4 Ways to Grow $100,000 Into $1 Million for Retirement Savings

A $1 million nest egg headed into retirement would give you around 4 times the median net worth of typical retirees. That’s a tremendous target to shoot for, and if you start early enough, it can be fairly straightforward to reach. Still, since $1 million is a big goal, it probably makes sense to knock it down into smaller, more manageable chunks and focus on hitting those chunks along the way.

One great approach to do just that is to strive to hit $100,000 first. At that level, compounding can start providing some serious boosts along your journey to make it possible to get the rest of the way in a reasonable amount of time. With that in mind, here are four ways to grow $100,000 into $1 million for your retirement savings, as some inspiration to start saving toward that first $100,000 goal.

Image source: Getty Images.

1. Wait patiently and let compounding do all the work for you

Over long periods of time, the stock market has delivered annual returns near 10% on average. If the market’s future is in line with that past, then it would take around 24.2 years to go from $100,000 to $1 million with no additional investments or effort on your part.

Of course, if 2022 taught investors anything, it’s that the market doesn’t always go up. If the future isn’t as strong as the past, it might take quite a bit longer for compounding alone to get you from $100,000 to $1 million. For instance, at 8% average annual returns, it would take around 29.9 years. At 6%, it would be closer to 39.5 years, and at 4% it would take about a whopping 58.7 years. As a result, it likely makes sense to keep on investing new money instead of just relying on compounding to get you there.

2. Keep investing new cash after you hit that $100,000 milestone

If you’ve done the hard work of saving and investing consistently over time to reach $100,000, then you’ve probably built strong money-savvy habits. So why not keep on investing to improve your chances of reaching that $1 million target sooner?

The table below shows how many years it would take to go from $100,000 to $1 million, depending on what average rate of return you earn along the way and how much you’re able to invest each month.

Monthly Savings

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns


























Calculations by author.

That simple act of continuing to invest new money after you’ve reached $100,000 can go a long way toward getting you to millionaire status sooner. That holds true even if the market’s future isn’t as strong as it was in the past.

3. Enlist your employer and Uncle Sam to help

Investing is tough enough on its own, but when you add taxes to the mix, it gets even harder. This is especially true in ordinary investing accounts where you’re first taxed on the income you want to sock away, then you’re taxed on any gains or dividends you receive along the way. If you make use of your 401(k) plan as a vehicle for your investments, you can get Uncle Sam and potentially your company to help you along the way.

If your employer offers a match for your 401(k) plan, then your company will contribute alongside you, helping you reach your goal faster. Matches vary by employer, but a typical one is 50% of your contribution, up to some percentage of your salary.

Say you make $50,000 a year and your company will match 50% of your contribution, up to 6% of your salary. Six percent of $50,000 is $3,000, and 50% of that is $1,500. So by putting $3,000 into your 401(k), your company would sock away $1,500, making the total amount saved in your plan $4,500.

On top of that, all 401(k) plans have tax advantages. Your money grows tax deferred as long as it remains in the plan. In Roth IRA plans, you pay taxes on your contributions but can take tax-free withdrawals in retirement once you qualify. In traditional IRAs, you get an immediate tax deduction for contributing, but you pay ordinary income tax rates when you withdraw those contributions.

Add Uncle Sam’s help along with your employer’s, and both the initial investment and the compounding along the way can get that much easier for you.

4. Reinvest your dividends somewhere

According to research from Hartford Funds, 84% of the total returns generated from investing in the stock market since 1960 comes from reinvesting your dividends and letting them compound. That is absolutely astounding, and it shows the power that those seemingly small payments have over time when they’re allowed to compound on your behalf.

The power of those compounded dividends is especially strong when you’re able to take advantage of No. 3 (above) and invest your money inside a tax-advantaged plan like your 401(k).With no tax drag along the way, more of the money remains available to you and compounding for your future.

As tempting as it may be to spend those dividends, keeping them invested may be one of the best things you can do to improve the odds that your nest egg can reach that $1 million mark.

Get started now

Whether you’re starting from $0 or already have that first $100,000 socked away, the reality is that it will take time — likely well over a decade — to reach millionaire status. The clock is ticking, but your money can only start compounding for you once you have it invested. So get started now and maximize the time your money can work on your behalf to give you your best shot of retiring with $1 million.

The $18,984 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $18,984 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

Chuck Saletta has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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