Save and Invest

Most Americans think $1 million will be enough for 'a comfortable retirement'—here's how to figure out how much you need

Andrea Boris via Twenty20

About six in 10 Americans (58%) think that $1 million will be enough for "a comfortable retirement." That's according to TD Ameritrade's 2019 Retirement Pulse Survey, which surveyed 1,015 U.S. adults ages 23 and older with at least $10,000 in investable assets.

Although $1 million is the oft-cited amount needed to retire comfortably, it might not be enough. "On average, a $1 million retirement nest egg will last 19 years," according to a 2019 report from personal finance site GOBankingRates. And depending on where you live, retirees could blow through $1 million in as little as a decade.

Of course, everyone's individual situation is different. It's certainly possible to retire with $1 million in savings — and many Americans live on much less.

While the amount you need is highly personal and depends on your lifestyle and spending habits, there are a few basic guidelines to follow if you want to retire comfortably.

The definitive guide to retirement savings plans
The definitive guide to retirement savings plans

Set aside 10-15% of your income as soon as possible

Many experts, including co-founder of AE Wealth Management David Bach, say that if you set aside at least 10% of your income in a retirement fund, you'll set yourself up to be fine. But more is always better, he adds.

Sallie Krawcheck, co-founder and CEO of Ellevest, recommends saving 20% of your income for your future self. That 20% includes retirement funds and saving for any major purchases, such as a home or car. "For a lot of folks that can be difficult to get to," Krawcheck says, "so start with 1%." Then, aim to gradually increase that amount over time.

You don't just want to save this money, she adds. You want to invest it and make it work for you. That means contributing to your employer's 401(k) plan if they offer one or saving in other retirement accounts, such as a Roth IRA or traditional IRA.

If you don't set aside money when you're young, you'll have to save more to make up for lost time. If you want to retire by 65, you should be setting aside 10-17% of your income if you start saving at 25, the Stanford Center on Longevity determined in a 2018 report. But if you wait until 35 to start, you have to save 15-20%.

Work your way up to saving 10 times your salary

Another rule of thumb, from retirement-plan provider Fidelity Investments, is that you should have 10 times your final salary in savings by 67 to last you through retirement.

"Our savings factors are based on the assumption that a person saves 15% of their income annually beginning at age 25, invests more than 50% on average of their savings in stocks over their lifetime, retires at age 67, and plans to maintain their preretirement lifestyle in retirement," Fidelity says.

Getting to 10 times your final salary "may seem ambitious," the report adds, "but you have many years to get there." Here's a timeline you could follow to see if you're on track to get there:

  • By 30: Have the equivalent of your starting salary saved
  • By 35: Have two times your salary saved
  • By 40: Have three times your salary saved
  • By 45: Have four times your salary saved
  • By 50: Have six times your salary saved
  • By 55: Have seven times your salary saved
  • By 60: Have eight times your salary saved
  • By 67: Have 10 times your salary saved
Here's the ideal amount of money you should invest
Here's the ideal amount of money you should invest

How do I get on track?

Most Americans, 62%, feel like they need to catch up on their retirement savings, TD Ameritrade reports. If you feel the same, there are strategies you can use like setting up automatic contributions or increasing your income that will help you get to, or nearer to, where you need to be.

First, enroll in your employer-sponsored 401(k) plan if you haven't already, says Katie Taylor, vice president of thought leadership at Fidelity Investments. Next, find out if your company offers a 401(k) match. If they do, take full advantage of it, she tells CNBC Make It: "If there is a match that's 3%, make sure that you're saving at least 3%. Otherwise, you're leaving 'free' money on the table."

If you're one of the many Americans without access to a 401(k), don't stress. Most importantly, "don't let that be a deterrent for not saving for the future," says Taylor. "Whether or not you have access to a 401(k), at some point, you will want to retire and you will need to have money saved."

You have plenty of other options, including a traditional, Roth or SEP IRA; a health savings account (HSA) or a normal investment account. Read up on all of your options, choose an account to fund and start setting aside money for your future today.

"It's harder to catch up if you don't save," says Taylor. "If you spend the first half of your career not saving, you've got to do a lot of catching up later in your career and you don't have the time in the market to ride out any fluctuations. It's always a good idea to get started as early as possible."

Don't miss: How much money you need to save to retire by age 65, according to Stanford researchers

Like this story? Subscribe to CNBC Make It on YouTube!

Wealth manager: Use this simple formula to retire with $1 million in 20 years
Wealth manager: Use this formula to retire with $1 million in 20 years