So, the basic scenario here is that one's not going to retire into a mansion, but also won't live on dog food. To that end, we'll say you'll need $50k/year in retirement, social security will pitch in ~$18k of that (it'll likely still be there), and you'll make 5% after-inflation per year as you're saving, which is not unheard of in a retirement account. A basic rule of finance states that you'll need to have 25X your yearly needs when you start retirement (ie, (50k-18k) * 25 = $800,000). So, $800k is our goal. Now, the monthly savings breakdown, depending on how long you have to save:
There you have it! This not only shows the benefits of starting young, but also how difficult it is to retire early. Remember, one can't claim social security till they're 62 (which age will soon rise), so if you're looking to be free before then, you'll have to save in the ballpark of $1.25 million (~$50k * 25).
Check out calculators here and here to play with your own numbers. Everything above is calculated before tax and with real dollars (i.e. the 5% return is after inflation). Check out bogleheads.org and their wiki for basic, honest info on how to invest. Remember, Vanguard and Roth IRAs are your friends. Happy saving!
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