How much money to save to retire rich

Getting rich starts with paying yourself first, says self-made millionaire and wealth manager David Bach. In short, that means, “when you earn a dollar, the first person you pay is you,” he writes in his bestselling book “The Automatic Millionaire.”

More specifically, if you want to retire rich, he says, “save 15 percent to 20 percent of your pretax income in a tax-advantaged retirement account,” such as a 401(k), 403(b) or IRA. If you want to be “rich enough to retire early,” he adds, contribute 20 percent or more to a retirement savings account.

These percentages come from Bach’s “pay yourself first formula,” which he created to give you an idea of what your financial standing will look like depending on how much you save. Here’s the full formula:

To be …

Dead broke: “Don’t pay yourself first,” writes Bach. “Spend more than you make. Borrow money on credit cards and carry debt you can’t pay off.”

Poor: “Think about paying yourself first, but don’t actually do it,” he writes. “Spend everything you make each month and save nothing. Keep telling yourself, ‘Someday … ‘”

Middle-class: Save 5 percent to 10 percent of your pretax income in a tax-advantaged retirement account.

Upper-middle-class: Save 10 percent to 15 percent of your pretax income in a tax-advantaged retirement account.

Rich: Save 15 percent to 20 percent of your pretax income in a tax-advantaged retirement account.

Rich enough to
retire early
: Save 20 percent or more of your pretax income in a tax-advantaged retirement account.

Keep in mind that “everyone’s life is different,” Bach writes, “but this should give you a benchmark to shoot for or plan around.”

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