Want to Retire With $1 Million? Here’s How Much You Should Invest Today

If you want to retire a millionaire, the key to safely doing so is saving up a lot of money and investing it for as many years as you can. Trying to take shortcuts will only put your money at risk and lead to potentially significant losses — which can lead to a much more stressful retirement.

If you have at least 20 investing years left before you plan to retire, I’ll show you how much you need to invest today to get to the $1 million mark. There are no sky-high returns assumed here, only modest gains that you can expect from safe, long-term investments.

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How much money should you save up to get to $1 million in 20 years?

Over the long term, the S&P 500 has averaged returns of around 10%. And that’s the assumption that I make in the following chart, that whatever you invest in today will grow at that rate on average each year. Here’s how much various initial investments ranging between $25,000 and $150,000 will grow over two decades at this rate:

Chart by author.

To get to $1 million, you will need to invest roughly $150,000 under this conservative approach.

The sobering reality for investors is that even with decades of investing, there is no substitute for accumulating savings. A $25,000 investment will only grow to less than $170,000 in 20 years. It’s only as the accumulated balance becomes larger that the effect of compounding is the greatest. In the 20th year of growth in this model, the original $150,000 investment will increase by nearly $92,000 to finish at $1,009,125. By comparison, the $25,000 investment will rise by just $15,290 during that year.

If you are able to get to the $150,000 in savings, then the next part is relatively easy: Deciding what to invest in.

For conservative gains, investors have plenty of options to choose from

What’s great about this strategy is that, since you don’t need to plan for extremely high returns, you can just focus on stocks that either closely follow the market or normally outperform it. A…

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