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How to Retire a Millionaire

Retiring a millionaire may sound glamorous, but the truth is, many Americans need at least $1 million “in the bank” to retire comfortably. If you’re making more than $50,000 a year pre-retirement and want to maintain your lifestyle, experts estimate that $1 million is the minimum amount you should save. These retirement-planning tips from Dutch Point Credit Union can help jumpstart your retirement nest egg.

How Much Will I Need to Save Each Month?

One in six Americans retire a millionaire, but those savings didn’t happen overnight. The key to saving for retirement is to start early and take advantage of compound interest (also known as interest on interest). A retirement savings calculator can help you estimate how much you’ll need to save each month to reach your goal.

The sooner you start saving for retirement, the more you’ll have “in the bank”. Explore the following scenarios to understand how your retirement savings will change depending on when you begin to save. For these examples, let’s assume the retirement age to be 65 with an annual interest rate of 8%, annual inflation rate of 2% and $0 in prior savings.

Starting to Save at Ages 45-50

It’s never too late to save. Starting your savings journey at age 50 doesn’t mean it’s impossible to be a millionaire by 65. It may be more difficult and restrictive, but if this is your goal, it’s crucial that you stick with it. To become a millionaire by age 65, you’d need to save $3,000 each month. For many, this may not be realistic, but try to get as close to this number as you can.

If you begin saving five years earlier, at age 45, you’ll have a little more flexibility, but your budget will still be tight. You’d need to save $1,7000 a month to retire with $1 million. Keep in mind that you may also need to balance this savings goal with college tuition payments and other major expenses, like buying a new car or paying off a mortgage. Saving for retirement this aggressively may impact your ability to afford your other financial obligations.

Starting to Save at Age 35

At age 35, you would need to save $700 a month to reach $1 million by age 65. Starting to save at age 35 will provide you with more flexibility than at age 50 but can still be difficult considering the many common expenses you’ll incur during this life stage. For example, suppose you’re getting married, raising kids or furthering your education. Saving a large percentage of your income for retirement will make it difficult but not impossible to afford other major expenses.

Starting to Save at Ages 20-25

Starting early gives you much more flexibility. If you begin putting away $300 a month at age 25, you can reach your retirement savings goal while enjoying the ability to spend freely. If you’re able to start saving at age 20, you can contribute just $190 a month and be able to reach your million-dollar target. This can be difficult to achieve with a starting salary, however, and requires a lot of discipline. Saving diligently early on can minimize your financial stress later in life.

The Importance of Compound Interest

Compound interest builds on itself over time, so the more you save, the more you earn in interest. As interest accrues, you earn additional interest on your total balance, which includes both your initial principal (or deposit) and the interest you earned previously. A compound interest calculator like this one from NerdWallet demonstrates the benefit of compound interest over time. This example assumes you have been investing $250 a month since you began saving, with an 8% annual investment return. Based on your starting age, you would receive the following compound interest at retirement:

  • Age 45: If you began saving toward retirement at age 45, you would accumulate $148,236 in compound interest by the time you were 65 years old.
  • Age 35: By starting to save 10 years earlier, at age 35, your money would accumulate an additional $200,000, giving you a total of $375,073 in compound interest by age 65.
  • Age 25: With the same $250 monthly contribution, you would accumulate an impressive $878,570 in compound interest by age 65 if you began saving at age 25.

Retirement Savings Tips

It’s one thing to know how much you should save for retirement. But at Dutch Point Credit Union, we understand life happens, and saving your maximum amount every month sometimes isn’t feasible. These additional retirement saving tips can help you reach your savings goals even when life gets in the way.


  1. Live Below Your Means

    This may be a difficult concept to apply, especially if you want to live the “American dream,” but cutting your spending can help you save efficiently. If saving $500 a month puts you in debt, you’re probably overspending. Find smart ways to cut your costs. Sometimes this is as simple as visiting the coffee shop once a week instead of twice. Create a weekly budget, pay your bills on time and avoid racking up credit card debt. Small lifestyle changes can add up in the long run.

  2. Grow Your Nest Egg

    There are many ways to increase your income beyond your regular paycheck. Investing in the stock market, while risky, can be an excellent way to grow your wealth. The sooner you begin investing, the more risk you can safely incur. Market fluctuations are normal, and the longer you invest, the more likely you are to recoup any losses down the road. If you invest wisely with the help of a financial advisor at Dutch Point Credit Union, you can watch your money grow over time.

    Dutch Point Credit Union can also help you set up automatic transfers. This automatically puts money from your paycheck toward your savings or retirement accounts. Work with our experts to determine how much money you can reasonably transfer. Chances are, you won’t notice it’s gone.

  3. Max Out Your Contributions
    The best way to boost your retirement savings is to max out your retirement account contributions. Don’t forget, many employers match your contributions up to a certain percentage. If you have an employer match, be sure you contribute at least enough to receive the full match. Employer contributions are essentially free money toward retirement. If you’re using a tax-deferred retirement savings plan, you can also open a taxable account to spread out your investments and minimize risk. A financial planner at Dutch Point Credit Union can help you determine whether this option is right for you.


Retiring a millionaire can seem like a dream rather than a reality. However, if you do the math, it’s extremely attainable for many. By following these saving techniques, you can become the one out of every six people who retire a millionaire.

To make your million-dollar dreams a reality, contact an expert at CT-based Dutch Point Credit Union.

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