Don't sweat saving $1M. How to save less and still retire comfortably. – USA Today
The thought of saving $1.5 million – what Americans think they need to retire comfortably – is daunting, but what if you could focus on just the first $100,000?
That’s the advice from the late Charlie Munger, famous billionaire Vice Chairman and right-hand man of Warren Buffett at Berkshire Hathaway.
“The hard part of the process for most people is the first $100,000,” Munger conceded at Berkshire Hathaway’s 1998 annual meeting. “If you have a standing start at zero, getting together $100,000 is a long struggle for most people.”
But once people achieve that milestone, they can breathe a little easier. The reason lies in compound interest, or what Albert Einstein is said to have called the “eighth wonder of the world,” finance experts said.
“It’s the miracle of compounding interest,” said Brad Clark, investment adviser representative and founder of Solomon Financial. “Once you’re past those years (of scrimping and saving), it’s incredible to see what happens.”
Compounding happens when you’re earning interest on interest in addition to on the money you saved, the St. Louis Federal Reserve said.
A popular illustration is often used to demonstrate the power of compound interest: which would you rather have, a penny that doubles each day for a month or $1 million now? A penny that doubles every day means you would receive a penny on day one, two pennies on day two, four pennies on day three, and so on.
Many people get caught up in the idea of $1 million, but if you’ve got 30 days, the penny’s the better choice. Mathematically, a penny doubled every day would be worth $5,368,709.12 on day 30 and much more than the $1 million.
To Munger, who was just shy of his 100th birthday when he passed away in 2023, it’s at the $100,000 milestone when compounding really accelerates and your money starts working hard for you.
“Once you cross $100,000, the compounding engine finally starts working in your favor,” he said. “Ten percent on $100,000 is $10,000. Suddenly, the returns are visible. Suddenly, the effort feels worth it.”
But again, he warned that saving that first $100,000 will be hard.
“You (will) have to behave in ways that most people won’t,” he said. “You have to save when it feels pointless. You have to invest when the numbers look trivial. You have to ignore the urge to copy your neighbor who just bought a shiny new car on credit. When you’re young, $1,000 feels like a lot. You save it and it earns $20 in a year. You think this is useless. That’s why most people give up. They’d rather buy a toy today than plant a seed for tomorrow. But the joke is on them.”
Savings of $100,000 may now be earning as much in a year sitting around as you struggled to save from your salary through years of working. At a 2% interest rate, $100,000 could be earning $2,000 annually.
If the $100,000 was invested in the S&P 500 index last year, you could have earned $17,000. The S&P 500 returned around 17% in 2025.
Don’t get caught up in the number $100,000, more youthful advisers said. Adjusted for inflation for the nearly 30 years since Munger made his initial comment, the number might be closer to $200,000, some said.
Regardless, people should focus on the habit of saving early, advisers said.
There’s something “much bigger in play and why and how to save for retirement with dignity,” said Ted Schmelzle, vice president of retirement plan services at The Standard. “Some will be able to save a lot, and others won’t be able to save as much.”
But for everyone, “the time to get into the habit is when they’re starting their careers,” Schmelzle said. “Time is the most precious. You can’t get more of it so it’s incredibly important to take advantage of that.”
The longer money has time to grow exponentially, the more you’ll have at retirement.
For example, someone age 25 who saved $5,000 every year for 10 years in a row and invested it at 8% interest and never added another penny would have more than $787,000 at age 65.
Compare that to someone who began saving $5,000 every year from age 35 for 30 years to age 65 and invested the money at the same interest rate. That person would have less than $612,000, more than $150,000 less.
It’s just that the beginning is so hard “because you start with nothing. And nothing compounds to nothing,” Munger said. “It’s like trying to push a heavy boulder from a dead stop. Once it’s rolling, momentum helps.”
Start saving whatever you can as early as possible, advisers said.
At your first job, complete the 401(k) form to contribute as much as you can and tick the yearly automatic increase, with the aim of at minimum collecting all the dollars the company’s willing to match, advisers said. Contributions automatically go into your account. You won’t ever have to think about it.
Also, “live below your means, save like a pessimist, invest like an optimist, ignore the idiots,” Munger said. “It’s not complicated, but it is hard…discipline is the rarest commodity in the world. If you’re under 40 and broke, don’t despair. But don’t kid yourself either. You need to save until it hurts. You need to sacrifice.”
If Americans save heavily early and before kids, Clark said “later years are so much easier, no question about that.” Not just in retirement but also during the “messy middle” years when people are raising kids — paying for daycare, babysitters, education, sports, homes — and unable to save as much. The early savings will grow to help offset smaller savings contributions, he said.
Advisers emphasized that even if savings contributions are small during lean years, it’s important to continue setting aside that money and increasing amounts again when you can. “Keep the muscle going,” Schmelzle said.
Discipline is “not glamorous advice, but it’s the only advice that matters,” Munger said. “Spend less than you earn. Invest what you save. Stay patient.”
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
(This story was updated to add a video.)
source
This article was autogenerated from a news feed from CDO TIMES selected high quality news and research sources. There was no editorial review conducted beyond that by CDO TIMES staff. Need help with any of the topics in our articles? Schedule your free CDO TIMES Tech Navigator call today to stay ahead of the curve and gain insider advantages to propel your business!
That’s the advice from the late Charlie Munger, famous billionaire Vice Chairman and right-hand man of Warren Buffett at Berkshire Hathaway.
“The hard part of the process for most people is the first $100,000,” Munger conceded at Berkshire Hathaway’s 1998 annual meeting. “If you have a standing start at zero, getting together $100,000 is a long struggle for most people.”
But once people achieve that milestone, they can breathe a little easier. The reason lies in compound interest, or what Albert Einstein is said to have called the “eighth wonder of the world,” finance experts said.
“It’s the miracle of compounding interest,” said Brad Clark, investment adviser representative and founder of Solomon Financial. “Once you’re past those years (of scrimping and saving), it’s incredible to see what happens.”
Compounding happens when you’re earning interest on interest in addition to on the money you saved, the St. Louis Federal Reserve said.
A popular illustration is often used to demonstrate the power of compound interest: which would you rather have, a penny that doubles each day for a month or $1 million now? A penny that doubles every day means you would receive a penny on day one, two pennies on day two, four pennies on day three, and so on.
Many people get caught up in the idea of $1 million, but if you’ve got 30 days, the penny’s the better choice. Mathematically, a penny doubled every day would be worth $5,368,709.12 on day 30 and much more than the $1 million.
To Munger, who was just shy of his 100th birthday when he passed away in 2023, it’s at the $100,000 milestone when compounding really accelerates and your money starts working hard for you.
“Once you cross $100,000, the compounding engine finally starts working in your favor,” he said. “Ten percent on $100,000 is $10,000. Suddenly, the returns are visible. Suddenly, the effort feels worth it.”
But again, he warned that saving that first $100,000 will be hard.
“You (will) have to behave in ways that most people won’t,” he said. “You have to save when it feels pointless. You have to invest when the numbers look trivial. You have to ignore the urge to copy your neighbor who just bought a shiny new car on credit. When you’re young, $1,000 feels like a lot. You save it and it earns $20 in a year. You think this is useless. That’s why most people give up. They’d rather buy a toy today than plant a seed for tomorrow. But the joke is on them.”
Savings of $100,000 may now be earning as much in a year sitting around as you struggled to save from your salary through years of working. At a 2% interest rate, $100,000 could be earning $2,000 annually.
If the $100,000 was invested in the S&P 500 index last year, you could have earned $17,000. The S&P 500 returned around 17% in 2025.
Don’t get caught up in the number $100,000, more youthful advisers said. Adjusted for inflation for the nearly 30 years since Munger made his initial comment, the number might be closer to $200,000, some said.
Regardless, people should focus on the habit of saving early, advisers said.
There’s something “much bigger in play and why and how to save for retirement with dignity,” said Ted Schmelzle, vice president of retirement plan services at The Standard. “Some will be able to save a lot, and others won’t be able to save as much.”
But for everyone, “the time to get into the habit is when they’re starting their careers,” Schmelzle said. “Time is the most precious. You can’t get more of it so it’s incredibly important to take advantage of that.”
The longer money has time to grow exponentially, the more you’ll have at retirement.
For example, someone age 25 who saved $5,000 every year for 10 years in a row and invested it at 8% interest and never added another penny would have more than $787,000 at age 65.
Compare that to someone who began saving $5,000 every year from age 35 for 30 years to age 65 and invested the money at the same interest rate. That person would have less than $612,000, more than $150,000 less.
It’s just that the beginning is so hard “because you start with nothing. And nothing compounds to nothing,” Munger said. “It’s like trying to push a heavy boulder from a dead stop. Once it’s rolling, momentum helps.”
Start saving whatever you can as early as possible, advisers said.
At your first job, complete the 401(k) form to contribute as much as you can and tick the yearly automatic increase, with the aim of at minimum collecting all the dollars the company’s willing to match, advisers said. Contributions automatically go into your account. You won’t ever have to think about it.
Also, “live below your means, save like a pessimist, invest like an optimist, ignore the idiots,” Munger said. “It’s not complicated, but it is hard…discipline is the rarest commodity in the world. If you’re under 40 and broke, don’t despair. But don’t kid yourself either. You need to save until it hurts. You need to sacrifice.”
If Americans save heavily early and before kids, Clark said “later years are so much easier, no question about that.” Not just in retirement but also during the “messy middle” years when people are raising kids — paying for daycare, babysitters, education, sports, homes — and unable to save as much. The early savings will grow to help offset smaller savings contributions, he said.
Advisers emphasized that even if savings contributions are small during lean years, it’s important to continue setting aside that money and increasing amounts again when you can. “Keep the muscle going,” Schmelzle said.
Discipline is “not glamorous advice, but it’s the only advice that matters,” Munger said. “Spend less than you earn. Invest what you save. Stay patient.”
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
(This story was updated to add a video.)
source
This article was autogenerated from a news feed from CDO TIMES selected high quality news and research sources. There was no editorial review conducted beyond that by CDO TIMES staff. Need help with any of the topics in our articles? Schedule your free CDO TIMES Tech Navigator call today to stay ahead of the curve and gain insider advantages to propel your business!
