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Barring any major family emergencies or other drivers of sustained unemployment, you'll likely be working for at least 40 years of your life. When you're done, what will you live on?

Pensions are largely relics of the past, after all, and Social Security is in the process of collapsing. What's left? Largely what you put away, compounded at whatever rate of return you earn on it.

Will that be enough?
As tough as that message may be to swallow, it's a painful reality we pretty much all have to accept. These days, there really aren't many other reliable sources of retirement money other than what we ourselves put away on our own behalf.

Even within that grim picture, though, there's a ray of hope: You don't need to be a great investor to retire a millionaire, even if all you get is what you yourself can sock away. What you do need, though, is a combination of time, investable cash, and the discipline to keep funding your future, year after year.

If you've got that 40-year career ahead of you, check out your potential path to $1 million or more, so long as you invest every month for that entire 40-year time:

Monthly Investment Amount

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns

2% Annual Returns

$1,375 $8,695,609 $4,800,136 $2,738,300 $1,625,197 $1,009,849
$1,000 $6,324,080 $3,491,008 $1,991,491 $1,181,961 $734,436
$500 $3,162,040 $1,745,504 $995,745 $590,981 $367,218
$250 $1,581,020 $872,752 $497,873 $295,490 $183,609
$100 $632,408 $349,101 $199,149 $118,196 $73,444

If you're able to sock away at least $1,375 a month for the next 40 years, you're nearly guaranteed to wind up a millionaire, even if all you do is average 2% annual returns. Best of all, that $1,375 a month corresponds to $16,500 a year, the contribution limits for those who have 401(k) or 403(b) tax-deferred retirement plans.

In other words, if you max out your 401(k) throughout your entire 40+ year career, all you have to do is hit 2% returns, and you'll wind up a millionaire. Do better than that 2%, and you'll either wind up with more or have the opportunity to retire sooner.

So what?
Even during the recent lost decade, you could have made money by dollar-cost averaging into an S&P 500 index fund like the SPDRs (NYSE: SPY  ) and reinvesting your dividends. 401(k) investing is typically dollar-cost-averaging-type investing, where you invest a set amount each payday. If that style of investing can help you keep from losing your shirt during one of the worst decades ever for the U.S. stock market, imagine what it can do in more normal times.

Of course, you may be of the mind that the future will bring faster growth and better returns outside of America. In that case, Vanguard's Total World ex US (NYSE: VEU  ) (Nasdaq: VXUS  ) funds may be more to your liking. Or if you're not entirely ready to throw the U.S. to the curb, Vanguard's Total World (NYSE: VT  ) exchange-traded fund covers the entire globe, including the states.

If the stock market's recent behavior has turned you off stocks completely, or if you want to further diversify across asset classes, there are always bond funds. Vanguard's Total Bond Market (NYSE: BND  ) ETF covers a broad array of debt, and the Powershares 1-30 Treasury Ladder (NYSE: PLW  ) builds a 30-year bond ladder from U.S. Treasuries.

Of course, if you're expecting interest rates to rise in response to expected inflation, you might want to avoid typical bond funds, whose market prices can fall as rates rise. Instead, you might prefer iShares Barclay's TIPS Bond (NYSE: TIP  ) ETF, whose underlying assets (Treasury Inflation Protected Securities) get stepped-up values in response to inflation.

Any way you slice it ...
No matter how you choose to invest over the course of your career, one thing is abundantly clear from that chart above: The more you invest throughout your working life, the better off you'll be. With millionaire status virtually assured you at the end of a career of consistently saving a decent chunk of change, it's important to get started quickly.

Any reasonable investment strategy, carried out long enough with enough capital consistently put behind it will enable you to retire a millionaire by the end of an ordinary working career. The most important parts are to get started early and to follow a strategy that you can keep with throughout the decades of your life as an investor.

At the time of publication, Fool contributor Chuck Saletta did not own shares of any fund mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 27, 2011, at 3:18 PM, pwerth wrote:

    You forgot about inflation and taxes. The truth is to obtain 1,000,000 spendable inflation adjusted dollars you will have to save about $3200/month into a 401K or equivilent or $38,400/year, increase the amount each year for inflation (3%?), and get a return at least that of inflation, which has not been easy to do.

  • Report this Comment On June 27, 2011, at 5:22 PM, TMFBigFrog wrote:

    Hi pwerth,

    You're absolutely right that inflation is an important factor to consider. The thing is, though, is that it's a far less concern than simply savings/investing in the first place.

    Going from $1 million to $2 million (inflation buffering) is a lot easier than going from $0 to $1 million (initial investing). Making the decision to invest and structuring your lifestyle around investing is a LOT tougher nut to crack than structuring your investments to have a reasonable long run chance of beating 5% returns vs. 2% returns.

    At 5% annual returns over 40 years, $1,375 per month would turn into a bit more than $2 million and would provide twice the income as $1 million.

    But if you don't make the decision and build the lifestyle to enable you to invest in the first place, no rate of return can turn $0 invested into a comfortable retirement.

    As for taxes -- $1,375 per month fits into a standard 401(k) plan. You can get tax-deferred contributions into that type of plan, which generally makes the out-of-pocket cost to you below $1,375 (by whatever your marginal income tax rate is). 401(k) money also compounds tax deferred, which means the primary tax burden happens around retirement time. (Social Security and Medicare taxes are taken out of income that goes towards 401 (k) contributions, but federal income taxes are not.)



  • Report this Comment On June 27, 2011, at 6:00 PM, dvdre wrote:

    The biggest issue, and this is going to burn people's minds ... is $1 million (even in real dollars) going to be enough to have a comfortable retirement?

    Especially if Social Security and Medicare gets means-tested, based on your net worth?

    You would be living on about $40,000 a year. That probably isn't the lifestyle you expected?

  • Report this Comment On September 10, 2011, at 3:50 PM, MarionContrarian wrote:

    Gee - when I first read the headline, I expected the punch line to be something like, "start out with $2 million"...

    Of course, you can never save too soon, nor too much. Problem is that many of the people reading this article are likely Boomers who (so far) have done neither.

    I thought I had saved enough, believed in the financial models of the past and hadn't heard about "black swans" (BS) until my later years. Turns out that the biggest "BS" may be our very own government and the Fed.

    So, for those who are still a couple of decades away from "retirement", start your savings habits as soon as you're old enough to read, and invest every raise you get. Buy a house when interest rates are high, refinance when they're low, or rent and invest the difference. Become your own financial planner, and keep the extra 1%-2% that you'd pay in asset fees, which could be a sizable chunk of your returns if market returns are subdued for an extended period of time. Using TMFBullFrog's 5% return figure means that 20%-40% of your return goes to your "advisor" -- assuming that taxes don't eat into your annual returns.

    By all means, keep reading the Fool, as well as other excellent web sites like Seeking Alpha.

    ...and don't quit your day job ;o)

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