Q: I recently started investing, and the biggest reason is because I want financial security in retirement. If I want to retire with $1 million in my brokerage account, how much do I need to invest per month now?

Unfortunately, there’s no perfect answer to your question, but by examining two key factors, you can get a good idea of how much you should be investing.

The first factor is the returns you expect your investments to generate over time. I won’t get too deep into an asset allocation discussion here, but I generally suggest that investors should subtract their age from 110 to determine their ideal stock allocation, with the remainder in bonds. For example, I’m 37, so this means roughly 73% of my portfolio should be in stocks, with the other 27% in bond investments.

While returns can vary dramatically from year to year, it’s reasonable to expect an average annual return of about 7% from a properly allocated portfolio over long periods of time.

The second factor is age — both your current age and your planned retirement age. In other words, if you’re 50, you’ll need to be a little more aggressive with how much you save and invest than you would if you’re in your 30s. Here are a few examples that you can use as a guide, based on a 7% expected return and a target retirement age of 65:

  • If you’re 25, you need to invest $388 each month to retire with $1,000,000.
  • If you’re 30, you need to invest $560 each month.
  • If you’re 35, you need to invest $816 each month.
  • If you’re 40, you need to invest $1,213 each month.
  • If you’re 45, you need to invest $1,857 each month.

Finally, it’s important to keep in mind that $1 million may or may not be enough for you. If you think you’ll need $2 million, for example, you can simply double these figures to determine how much you should be investing. If you think you’ll only need $500,000, cut them in half.

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