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Falling behind on retirement savings? Here's the math on becoming a millionaire (and how to do it)

A survey found that workers of all ages are falling behind in their retirements savings. Start saving and investing now, and you'll get there.

COLORADO, USA — Retirement planning is a thing many Americans have on their radar.

Many may wonder how they can possibly save $1 million, and essentially guarantee a comfortable retirement, by the time they are 65.

Of course, the younger you are when you start, the easier it will be to hit that goal. But that doesn't mean you are out of possibilities as you get older.

Across the board, workers of all ages are falling behind in their retirements savings, according to a new survey from the TransAmerica Center for Retirement Savings. 

Baby Boomers, the oldest of whom are in their 70s, have an estimated median of $152,000 saved in all household retirement accounts, according to the experts at the center.

The situation is even more distressing for the Gen Xers — the group that was born between 1965 and 1980. Those workers have a median of $66,000 socked away in all household retirement accounts, the survey revealed.

Millennials had the smallest median balances saved, with only $23,000 in the bank.

But financial planners say new millionaires are being created every day by following a simple formula. It's a formula that is constantly being adjusted to allow for all age groups and changing market conditions.

Wage earners need to know that the stock market is a big player in making the formula work. A lot of people don't like Wall Street.

But the facts are the S&P 500 has returned a steady 9.8% over the last 90 years. 

Let's face it. You don't really have a lot of options. Bank savings accounts and Certificates of Deposit (CDs) are still paying historically low rates. Treasury bills are a little better, but still terrible, and most of us don't have pensions anymore.

So, you need to adopt the steely-eyed mindset of a long-term investor and the saving habits of your local minister. Then you can get to a million before you cross the career finish line.

Here's the math on how it works:

If you're in your early 20s, you can become a "lunch-bag" millionaire. That is, you can "brown-bag" it to work and cut back on dinner out.

9NEWS Financial Analyst Bruce Allen said you should take all that money, an average of $325 a month, and throw it into the stock market every month of your life.

"If you were to start at the age of 25 and you invested your money in a high-quality stock fund over the next 40 years, you will end up having over a million dollars by the time you are 65," Allen said.

The hill will get steeper as you get older, but not impossibly steeper. At age 30, you'll need to sock away $645 a month to hit a million.

At age 40, as you begin to hit the zenith of your earning power, you'll need to bank $1,400 a month.

Allen said that sounds like a heavy lift, but he reminds us that in our 40s, in addition to having bigger incomes, we also are frequently in two-income households. A spouse who is also earning can help families reach retirement goals faster.

"If you have two people earning incomes, it may become an easier lift at that point. Also, if both people, the couple, are saving their money in a pre-tax 401k fashion, then that really compounds and adds to that strategy as well," Allen said.

Even if they are working on mortgages and college educations, the experts say two-income families are in a good position to set budgets and pay themselves first.

If you've really been putting off saving for retirement, and you've arrived at age 45 without giving it much thought, Allen said you'll need to come up with $2,000 a month to hit the million dollar goal. 

If you wait until age 50, you'll need $3,000 a month and at age 55, really late to the game, the number climbs to a staggering $6,000 a month.

But don't be deterred by the math. Allen said saving even portions of those amounts can still result in a comfortable retirement. He tells clients the key component is to save "something" and to develop a saver's mentality and do it today.

"It's very difficult to take someone who is not a saver and turn them into a saver," he said. "But it's very easy to help a saver achieve their financial goals."

It’s all about discipline. Pay yourself first, make it your life plan, and become the master of your own destiny.

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