How Different Age Groups Could Reach $1M in Retirement Savings

U.S. retirement savers have high expectations of how much they will need to retire comfortably, with the majority believing they will need at least $1 million, according to Northwestern Mutual. Yet a 2022 survey from the Federal Reserve found the average household only had $333,940 saved.

However, reaching $1 million in retirement savings is not an impossible feat, as shown by recent scenario testing by PensionBee, which put together seven potential paths for plan participants to reach $1 million by retirement.

Young Savers Have a Leg Up

One hypothetical path looks at an early-career saver who starts with a salary of $66,000, which increases by 3.7% annually, and makes a 5% annual retirement plan contribution, with a 5% employer match. The investment and contribution horizon of 43 years would result in employee contributions totaling $336,000 and total contributions with employer match reaching $672,000. With investment growth, the final balance at age 65 for the saver would total $2.5 million.

This path, identified by the PensionBee report as “By the Book,” emphasizes the importance of saving early, with decades of compound interest paying off significantly by retirement.

The next path, “Early Sprint,” concerns an early-career saver who maxes out 401(k) contributions for a five-year period at the 2026 annual limit of $24,500, and then stops contributing. Assuming a similar investment horizon of 43 years and a salary starting at $66,000, employee contributions would total $122,500, and total contributions with the employer match totaled $140,000. By the time the employee turns 65, there would be $1.7 million in the retirement account.

If the saver has the means, such as significant family support, the early-career “sprint” can be a strategic trade-off, according to the report. If the saver were to sprint for 10 years instead of five, there would be $300,000 contributed, yielding a total of $3.2 million.

Delaying Diminishes Impact, but a Million Is Still Possible

The later saving starts, the more compound growth is at risk, but PensionBee still found scenarios in which savers reached $1 million by retirement, even when contributions started after age 30.

In one scenario, contributions start at age 35, leaving three decades of compound growth. If the saver earns a 7% investment return over a 30-year horizon and starts with a salary of $106,000 that increases by 3.7% annually, total employee contributions would be $284,000 and total contributions with employer match would total $567,000. The participant would have a final balance of $1.5 million by retirement.

In “Mid-Career Coast,” contributions start at age 35, but with a $45,000 rollover—the average retirement account for those aged 35 to 44. The investment and contribution horizon is 30 years, which allows the worker to save for 15 more years. If contributions end at age 50, the saver would still surpass $1 million in savings by age 65. The final balances in this scenario are $350,000 in employee contributions, $610,000 in total contributions with employer match and $1.8 million in retirement savings.

Even with late-career savers who start contributions past the age of 50, PensionBee still found scenarios in which employees reach $1 million by retirement and, in some cases, exceed $1 million.

In one scenario, the employee has a starting salary of $183,000 that increases by 3.7% yearly. The saver rolls over $115,000 into a 401(k) and, at age 50, starts making 10% annual contributions. An investment and contribution horizon of 16 years would result in $310,000 in employee contributions, $195,000 of total contributions with employer match and a final balance of $1.1 million by age 66.

Another scenario for late-career savers titled “Max-Out” takes advantage of the IRS catch-up and super-catch-up limits. Again, contributions start at 50, leaving an investment and contribution horizon of 15 years. The starting salary is $183,000, the saver maxes out contributions at the 2026 catch-up limit of $32,500 for people olde than 50, and there is an added 5% employer contribution. From ages 60 through 63, the saver takes advantage of additional super catch-up provisions, leveraging the higher $11,250 super catch-up limit. By retirement at age 65, total employee contributions would be $468,000, and total contributions with employer match would be $632,000, and savings would total $1.1 million.

“There is no single path to a retirement [balance of $1] million, and that is exactly the point,” said Romi Savova, PensionBee’s CEO, in a statement. “Someone [can be] 22 and just getting started, 35 playing catch-up, or 50 with nothing saved yet.”