The other day, a fellow firefighter told me he’d like to sit down with me and talk about money, and specifically, retirement. I agreed and told him to start thinking about where he’d like to begin. He said, “I’d rather focus on where I want to end up – I don’t want to have to work in retirement.” He had clearly outlined a major retirement goal for himself, and in doing so, identified a specific need. He’ll have to have enough saved by the time he retires to produce a retirement income that will cover his cost of living for the rest of his life. He doesn’t want to have to be a greeter at Walmart or a security guard at the mall.

Is it even possible to achieve this on a firefighter, police officer, or paramedic’s salary? My answer is, yes, it is entirely possible, but it will take some conscious saving on your part. More than you might think. Read on.

One Million Dollars?!?

If you pick up any kind of money-related magazine nowadays, chances are you will see an article with a title like “How To Save A Million Dollars,” “10 Tips to Becoming a Millionaire,” or “Reach the Million Dollar Milestone.” You may see them and think to yourself, “What kinds of people are these articles for? I’m a firefighter (or police officer, or paramedic). Why on earth would I need $1,000,000 saved up when I retire?” Here’s why: If you follow the 4% rule for your withdrawals, having one million dollars saved will give you about $40,000 per year in retirement income. This rule assumes an approximately 30 year retirement and allows increases for inflation.

As a public servant, you may feel like saving a million dollars is an unreachable goal. The median salary for a firefighter in the US is $46,870*. For a police officer, its $58,320. For a paramedic, its $31,980. With our salaries, it will take a long time to reach a million dollars. It may seem like a daunting task, but by starting early and using the power of compounding, it is possible. I have 20 years left until I am eligible for full retirement. At the rate I am saving, I will have over a million saved by the time I retire (figured using this calculator).

How Much Do You Need?

How do you know if you are one of the people that will need at least a million dollars in retirement? Many financial planners work under the assumption that most people need between 70-80% of their pre-retirement income to meet their spending needs in retirement. If you make $60,000 per year, you would need between $1.05 million (70% income replacement) and $1.5 million (100% income replacement). Another way of calculating how much you might need in retirement is to multiply your annual spending by 25. This may be a more accurate number, since it takes into account how much you spend, and not how much you earn. If you spend $50,000 per year, you would need $1.25 million.

These numbers may or may not work for you. Visualize how your spending might change in retirement. You may have your mortgage paid off, but your medical costs may rise. Will you be buying your own health insurance? Will you want to travel more? You may need more or less than 70-80%. Some people will need 100% or more of their pre-retirement income. These figures also assume you take out the money at a steady rate. Splurging during the first few years of retirement will drastically affect whether or not your money will last in later retirement.

Does the 4% Rule Always Work?

The 4% has its fair share of critics, who argue that it may not be all that accurate in today’s times. The stock market has been all but “normal” lately, far from the average market that the rule is based on. It also doesn’t factor in investment costs, which can eat away at your hard-earned savings. There are also several variations of the 4% rule. Some of these base a retiree’s withdrawals on the performance of the stock market or tie retiree spending more closely with inflation. If you are close to, or in retirement right now, it pays to look into the options you have for making your money last for the rest of your life.

What Other Retirement Income Will You Have?

When you are working through these numbers, remember that your pension (if you are lucky enough to have one) and any Social Security benefits will contribute to your retirement income and reduce the amount you need to save. My pension system has a website where I can calculate my distributions in retirement. It tells me that my pension distributions will cover almost half of my needed income in retirement. Check to see if your pension system has a similar calculator. You can also get an estimate of your Social Security benefits here.

Reach For Your Goal

Once you’ve found your number, there are plenty of calculators out there that will tell you how much you need to save per month to reach your goal. There are several paths to get there. You can increase your 401(k) contribution or open an IRA. If you are 50 or older, you can put extra money into your 401(k) or IRA above the normal contribution limit. These are called “catch-up contributions,” and are designed to help people who are closer to retirement “catch-up” to where they should be in terms of retirement savings. If you’ve already contributed the maximum to those and still have money available, you can open a taxable investment account.

Remember to use the power of compounding. The sooner you start, the easier it will be to reach your goal of having enough retirement income to last for your entire life.

*As of May 2015