How Much Should I Save for Retirement Each Month? Calculator & Guide 2025

"How much should I save for retirement each month?" is a question that keeps many people up at night. The answer depends on your age, income, current savings, retirement goals, and when you want to retire. This guide will help you calculate your personalized monthly savings target and show you how to use our free retirement calculator to create a plan.

The Quick Answer: How Much Should I Save Each Month?

Financial experts generally recommend saving 15% of your gross income for retirement, including employer contributions. However, this is a starting point. Your actual target depends on:

• Your age when you start saving
• Your current retirement savings
• Your desired retirement age
• Your expected retirement lifestyle
• Social Security and other income sources

Age-Based Monthly Savings Targets

The earlier you start, the less you need to save each month. Here are age-based guidelines:

In Your 20s

Target: 10-15% of income
Why: Starting early means compound interest does most of the work. Saving $500/month from age 25 to 65 at 7% returns = $1.2 million.

Example: If you earn $50,000, save $5,000-$7,500 per year ($417-$625/month).

In Your 30s

Target: 15-20% of income
Why: You've lost some compound interest time, so you need to save more. Still manageable if you start now.

Example: If you earn $75,000, save $11,250-$15,000 per year ($938-$1,250/month).

In Your 40s

Target: 20-25% of income
Why: Time is running out. You need to save aggressively to catch up. Consider maxing out 401k and IRA.

Example: If you earn $100,000, save $20,000-$25,000 per year ($1,667-$2,083/month).

In Your 50s

Target: 25-30% of income (or as much as possible)
Why: You're in the home stretch. Use catch-up contributions ($7,500 for 401k, $1,000 for IRA in 2024).

Example: If you earn $120,000, save $30,000-$36,000 per year ($2,500-$3,000/month).

How to Calculate Your Monthly Savings Goal

Follow these steps to calculate how much you should save each month:

Step 1: Determine Your Retirement Goal

Use the 25x rule: Multiply your desired annual retirement income by 25. If you need $80,000/year, you need $2 million saved.

Step 2: Subtract Current Savings

Subtract your current retirement savings from your goal. If you need $2 million and have $200,000, you need to save $1.8 million more.

Step 3: Account for Growth

Your existing savings will grow. Use a retirement calculator to see how much your current savings will be worth at retirement age.

Step 4: Calculate Monthly Savings Needed

Use our retirement calculator or a future value calculator to determine how much you need to save monthly to reach your goal, accounting for expected returns (typically 6-7%).

Real-World Examples: Monthly Savings by Scenario

Example 1: Early Starter (Age 25)

Goal: $1.5 million by age 65
Current Savings: $0
Monthly Savings Needed: ~$750/month at 7% returns
As % of $60,000 income: 15%

Example 2: Late Starter (Age 40)

Goal: $1.5 million by age 65
Current Savings: $100,000
Monthly Savings Needed: ~$2,200/month at 7% returns
As % of $100,000 income: 26%

Example 3: Catching Up (Age 50)

Goal: $1.5 million by age 65
Current Savings: $300,000
Monthly Savings Needed: ~$3,500/month at 7% returns
As % of $120,000 income: 35%

The 15% Rule: Is It Enough?

The 15% rule assumes:

• You start saving in your 20s or early 30s
• You work for 35-40 years
• You earn average investment returns (6-7%)
• Social Security provides 40% of retirement income

If you start later, earn lower returns, or want a more comfortable retirement, you'll need to save more than 15%.

How to Increase Your Monthly Savings

If you can't save enough right now, try these strategies:

1. Start Small and Increase Gradually

Start with 5-10% and increase by 1% each year or whenever you get a raise. You'll barely notice the difference, but your savings will grow significantly.

2. Automate Your Savings

Set up automatic transfers from your checking to retirement accounts. Out of sight, out of mind—you'll adjust your spending accordingly.

3. Take Advantage of Employer Matching

If your employer matches 401k contributions, that's free money. A 50% match on 6% of salary means you're saving 9% with only 6% coming from your paycheck.

4. Reduce Expenses

Cut unnecessary expenses: dining out less, cancel unused subscriptions, shop around for insurance. Small changes can free up hundreds per month.

5. Increase Income

Ask for a raise, take on a side hustle, or develop new skills for a higher-paying job. Earning more makes saving easier.

Use Our Free Retirement Calculator

Our free retirement calculator makes it easy to determine your monthly savings goal. Simply enter:

• Your current age and retirement age
• Current savings and monthly contributions
• Expected retirement expenses
• Social Security and other income

The calculator will show you exactly how much you need to save each month to reach your retirement goals, with Monte Carlo simulations showing your probability of success.

Common Mistakes When Calculating Monthly Savings

• Not accounting for inflation: $1 million today won't have the same purchasing power in 30 years.
• Overestimating returns: Don't assume 10%+ returns. Use conservative estimates (6-7%).
• Forgetting employer contributions: Count employer 401k matches toward your savings rate.
• Ignoring Social Security: Social Security will provide significant income—factor it in.
• Not adjusting for raises: As your income grows, increase your savings amount, not just the percentage.

Conclusion

How much you should save for retirement each month depends on your unique situation. While 15% is a good starting point, use our retirement calculator to get your personalized number. The most important thing is to start saving now—even if it's just 5-10%—and increase it over time. Every dollar you save today is worth significantly more in retirement thanks to compound interest.