How to Retire With $1 Million on a $40,000 Salary

With retirement getting more costly, you may need more than you think in savings to enjoy your senior years comfortably. There’s also a chance that Social Security benefits could be reduced in the coming years, so it’s even more important to have a robust retirement fund.

Saving $1 million or more may seem difficult or even impossible, especially if you’re earning an average salary. But if you’re strategic about how you invest, becoming a retirement millionaire may be within reach. Here’s how to achieve it.

Image source: Getty Images.

Invest in the right places

Choosing the right investments is critical as you’re saving for retirement. While it may be tempting to put your money behind high-risk, high-reward stocks, that’s a dangerous move that could cost you. Any stock that earns phenomenal returns is more likely to experience losses, too, and that’s the last thing you want when your retirement savings are on the line.

A safer option, then, is to focus on slow-but-steady investments. These can include S&P 500 index funds, for example, or mutual funds within your 401(k) or IRA. Investments like these may only earn average returns, but they’re more likely to experience consistent growth over time.

Consider how much you can invest

You don’t need to invest a lot of money each month to see significant earnings over time. This is especially true if you start investing now rather than putting it off. The more time your money has to grow, the less you’ll need to save each month to reach your goals.

Most experts recommend setting aside around 15% of your salary toward retirement savings. If you’re earning $40,000 per year, that comes out to $6,000 annually, or $500 per month.

Keep in mind, too, that this $500 per month doesn’t necessarily need to come entirely out of your wages. If you have access to employer matching contributions through your 401(k), that’s free money that can be put toward your savings goals.

Building a million-dollar nest egg

Consistency is key when saving for retirement, and by investing a few hundred dollars per month, you can earn more than you may think.

Let’s say you’re investing in a variety of mutual funds through your 401(k) or IRA, and you’re earning a modest 8% average annual return on your investments — which is just under the market’s historic average.

If you’re investing a total of $500 per month (which includes both your own savings and matching contributions from your employer), here’s approximately how much you’d have saved over time:

Number of Years
Total Savings






Author’s calculations via

By investing consistently, you can reach $1 million in total savings within 35 years. If you’re able to keep your money invested longer than that, you could earn even more.

Saving for retirement is tough, but it’s possible to build a million-dollar retirement fund — even if you’re not already wealthy. With enough time and consistency, you’ll be well on your way to reaching your retirement goals.

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