How Much Should Millennials Save for Retirement?

How Much Should Millennials Save for Retirement

I am Xyz from Our Financial Path, my wife and I share our path towards financial freedom and early retirement. With high savings rates and long-term investing, we are planning to retire in less than 10 years with a portfolio large enough to sustain our lifestyle thereafter.

I bought my first stock at 23 years old, it was some Toronto-Dominion Bank stocks and I sold them the second I made $100 profit off of them. I did not know what I was doing and I was aiming the short-term gains. As soon as it hit my target, I sold.

Looking back at this trade, I would now be $1400 up if I had not sold so soon. Here is the thing with the market, things take time and the real gains will come with a long-term plan.

Learn to Invest for the Long-Term

I have since learned a lot about the ups and downs of the market and now solely invest in index funds to diversify risk and take a long-term approach to investing. Selecting individual stocks was just too much of a gamble for me. Even the professionals cannot beat the index over the long-term. 

Nearly 89% of actively managed funds underperformed their benchmarks over the past five years and 82% did the same over the last decade, S&P said CNNMoney

When millennials like me are thinking of investing for the next 50 year or so, missing out on a few basis points can really hurt down the line. Not only is it statistically improbable that actively managed funds beat the market but they also charge a lot more fees. Over time, the 1 or 2 percent fee charged by money managers really compound to large sums. For example, if we compare a passive index fund with a 0.15% management fee to a 1% management fee active fund; paying that 0.85% difference would have diminished your earnings by 20% over the next 20 years.

I simply invest in total market index funds and at a certain point, we can simply coast and relax.

How Much is Enough

We do not all need 1 million dollars to be happy and isn’t this the ultimate goal; to be happy? At some point, your savings will be enough to support your basic expenses many options will come to you.

Let’s say you live a nice middle-class lifestyle with a few frugal tricks here and there and you are able to live off $40,000 per year. The traditional amount to safely retire off your investments, according to the Trinity study, would be $1,000,000 invested in a 75% stocks and 25% bonds portfolio. Even going back a century and testing your portfolio with the Monte Carlo simulation offered in Personal Capital’s Retirement Tool will give you a high rate of success with such a nest egg. However, you might not want to work that long and would prefer stopping before the million.

Try Personal Capital's Free Retirement Tool


That’s where you need to be flexible. If you have been diligently investing for a while, you can always slow down before the ultimate “retirement” if you are flexible. Some people take mini-retirement every few years where they work for 5 years then spend a whole year off before going back. Some others cut their hours to part-time work or have side-hustles to sustain part of their expenses.

All this to say; there is more than one way to achieve financial freedom but whatever your path, start working on it today. If you have not started saving yet, start today with automatic transfers and, once you are ready, start investing and make your money work for you. I wish you great success in your journey, Xyz.



We are Mr. and Mrs. Xyz from Canada. We share our thoughts on about personal finance, investments, and frugality with the ultimate goal of financial independence. We are aiming to retire at 35 and show you exactly how we do it.

Latest posts by Xyz (see all)

Some of the links in this post are from our sponsors, but all opinions are my own.


Please enter your comment!
Please enter your name here