Here's How Much You Need to Save Each Month to Retire by 65

Retirement might seem far off, but saving consistently is the key to financial freedom later in life. The amount you need to save each month depends on how you want to live in retirement, how old you are, and your investment returns.

If you're aiming to retire by age 65, here's a breakdown of how much you should set aside each month to stay on track.

How much money do you actually need for retirement?

A good rule of thumb is the "25x rule," which suggests you should aim to save 25 times your expected annual expenses. For example, if you want to live on $50,000 per year from your savings, you'll need around $1.25 million in the bank.

It might seem impossible to ever have more than $1 million in the bank, but by starting as early as you can and sticking to a savings plan, you can get there.

How much to save each month, based on your age

The stock market and interest rates will continue to go up and down, so exact financial predictions are impossible to make. But an average 7% annual return is historically a conservative average estimate.

If you want to retire by 65 with $1.25 million in the bank, here's what you'll need to save per month based on when you start:

Starting early makes a huge difference. Thanks to compound interest, smaller contributions made in your 20s can grow into a sizable nest egg.

How to maximize your retirement savings

Even if you're behind, there are ways to boost your retirement savings and catch up.

1. Take advantage of employer 401(k) matching

Many employers offer a 401(k) match, which is essentially free money. Make sure you're contributing enough to your 401(k) to earn the maximum match your employer offers.

2. Use tax-advantaged accounts

Using tax-advantaged accounts like 401(k)s and IRAs is one of the best ways to save for retirement. These accounts offer tax benefits that help your money grow faster. A traditional 401(k) or IRA lets you contribute pre-tax income, reducing your taxable income today while deferring taxes until retirement. A Roth IRA or Roth 401(k) uses after-tax contributions, but withdrawals in retirement are tax free.

Looking to open an IRA, but not sure where to start? Check out our list of the best IRAs to begin your search.

3. Invest for growth

Leaving your savings in a low-interest savings account won't cut it. Consider opening an online brokerage account and investing in a diversified portfolio of stocks and bonds to earn higher long-term returns. The S&P 500 has historically returned an average of 10%, and is one of the best places to let your money grow.

It's never too late to get started

If you're behind on savings, don't panic. Increasing your monthly contributions, delaying retirement by a few years, or adjusting your investment strategy can help you get back on track.

The key is consistency -- start saving what you can now, and your future self will thank you.