Retirement Savings Starting at 40 With $500 a Month

This page looks at retirement saving that begins at age 40 and runs to 65. That gives 25 years for the account to grow. The starting deposit is $500 a month at 5.5 percent.

You would make 300 deposits. By 65 the account reaches $321,019 and growth supplies 53 percent of it.

Age you start saving

years

Age you retire

years

Amount already saved

Saved each month

Return per year

Balance at retirement: $321,019
Total you put in: $150,000
Growth: $171,019
Years of saving: 25

Year by year

Year	Total put in	Balance
41	$6,000	$6,154
42	$12,000	$12,654
43	$18,000	$19,522
44	$24,000	$26,776
45	$30,000	$34,440
46	$36,000	$42,537
47	$42,000	$51,090
48	$48,000	$60,125
49	$54,000	$69,670
50	$60,000	$79,754
51	$66,000	$90,406
52	$72,000	$101,659
53	$78,000	$113,547
54	$84,000	$126,106
55	$90,000	$139,373
56	$96,000	$153,388
57	$102,000	$168,194
58	$108,000	$183,835
59	$114,000	$200,358
60	$120,000	$217,814
61	$126,000	$236,254
62	$132,000	$255,734
63	$138,000	$276,313
64	$144,000	$298,053
65	$150,000	$321,019

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How the balance is worked out

The calculation runs month by month. The yearly return of 5.5 percent becomes a monthly rate of 0.4583 percent. Each month the balance grows by that rate and then the deposit of $500 is added. Every deposit keeps growing for the rest of the 25 years.

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Worked example

Picture saving $500 a month for the 25 years between age 40 and 65. At a steady 5.5 percent that adds up to $321,019.

Growth supplies 53 percent of the final amount. That is $171,019 that you did not have to deposit.

Questions about this calculator

What if you saved double, $1,000 a month, from age 40 to 65 at 5.5 percent?

The balance at 65 would be about $642,037 instead of $321,019. That is 2 times as much.

What if returns averaged 4 percent instead of 5.5 percent for $500 a month from age 40 to 65?

The $500 a month would reach $257,065 by age 65. That is $63,954 less than the $321,019 shown at 5.5 percent.

What is $321,019 worth after 25 years of inflation?

At 2.5 percent a year prices rise by a factor of 1.85. The $321,019 would then buy about as much as $173,154 does at the start.

What if you retired 3 years earlier, at 62, when saving $500 a month from age 40 to 65 at 5.5 percent?

The balance would be $255,734 instead of $321,019. That is $65,285 less.

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This page is for education only and is not financial or tax advice.