You want me to save $620 a month? How?

Last week, I talked about needing to save $620 per month for the next 40 years to reach $2 million.

The question I received was simple, but common:

Where do I get the $620 from?

This is possible, and I will help you find it so you can be on your way towards the $2 million.

To make this concrete, I’ll use an example based on some of my recent graduates’ compensation packages. On average, they earn $65,000 and receive a 50% 401(k) match up to 6%.

Recall: this savings target is designed to support $80,000 in annual retirement spending—that’s $15,000 more than their current gross income.

Starting Point

• Salary: $65,000

• 401(k) contribution (6%): $3,900/year (pre-tax)

• Health insurance: $1,800/year (pre-tax assumption)

Adjusted Gross Income (AGI): $65,000 − $3,900 − $1,800 = $59,300. Contributions to retirement and health insurance are deducted from gross income before taxes are calculated. You can reduce your taxable income by contributing more to your 401 (k).

Federal Taxable Income

• AGI: $59,300

• Standard deduction (~$14,600)

Federal taxable income ≈ $44,700.

Now that we have calculated your taxable income, we can estimate the taxes you will pay. Your total taxes will vary by geography, and therefore, these are estimates.

Estimated Taxes (Cincinnati Resident)

1. Federal Income Tax
On ~$44,700 taxable income → ~$5,100–$5,800

2. FICA (not reduced by 401 (k) or health premiums)
7.65% × $65,000 = $4,973

3. Ohio State Tax
On ~$59,300 income → ~$1,700–$2,100

4. Cincinnati Local Tax (1.8%)
1.8% × $65,000 = $1,170

These are estimates. Below, I share more information on how you can calculate your own taxes based on your Zip Code.

Total Taxes

$12,900 to $14,000. Let us use the top figure ($14,000) here to calculate your net pay.

Net Pay Estimate

• Gross income: $65,000

• 401(k): −$3,900

• Health insurance: −$1,800

• Taxes: − $14,000

Estimated take-home pay: $45,300/year

Monthly Take-Home

The take-home pay will be approximately ~$3,775 per month. Now you can budget for your other needs and wants. But did you get to the $620 in savings?

Now, Put This in Context

• 401(k) contribution: $325/month (already automated)

• Employer match: ~$162/month (bonus, not from you)

• Total invested already: ~$487/month

• Target: $620/month

• Remaining gap: ~$130/month. You can either increase your 401 (k) contribution or save an additional $130 from your net pay in an after-tax account. There are tradeoffs between tax advantages and liquidity. If you are looking to maximize your 401K contribution, the 2026 tax structure allows you to contribute up to $24,500 annually. In the above example, you are only contributing $3,900 per year. Let us assume you invest it in an after-tax savings account, you will have $3,645 to live on.

Can you live on $3,645?

Based on the above analysis, you will have your retirement figured out and can now use $3,645 to live on and save and invest for other purchases. How would you budget your first $3,645?

Take Home Calculator

How much are your wages after taxes? This powerful tool performs all gross-to-net calculations to estimate take-home pay across all 50 states.

Click here to use the calculator from ADP

Video

Here is a video that is a couple of years old on the same topic

It is that time of year, job offers are being sent out to my students. In addition to helping them navigate negotiating their first offer, we begin the planning process for their first paycheck.

How much will your first paycheck be if you accept a job that pays $60,000 a year in Cincinnati, Ohio?