Setting aside $10 a day could help you save over $1 million for retirement—but you have to start early (2024)

Although the thought of saving $1 million or more by the time you reach retirement age may seem overwhelming, the process doesn't have to be — especially if you start early.

Instead of focusing on the total, try paying attention to your savings rate, which is the percentage of your annual pre-tax income you're contributing to your retirement investment account.

While it can be helpful to have a goal in mind when you begin saving for retirement, it's also important to remember that your retirement account balance can be impacted by factors outside of your control, such as market volatility. But your savings rate is something you can control.

Fidelity recommends a savings rate of at least 15%, inclusive of any employer match. However, it's OK if allocating that much of your income isn't feasible at first.

"Starting out with smaller amounts is always the winner, because you can always invest more later, too," James Royal, Bankrate's principal investing and wealth management writer, tells CNBC Make It.

To that point, you can begin your retirement savings journey by setting aside just $10 a day, or $70 a week.

Say you start at age 21. By allocating about $70 a week into a retirement investment account that generates a 7% annual rate of return, you'd have just over $1 million by the time you reach age 65, according to CNBC's calculations.

CNBC calculated how that same $70 weekly contribution may grow if you started at ages 21, 25 and 30. These calculations don't account for unpredictable factors such as raises, periods of unemployment or market volatility.

If you start at 21

• Earning a 5% annual rate of return: $585,651
• Earning a 7% annual rate of return: $1,079,289
• Earning a 9% annual rate of return: $2,072,512

If you start at 25

• Earning a 5% annual rate of return: $466,418
• Earning a 7% annual rate of return: $803,588
• Earning a 9% annual rate of return: $1,435,563

If you start at 30

• Earning a 5% annual rate of return: $347,239
• Earning a 7% annual rate of return: $551,394
• Earning a 9% annual rate of return: $902,121

Beginning your retirement saving journey

While your 401(k) can be a great place to start building your retirement savings, if your employer doesn't offer one, you could consider a Roth individual retirement account.

With a Roth IRA, qualified investors make contributions with their post-tax dollars. This means that those earnings grow tax free and withdrawals made in retirement won't face taxes and penalties as long as the account has been open for at least five years.

In 2024, the Roth IRA contribution limit is $7,000 for those under the age of 50 and $8,000 for those age 50 and older.

Additionally, the income limit in 2024 for single and head-of-household tax filers ranges between $146,000 and $161,000. Married couples filing jointly can earn between $230,000 and $240,000.

"That's the perfect setup for young workers who expect to be earning more and paying higher tax rates in the future," Royal says. "Paying low tax rates on your Roth IRA contributions makes the most sense, and then they can enjoy tax-free gains forever."

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