3 Realistic Paths to a $1,000,000 Retirement

Want to retire with a million dollars? Of course you do! That kind of sum might allow you to pay off your mortgage entirely before entering retirement, while providing income in your later years, too. For example, if you had $800,000 invested in an array of solid dividend-paying companies with an overall average dividend yield of 4%, you’d receive about $32,000 annually just from dividends, and that sum would likely increase each year. Alternatively, you could spend around $40,000 per year from a million-dollar nest egg for 25 years.

Here are three strategies to help you reach that million-dollar goal — or any long-term financial goal.

Image source: Getty Images.

1. Save aggressively

Check out the table below:

Growing at 8% for

$10,000 Invested Annually

$15,000 Invested Annually

$20,000 Invested Annually

5 years




10 years




15 years




20 years




25 years




30 years




Data source: Calculations by author.

You surely know that the more you can sock away, the more it can grow over time, but it’s helpful to see just how much of a difference saving more aggressively can make for your results. For example, if you only have 15 years until you retire and you haven’t saved enough, contributing $20,000 annually to your retirement accounts instead of $10,000 might boost your results from close to $300,000 to close to $600,000 — quite a difference.

Doubling your savings is far easier said than done, of course. You may only be able to up your savings by 25%. But even that can make a meaningful difference in your results. Thinking outside the box can help you arrive at some possible ways to increase your income, in order to increase your savings. For example, you might take on a side gig for a few years, perhaps tutoring kids online, giving language or music lessons, making and selling things online (such as jewelry, candles, sweaters, or soaps), doing freelance work, or driving for a ride-sharing company.

2. Aim to beat — or meet — the market’s return

Next, be sure you’re investing effectively. Saving a lot but only parking those long-term dollars in a certificate of deposit (CD) that pays just 1.25% isn’t going to get you far. Similarly, investing in mutual funds that deliver mediocre results is suboptimal, too.

For most people, the best choice is a low-cost index fund that tracks a broad-market index such as the S&P 500. It will instantly spread your dollars across hundreds of solid American companies, and it will deliver the same performance of that index (with minimal fees).

If you want to shoot for above-average results, you might add some carefully chosen growth stocks to your portfolio. Growth stocks don’t always perform well — especially if you’ve bought them at relatively steep prices, so consider spreading your growth-stock money across a big bunch of them, say 25 or so, to increase your odds of ending up with some big winners. Plan to hang on to them for a long time, too — five years or more, at least.

Image source: Getty Images.

3. Stay the course

Finally, here’s perhaps the most important thing you can do on your way to a million dollars: Stick with your plan. If you’re socking away $10,000 or $20,000 per year, keep doing so. Don’t get discouraged by a market drop or a few somewhat stagnant years in the market. They happen. But over long periods, the market has always headed up.

Remember, too, that the biggest growth in your portfolio will likely happen in later years — perhaps 20 years from now. When you begin and have a small portfolio, even a 30% increase may not make the biggest difference — it will, for example, take a $50,000 portfolio to $65,000. But 20 years later, if you have an $800,000 portfolio and it grows by 12%, it will become nearly $900,000. Time is a very powerful factor in wealth building.

How much money you’ll need to retire with is different for everyone, but a million dollars will go a long way to making most of us comfortable and secure in our later years. See if you’re on track to amass as much as you need. If you’re not, devise a good plan — and stick to it.

10 stocks we like better than Walmart
When our award-winning analyst team has an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now… and Walmart wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

Stock Advisor returns as of 6/15/21

The Motley Fool has a disclosure policy.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts