I always like to know if I’m on the right path and on schedule with my investing and saving. I normally keep a spreadsheet of what my net worth needs to be at various points along my journey. I use this as one of many tools to see if I’m making good decisions about saving, investing and avoiding purchases. We each have a unique number that we are striving for. Certainly, for a long time, one million dollars has been the “magic” number. That’s not quite as magical as it once was but it’s safe to say that if you amass $1 million dollars at any age, you are doing much better than the majority of others. So what amount of money do you need to have at each age? Here’s a graph from age 21 up to age 65 with the dollar amounts you want to strive for at each age. You can reach this number in multiple ways. You could save more or compound your existing assets by changing your investment strategies. You’ll find that some years you miss the mark and others you exceed it. A changing market certainly will take it’s toll.
| Age 21: $0.00 | Age 32: $47606 | Age 43: $158606 | Age 54: $417418 |
| Age 22: $2860 | Age 33: $54274 | Age 44: $174154 | Age 55: $453672 |
| Age 23: $5948 | Age 34: $61476 | Age 45: $190947 | Age 56: $492826 |
| Age 24: $9284 | Age 35: $69254 | Age 46: $209082 | Age 57: $535112 |
| Age 25: $12887 | Age 36: $77655 | Age 47: $228669 | Age 58: $580781 |
| Age 26: $16778 | Age 37: $86727 | Age 48: $249823 | Age 59: $630103 |
| Age 27: $20980 | Age 38: $96525 | Age 49: $272669 | Age 60: $683371 |
| Age 28: $25519 | Age 39: $107107 | Age 50: $297342 | Age 61: $740901 |
| Age 29: $30420 | Age 40: $118536 | Age 51: $323989 | Age 62: $803033 |
| Age 30: $35714 | Age 41: $130879 | Age 52: $352769 | Age 63: $870136 |
| Age 31: $41431 | Age 42: $144209 | Age 53: $383850 | Age 64: $942607 |
Age 65: 1,020,875
Now for the assumptions:
-You invest $2500 per year over your entire life
-You earn an 8% interest rate every year (In practice, some years will be better, some will be worse)
I confess that I love playing with numbers like this. Using this tool, I can quickly glance at my investment balances and compare that to the chart above to make sure I’m on track. I actually use a different set of numbers based on my income and my current balances to see where I will be if I keep up at the same rate that I’m investing today. Since I know I want to have much more than $1 million by the time I retire, I’ve got a more aggressive age vs net worth chart.
Want to create your own chart? Go to:
http://www.money-zine.com/Calculators/Retirement-Calculators/401k-Savings-Calculator/
and punch in your own numbers!