• The key to a comfortable retirement may be saving $100 a week starting at 25.
• Doing so could amount to over $1 million by 65, a new report found.
• Student-loan-payment resumption means millions of Americans may be unable to save for retirement.

Putting aside a couple hundred dollars a month for retirement starting at 25 — just a few years after many Americans graduate from college — could amount to huge gains around retirement age.

A new report by the Milken Institute found that starting young was key to achieving lifetime financial security, drawing from a 2019 report by Guaranteed Rate. The report calculated that if 25-year-olds started with a weekly investment of $100, while earning a 7% annual rate of return, they'd have over $1 million in savings by 65.

The chart below shows how much you can save up by putting away $400 a month starting on your 25th birthday, assuming that historically reasonable 7% annual return.

If people waited until 35, though, to invest this same $400 or so a month, they'd accumulate about $300,000 in savings by 65 with this method. Putting this into perspective, if people saved just $100 a month starting at 25, they'd save over $250,000 by 65 because of compounding interest. This jumps to over $550,000 when saving $50 a week starting at 25, which highlights Milken's suggestion to focus on "holistic life planning."

The report said many Americans struggled to secure what it called "lifetime financial security." This is defined as having the financial ability to pay recurring monthly expenses and medical costs, being able to absorb financial shocks such as a job loss, having the funds to pay for adequate housing and lifestyle goals, and having a tax-advantaged savings plan.

Many Americans are not on track to retire comfortably, as only 24% of workers feel very confident in their ability to do so, a report from the Transamerica Center for Retirement Studies found. About 25% of Americans lack retirement savings, while half have no access to employer-sponsored retirement plans, The Motley Fool reported based on data from the Federal Reserve. This is especially alarming when considering about one in four American workers will be 55 or older by 2040, the Bureau of Labor Statistics wrote.

About 20% of student-loan borrowers are expected to pay at least $500 a month with the restart of federal student-loan payments in October, a TransUnion study found, which makes the $400 a month seem especially daunting.

According to Fidelity, which pulled from Bureau of Labor Statistics data, about one-third of eligible employees who had student debt did not contribute to workplace retirement plans. However, during the payment pause, 72% of student-loan borrowers saved at least 5% of their earnings for their 401(k). Some companies are set to offer retirement-match contributions next year for employees making student debt payments.

Fidelity added that savers should start investing 15% of pretax income at 25, about half of that in stocks, so that they can retire at 67.

The report outlined a number of actionable items that could help Americans feel more financially secure and confident. These included bettering access to retirement accounts for lower-income Americans, promoting state-facilitated retirement plans, educating younger Americans about compounding and saving for long-term expenses, and making long-term savings more equitable.

Are you an American worried about saving for retirement? Reach out to this reporter at [email protected].