Many investors will need to become millionaires in retirement if they hope to maintain their current lifestyles, but that can be a very difficult task. It requires a lifetime of diligent saving along with investment growth. To achieve that growth, some investors resort to trying to time short-term market fluctuations, or they try to hitch their success to a small group of companies that they expect to deliver tremendous gains. Going for extra upside, they end up reducing their investment diversity and increase their risk of losing big.

But there is an alternative. A number of exchange-traded funds (ETFs) have been developed to provide some tremendous upside potential while still offering some risk reduction that is achieved through diversification.

Choosing the right ETF today and purchasing shares regularly can help your retirement portfolio outpace the market and turn you into a millionaire. Let's look at how and why to do this and an ETF that might help you achieve this goal.

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Do you really even need $1 million? Yes, probably.

Eclipsing $1 million in retirement savings might be more important than you realize. Mean family income in the U.S. currently sits at around $117,000 in the U.S., though retirees generally don't need quite that much cash flow to replicate the lifestyle available on an average income.

A retiree generally can count on lower expenses related to child support, reduced housing costs, lower income tax bills, funds no longer being saved, and the availability of Social Security supplemental income. Taking all of that into account, including the average individual Social Security annual benefit of $18,170, the average household would still require an annual income of roughly $50,000 to remain comfortable and meet healthcare spending needs.

Retirement investment accounts are designed to create that income through the interest and dividends earned. However, there's only so much you can safely withdraw without reducing your fund. Experts recommend withdrawing only 3%-4% of savings each year in retirement to avoid running out of cash. Under those guidelines, to produce $50,000 in annual income, your portfolio would have to be a minimum of $1.25 million. For funds coming out of 401(k) or traditional IRA accounts, the amount saved would need to be even higher to account for the income taxes that you'll need to pay. If you are young, you can expect all these figures to be even greater when you reach retirement age due to inflation. 

How to accumulate $1 million in retirement savings

Becoming a millionaire in retirement depends, in part, on your savings rate and investment growth rate. Assuming an 8% rate of return on investments, it would take 20 years for a family saving 20% of their $117,000 average household income to reach $1 million in savings. Saving 20% of your income is a great goal, but most families these days are unable (or unwilling) to save nearly that much. The average personal savings rate in the U.S. has fallen to between 5%-10% these days. 

If this describes you, then you'll likely have to work on building retirement savings with the idea of saving for more than 20 years. You might also need to find opportunities to get savings growth rates higher than the oft-cited 8% average annual return. Finding consistently high-growth investments is easier said than done, especially without taking on lots of additional risks, which is something you'll want to avoid with a retirement account.

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Investors looking to boost growth rates might consider niche ETFs that track high-growth stock categories. Owing these targeted ETFs allows you to bet on the industry rather than individual companies and it gains you exposure to small companies that could eventually grow into industry leaders. To execute this strategy, consider funds that hold stocks benefiting from developing trends like 5G networks, the Internet of Things, cybersecurity, cloud computing, data management, analytics, robotics, telemedicine, and artificial intelligence.

As one example, the ETFMG Prime Cyber Security ETF (NYSEMKT:HACK) is a popular and unique fund that meets the above criteria. This ETF currently holds 57 stocks from around the world engaged in the development of cybersecurity hardware, software, and related services. These companies are expected to benefit greatly over the next few decades from the growing trends of cloud computing and remote collaboration. The digital transformation these trends require will drive demand for cybersecurity companies.

Rather than pursuing a market-cap weighting of the stocks in the fund (a regular feature in index funds), Prime Cyber Security fund establishes an equal weighting among constituent companies. This leads to much more exposure to small-cap and mid-cap stocks in the industry, which can increase the odds of outsized growth. No single holding makes up more than 3.8% of the total ETF portfolio, creating a balanced approach to cybersecurity investing. 

Investors should note that the Prime Cyber Security ETF carries a larger-than-average 0.6% expense ratio that will eat into returns every year. There's also a relatively high 0.14% average spread that increases the net cost of buying and selling. None of this is enough to make this ETF an investment to avoid, but it's worth noting.

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.