How to Have $1 Million By The Time You Retire

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I'm Nicole Lappen, the only financial expert you don't need a dictionary to understand. It's time for some money rehab.

Today we're going to crack the code on the million dollar question. Literally, how much do you need to invest and when to retire with a million bucks in the bank?

This is one of the top questions I get asked and one of the most commonly searched questions on Google and probably ChatGPT.

So today we're going to run the numbers. Whether you're 20 or you're 60, I'm going to show you exactly how much you need to invest each month to retire at 67 with a million dollars in the bank.

And this isn't based on magic, but on compound interest, which honestly is pretty magical.

We're assuming that you're investing in an ETF that mimics the stock market, like VOO or SPY, and assuming a 7% average annual return, which is actually a little conservative when you look at the long-term performance of the market.

But it is a pretty good bet with inflation. Before we break this down by age, you're going to notice something very quickly.
The earlier you start, the less aggressive you have to be.

Starting early is a financial superpower because of the great, beautiful, glorious, all the adjectives, force of compound interest.

Starting early is a financial superpower because of the great, beautiful force of compound interest.

Compound interest is what happens when your money earns money and then that money earns money and then that money earns even more money. It's the snowball effect.

When it comes to debt, compound interest sucks. It is so stressful because what you owe snowballs.
But when it comes to investing, compound interest is amazing because what you earn snowballs.

So simply put, the earlier you start, the more time your money has to grow. Even if you invest less, you can end up with more just by giving your money more runway to compound.

So you're going to see just how dramatically your minimum investment is going to have to increase the later you start. But don't worry, I'm not going to just hit you with scary numbers.

I'm also going to give you actionable ways to make up for lost time at any age. Okay, let's start with the dream scenario.
You are 20 years old and you are thinking ahead. First of all, bravo.

Not everyone, myself included, can start that early. To have a million bucks by 67, you have to invest 165 bucks a month into the stock market.
That's it.

165 bucks a month every month from age 20 to 67 at a 7% annual rate of return and you will get to that seven figure goal. This works because you have 47 years of of compound interest on your side.

Even though your total contributions over those 47 years only adds up to around $93,000, that interest is doing the heavy lifting and adding more than $900,000 to your final balance.

That math actually blows my mind. So I'm going to say it again.
You have to only put $93,000 over the course of 47 years aside in order to end up with a million dollars. It is insane.

You got to love it. So here's what I would do at 20.
Start with a Roth IRA retirement account. It is tax-free growth and withdrawal in retirement.
So win-win.

Then I would set up automatic contributions. Even if you can't do the 165 monthly, decide on what amount you can commit to and set it and forget it.

Now, let's say you don't start in your 20s. Let's say you start when you turn 30, flirty, and thriving.
Don't panic. You are 30.
You have still got plenty of time.

To reach a million bucks by 67, 67, you need to contribute $340 monthly. You see the jump there?

Starting 10 years later means you now have to invest more than double the monthly amount because compound interest has less time to do its thing.

So if I was getting started at 30, here's what I would do. Max out the 401k match for sure.
This is free money from your employer. Don't leave that on the table.

If you're not already, I'd start using my 3E rule for a spending plan, which is putting 70% of what you make toward essentials, 15% toward extras, and 15% towards your end game, like retirement, savings, investing.

I'd also put any raises or found money like tax refunds or inheritances, for example, into your investment account.

Lastly, I'd cut high interest rate debt and redirect those payments into your investments and consider bumping up some side income. The average millionaire has seven streams of income.

So if you only have one, I'd start thinking about what you could do to diversify that. A part-time freelance gig or consulting gig can get you to that $340 a month target pretty easily.

Okay, say you don't do that either. Say you don't get started until 40.
At 40, we're getting closer to that retirement age and the pressure starts to build.

But don't beat yourself up if you're getting a late start. Let's just get to work.
Here's what it takes, a $820 a month contribution.

We're now in the serious hustle territory, I'll be honest, but it's still very doable. If I needed to ramp up investing, I'd first revisit my spending plan.

You may be earning more, but you are spending more too. That is lifestyle creep and it can steal your investing dollars.
Then I wouldn't necessarily downsize my lifestyle, but I'd right size it.

It only takes $27 a day to add up to $820 a month. It is pretty easy to lose track of $27 here and there.
So I would plug any places where my budget is starting to feel a little leaky.

Lastly, automate increases. Every time you get a raise, auto increase your investment contribution by 1 to 2%.

Now, say you don't do that and you are starting at 50 and you're planning on retiring in 17 years. That's not nothing, but the runway is shorter and the stakes are higher.

So we're going to have to get serious. The monthly contribution that you'll need is $1,920.
I know it is a big number and a big jump from the numbers we've talked about so far.

But hey, you're also probably earning more than you did in your 20s and 30s. It is time to go all in.
What I would do to hit this number is to take advantage of catch-up contributions.

If you're 50 or older, the maximum amount you can contribute to your IRA or your 401k goes up. In 2025, for example, the 401k limit is 23 grand, plus an additional 7,500 bucks if you're 50 plus.

I'd also look for places where there's free money, meaning ways to make money from stuff you already own or things that you already do.

For example, you could rent out a room, a garage, or even a parking space. That extra $1,000 a month could go straight straight to your investments.

If the pressure is feeling like too much, you can always plan on doing a retirement soft launch at 67 where you go down to a part-time job so you can have more time to earn more money and save for that sweet, sweet, hard launch retirement.

So say you have done none of this, that you're 60 years old and you're just starting your money rehab journey.

You're 60 and you want to retire at 67 with a million bucks and you're starting with nothing. I'll be honest, this is a tall order.
Your monthly contributions will need to be $5,700.

I know it is steep. You'd need to invest more than the average monthly rent in many US cities.
But is it impossible? Not necessarily.

Here's what I would do: max out every retirement account you can, 401k, traditional, or Roth IRA, even HSAs if you qualify.

Then I'd take a look at unused assets like extra cars, storage units, old collectibles, and I'd get them appraised and think about selling.

Don't think of this as a fire sale because it is definitely not. This is just you turning your clutter into capital.
Personally, I'd also decide to delay retirement to 70.

I know this isn't right for everyone, but retiring at 70 would give you three more years of compounding and higher social security benefits. All right, let's zoom on that for a sec.

If these numbers are feeling intimidating, especially in your 40s, 50s, and 60s, know that you have more options than just investing more.

Delaying retirement by even a few years can massively improve your financial picture by giving you more time for compound growth, fewer years your savings need to support you, and like I just alluded to, potentially bigger social security checks.

Every year you delay retirement past full retirement age, currently 67, your social security benefit increases by 8% until age 70.

So even if you can't hit that $5,700 a month number at 60, retiring at 70 instead of 67 might mean you only need to invest 3,700 bucks a month instead.

So now that I've successfully given you the bright side, I'm going to tell you something that might be a little intimidating. You You might want more than a million dollars when you retire.

I say that because as crazy as it sounds, a million bucks isn't what it used to be. It's not yachts and mega mansions anymore.
It's more like healthcare, housing, and likely some independence.

But maybe that's perfect for you. I can't tell you what you need for retirement exactly because I don't know exactly what your goals are.

I don't know exactly what you picture when you think about shutting that laptop for good, deleting your LinkedIn and sailing off into the retirement sunset.

So what I would definitely do is a a little math to determine how much you think you will need in retirement and then use a compound calculator to see how much money you need to invest monthly if you start today.

So I know today I talked about a lot of numbers, but the biggest thing I want you to take away from this episode isn't your number. It's the value of starting today.

Your money goes further the earlier you start. So the question really isn't why wait, it's can you afford to wait?

For today's tip, you can take straight to the bank. At the beginning of this episode, I mentioned that these numbers were based on investing in stocks that mimic the overall market.

But as you get closer to retirement, you're definitely going to want to shift your investing priorities to more conservative assets like bonds.

One thing you can do to automate that prioritization is to invest in target date funds.

These types of funds are specifically designed to simplify retirement investing by automatically adjusting the asset mix, typically shifting from higher risk, growth-oriented investments like stocks to more conservative options like bonds as the target retirement year approaches.

It's a really nice option if you want to set it and forget it. These funds offer built-in diversification and rebalancing, which makes them a great option for hands-off investors.

But the downside is that not all target date funds are created equal. Expense ratios, asset allocation strategies, and glide paths, or the pace at which the fund shifts that risk, can vary widely.

That means some funds might be too aggressive or too conservative for your actual risk tolerance or retirement goals. So while they're very convenient, they still require some research.

Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin.
Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes.
Do you need some money rehab?

And let's be honest, we all do.

So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me.

And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you.
No, seriously, thank you.

Thank you for listening and for investing in yourself, which is the most important investment you can make.