How to All But Clinch a Millionaire Retirement

If you have enough time, diligence, and patience, it can be hard to not amass a million dollars.

If you think that a million dollars is a heck of a lot of money to retire with, think again. It is a significant sum, but it doesn’t necessarily mean you’ll be living a life of luxury in your last decades. Applying the flawed but handy 4% rule that suggests withdrawing 4% of your nest egg in your first year of retirement and then adjusting future withdrawals for inflation, a million-dollar nest egg will start you off with $40,000.

Adding the average Social Security benefit of about $20,000 annually, or an above-average benefit of $30,000, will give you $60,000 or $70,000 in initial annual retirement income. That may or may not seem like enough for you, but there’s a good chance that it’s in the neighborhood of what you need. So aiming for a million dollars by retirement is a good goal. (Many people may want to aim even higher, of course, perhaps even shooting for $2 million or more.) Here are some strategies to build a big nest egg.

Person seated at a table, smiling at an open laptop.

Image source: Getty Images.

1. Invest regularly

First, invest as regularly as you can. Just parking a chunk of change in a retirement account this year and another chunk in a few years is likely to not be nearly as effective as having a routine that you stick with. (For best results, start with a solid retirement plan, determining how much you need to amass and just how you’ll get there.)

The table below shows just how much you might amass if you regularly sock away certain sums over long periods, averaging annual growth of 8%:

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.

With enough time and enough diligence, you might end up with $1 million after 20 to 30 years, or $2 million within 30 years. You can, of course, exceed the sums above if you plow even more money into the stock market annually, and if you’re lucky enough to have higher average annual gains. The stock market’s average annual gain over long periods has been close to 10%, but we can’t count on that over any period of several decades. Assuming 8% growth is being a bit conservative.

2. Stick with stocks

Next, be sure to give the stock market a lot of consideration to be your primary growth driver. Few alternatives will serve you as well. From year to year, the market can be volatile, and every few years it will take a small or big dive, but it has always recovered and gone on to hit new highs.

Wharton Business School professor Jeremy Siegel has made a great case for stocks, finding that stocks outperformed bonds in 96% of all 20-year holding periods between 1871 and 2012 and in 99% of all 30-year holding periods. He also calculated the average returns for stocks, bonds, bills, gold, and the dollar, from 1802 to 2012:

Asset Class

Annualized Nominal Return









U.S. Dollar


Data source: Stocks for the Long Run.

The easiest way to invest in the stock market is via one or more low-fee, broad-market index funds, such as the SPDR S&P 500 ETF ( SPY 1.09% ), Vanguard Total Stock Market ETF ( VTI 1.17% ), and Vanguard Total World Stock ETF ( VT 0.81% ). Respectively, they’ll have you invested in 80% of the U.S. market, all of the U.S. market, or most of the world’s stock market.

Keep any money you’ll need within five years (or 10 years, to be more conservative) out of stocks, though, because of the chance of corrections and crashes. You don’t want to have to withdraw, say, $50,000 for a down payment on a house soon after the market has plunged by 20%.

3. Let compounding work its magic

Finally, prepare to do a lot of waiting, letting the miracle of compounded growth do its thing. The best stocks deliver the most amazing performances over decades, and patience is a key factor in successful investing. As Warren Buffett noted in his 1988 letter to shareholders:

…[W]hen we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever. We are just the opposite of those who hurry to sell and book profits when companies perform well but who tenaciously hang on to businesses that disappoint.

To appreciate the power of patience, scroll up to the top table, and you’ll see that while your money may grow by tens of thousands of dollars in early years, it can grow by hundreds of thousands of dollars in later years.

So don’t give up if you encounter a flat or down year. Don’t stop investing regularly in the stock market — and waiting.

Doing so is likely to help you amass a lot more for retirement than you thought you could — possibly even $1 million or $2 million.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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