How to retire with P1 million (1 Million Pesos) by age 60?

How much money do you need to save per month in order to get P1 million by the age of 60?

No need to guess, as we’ve made the computations for you. In the following examples, we computed the amount of money you should save every month to enable you to get P1 million by the age of 60.

Here at PinoyMoneyTalk, we believe that the path to financial freedom is actually simple and straightforward. For us, it requires three (3) doable steps:

1. Earn as much money as you can;
2. Save to generate extra cash; and
3. Invest the extra cash to fast-track your journey to becoming rich.

This is what we call PinoyMoneyTalk’s ESI Steps to Financial Freedom. ESI stands for the three actionable steps of Earning money, Saving money, and Investing money in order to be be financially ready for retirement.

In this article, let’s focus on the second step: Saving money. If we want to have P1 million by age 60, how much money do we need to save?

The answer is not that clear cut as this depends on two things: how many remaining years you have before age 60 and rate of return of the investment where you’ll invest your savings into. Don’t worry, we still have the answers for you. We’ll show three (3) scenarios where your money ought to be placed in an investment that earns any of the three attainable rates of return:

• five percent (5%) return;
• seven percent (7%) return;
• ten percent (10%) return.

So depending on your age, here’s how much your monthly savings should be to attain your P1 million goal.

(Note: We also assume that you’re starting with nothing, that is, no current savings or investments yet in order to be more conservative with the computations.)

How to get P1 million by age 60 (with 5% return)

In this scenario, we assume that your money will be invested in an asset that can earn 5% per year. Which investments could potentially provide at least 5% annual return? Typically this could be stocks, equity or balanced or bond funds, real estate, or any other high-yield (but also likely high-risk) investment.

Interesting side note: Philippine stocks have averaged 9.46% annual return for 20 years, so a 5% return per annum is doable with Philippine stocks (see: PSE Stocks Performance under each Philippine President from 1987 to 2022). You’ll have to ride out the entire 20-year period, though, as there could be years of severe stock market plunges and price downturns.

The table below confirms that the earlier you save, the smaller the required monthly savings is for you to achieve your P1 million goal by the age of 60.

So how much do you need to save to get P1 million by the age of 60?

If you start saving at the age of 20, you’ll only need to set aside P655.30 per month. On a daily basis, that’s equivalent to saving P22.00 per day. So to accumulate P1 million by the age of 60, save P22.00 per day starting at the age of 20! That’s doable, right?

If you’re currently aged 20, what you must do is save P655.30 monthly and then invest the saved amount in an investment that can earn at least 5% return per year. If you do this every month until the age of 60, you’ll end up with P1 million by the time you reach 60!

Now, the older you start saving, the higher the required monthly savings will be. If you’re 30 years old, for example, you’ll have to save P1,201.55 per month, around P546.00 higher than if you begun saving and investing at age 20.

If you’re 40 years old, the required monthly savings goes up to P2,432.89.

Now, by the time you’re 50 years old, you’ll have to save P6,439.88 per month in order to get P1 million with only 10 years remaining, that is, from age 50 until 60 years old.

As you can see, the required monthly savings increases if you will start saving later in your life.

Again, the computations above assume a 5% annual return on investment (ROI). If you can invest your savings in an asset that can deliver higher rate of return, the required monthly savings will go down. This is shown in the second example.

How to get P1 million by age 60 (with 7% return)

As you can see in the table below, the monthly savings required has gone down compared to the first example. This is because your money is placed in an investment with a higher return which compounds and fast-tracks the income you’re earning.

If your savings will be placed in an investment that earns 7% return per year, the required monthly savings to get P1 million by age 60 is shown below.

In this example, a 20-year old only needs to save as little as P380.98 per month! That’s equivalent to saving just around P12.00 per day! Easy, right?

Again, this amount has to be saved month after month from age 20 until age 60, and the total savings must be placed in an investment that earns 7% net return per year.

If you’re 30 years old, meanwhile, the required monthly savings is P819.69.

This goes up to P1,919.66 if you’re starting to save only by the age of 40 and goes up again to P5,777.51 per month if you’re saving only beginning the age of 50.

How to get P1 million by age 60 (with 10% return)

Now, here’s our final example. If you can invest your savings in an investment that can consistently earn you 10% year after year, the required monthly savings will definitely go down. Take a look at the table below.

If you’re 20 years old, you only need to save a small P158.13 per month. If you’re 30 years old, you’ll have to set aside P442.38 savings per month.

If you’re 40 years old, you need to save P1,316.88 monthly.

Finally, 50-year olds will have to save P4,881.74 per month to achieve their P1 million goal.

Is it possible to get 10% return consistently every year? Yes, but you should be ready to accept risk and volatility in the value of your investments in the short-term. As mentioned earlier, the Philippine Stock Exchange (PSE) was able to deliver a 9.46% annual return, but this comes with recessions and turmoil along the way.

Aside from stocks, other investments that could potentially give you an average return of 10% per year include equity funds, offshore funds, crypto (cryptocurrency) investments, and other high-yield/high-risk investments. But at the same time, it’s possible for your investment to lose money in the short run, so make sure you won’t be detrimentally affected if your investment loses value after 1, 2, or 3 years.

Think long-term since, historically speaking, investments are likely to recover after 10 or 15 or 20 years.

Key Lessons: Save early and invest today

Achieving your goal to become a millionaire is dependent on the age you begin saving and on the rate of return where your saved money will be invested.

In the end, we have two (2) key take-aways in this article:

1. The younger you save, the smaller the required monthly savings will be. As you’ve seen in the examples above, those in their 20s or 30s will need to save a smaller amount of money compared to those already in their 40s or 50s. So again, start saving today!

2. Your savings must be placed in high-earning investments in order to capture the power of compounding. The higher the rate of return of the investment, the faster you will grow your money. This could lower the amount per month that you need to save. So what you must do is look for good investment options that can grow your money! Make sure, though, that your risk appetite aligns well with the associated risk and volatility of the investment.

In the end, we can see that the P1 million goal by the age of 60 is very, very doable regardless if you’re 20 years old or 30 or 40 or 50 years old.

What you need to do is to Earn as much money as you can, to consistently Save an acceptable amount per month, and to Invest your savings in investments that can reliably generate the required rate of return.

Follow PinoyMoneyTalk’s ESI recommendations and you’re on your way to becoming a happy millionaire soon!

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