 based on which age you started. These calculations are assuming the employer match is zero, and the salary is based on the U.S. median.

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Age at Start of Investing Birth Year 401k Retirement Savings 25 1994 $272,214 30 1989 $188,329 35 1984 $128,080 40 1979 $84,989 45 1974 $54,338 50 1969 $32,692 55 1964 $17,550 60 1959 $7,093 Less frequent than no match is employers who match 50 cents on the dollar up to 6 percent of employee salary. The median match is 3 percent. Based on the same parameters above, you’d save approximately $408,321 by age 65 if you put away $100 month with a 3 percent employer match of your salary.

Tips to Save More for Your Retirement Savings

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A straightforward, if basic, way to increase your retirement savings is to increase your monthly contribution. For the purposes of this study, $100 contributed a month was used, for an annual contribution of $1,200. You could certainly crank that up if you wish by contributing more depending on what your budget permits, contributing every paycheck and opting for your employer’s maximum contribution match. Another strategy is to open and maintain several vehicles for retirement savings. For instance, you can have a 401k through your employer while at the same time contributing to an IRA outside of work. Plus, IRAs tend to offer a wider variety of investment options than the usual 401k plan. The good news is, retirement costs can be modified and reduced based on geography. The basic fact is that some states and cities have cheaper costs of living than others, better taxes on retirees, more affordable homes, or many other factors. Some states even tax Social Security, so where you choose to retire certainly affects how quickly you use up your savings. Find out the best places to retire if you haven’t saved as much as you should’ve.

More on Retirement Planning

We make money easy. Get weekly email updates, including expert advice to help you Live Richer™. Methodology: GOBankingRates determined how much a person would have for retirement if they saved $100 a month first through a basic savings account, and second by using a 401k. SmartAsset’s 401(k) calculator was used to determine how much savings one would have if they invested $100 every month until retirement, using the following constants (1) type of Account [401K], (2) annual contribution amount [$1,200, based on a $100 a month contribution], (3) current 401k balance [$0], (4) employer matches [0%], (5) annual income [$57,652, the median household income according to the Census Bureau 2017 American Community Survey], (6) annual rate of return savings [6.5%, based on slightly more conservative value than The Motley Fool’s 7 percent average], (7) marital status [single], (8) retirement age [65], and (9) life expectancy [78.6 years, the U.S. average according to the Center for Disease Control. These factors were then used for each birth year in the study to give a final total Retirement Savings. This figure was then spread out over the average thirteen years between retirement and death and taxed at the appropriate income level.

This article originally appeared on GOBankingRates.com: How Much Would You Have for Retirement If You Saved $100 a Month?

finance.yahoo.com - How Much Would You Have for Retirement If You Saved $100 a ...

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