Can you save 1 million dollars for retirement?

One of the most common questions we’re asked as financial advisors is “How much do I need to save up before I can retire?”

With so many variables involved, there is no set answer. But these days, with many of us expecting to live longer, at least one million dollars is the minimum required to fund a comfortable retirement.

This might come as a shock. Many people think that figure is only achievable by winning the lottery. But rest assured, it is achievable. It just takes planning, commitment and a little bit of magic called compound interest.

8 quick considerations

Below are some key considerations we’d talk to you about if you were sitting in front of us:

1. Frequency

Regular deposits are recommended straight from your pay. What you don’t see you don’t miss.

2. Amount

Minimum 10% of monthly net income is recommended.

3. Rate

Choose investments that provide at least a 6-8%pa rate of return.

4. Type

High-interest savings account to get started, then perhaps managed funds once you have saved enough for the minimum investment. As your balance grows, we would look at other assets to spread your investment. If you’re taking advantage of the low tax applied to super, in addition to the superannuation guarantee, you may want to salary sacrifice to your super fund (as long as you don’t exceed the concessional contributions cap).

5. Risk

High returns generally mean high risk. On the other hand, being too careful can slow progress. Everyone has a different risk tolerance which depends on age, personality and circumstances.

6. Age

Obviously, it’s best to begin as early as possible, but you can still save a substantial amount even if you start in your mid to late thirties.

7. Emergencies

Emergencies mean just that. If you withdraw money for a new car or a big holiday, you’re only undermining yourself. (That doesn’t mean you miss out on these enjoyable lifestyle events. Fun should be an important part of any savings plan.)

8. Goal

The figures we’ve quoted here are based upon a $1 million target, however, depending on your lifestyle and expectations, you can revise that amount to suit your circumstances.

How many years to save $1 million?

Let’s start with a portfolio of $5,000. This is how long it will take to reach the million-dollar mark at different contribution amounts and earnings rates:


Years @ 4%pa

Years @ 6%pa

Years @ 8%pa

















Obviously, the earlier you start saving, the smaller the contribution is needed. You can accelerate your contribution rate as your income increases. Savvy savers who pay a mortgage off early can accelerate their program considerably by directing the amount formerly devoted to the mortgage payment into savings.

And what about any money you receive along the way? If you receive an inheritance of say, $100,000 (assuming an annual return of 6%), the $1 million mark can be reached in just 30 years contributing only $400 per month.

Building your saving muscle

Regular investing is likened to building a “saving muscle.” You grow accustomed to putting away this money over the years and are able to increase the amount as you would increase an exercise regimen.

Eventually, it becomes a habit. You don’t notice the pain anymore, and the payoff can be enormous at the end. Like achieving a fit and healthy body, building your saving muscle results in a healthy financial outlook.

Being a millionaire may seem like an unattainable dream, but with the right amount of financial planning and diligence, you can join the Millionaires’ Club sooner than you think.

Notes: taxation and inflation have not been taken into account in these calculations. Calculation based on achieving $1 million in today’s dollars.

If you like this article, you might be interested to know that we share useful thoughts and information like this in our monthly financial insights email. You can subscribe to that email here. All subscribers receive a copy of our e-book: The 5 Key Pillars of Financial Independence.

General Advice Disclaimer

This article contains general advice only, which has been prepared without taking into account the objectives, financial situation or needs of any person. You should, therefore, consider the appropriateness of the information in light of your own objectives, financial situation or needs and read all relevant Product Disclosure Statements before acting on the information. Whilst every care has been taken to ensure the accuracy of the material, Paradigm Strategic Planning or Sentry Advice Pty Ltd will not bear responsibility or liability for any action taken by any person, persons or organisation on the purported basis of information contained herein. Without limiting the generality of the foregoing, no person, persons or organisation should invest monies or take action on reliance of the material contained herein but instead should satisfy themselves independently of the appropriateness of such action.

Paradigm Strategic Planning Pty Ltd is an Authorised Representative of Sentry Advice Pty Ltd AFSL 227748

Scroll to Top