With the S&P 500 teetering on the edge of a bear market  and some high-growth-prospect companies down more than 90%, reaching millionaire status by the time you retire may seem like a crazy goal. In reality, most bear markets plant the seeds of the next great recovery. Unless you believe that this crash will usher in the end of capitalism and the entrepreneurial spirit, it is very likely that this one will, too.

That makes now -- when the market is down sharply from its highs -- a great time to put your plan in place to reach millionaire status by the time you retire. After all, every dollar you invest today buys that many more shares of stock than it did near the market's highs. More shares translates directly to a larger base that participates in any recovery that follows. That can actually end up accelerating your path to millionaire status.

Still, building a nest egg that large is a journey that takes time. While there remain no guarantees in the market, there is a simple, four-step time-tested approach that can give you a great shot to all but clinch a millionaire retirement.

Senior woman looking out over the water.

Image source: Getty Images.

Step 1: Get your own financial house in order

A big challenge with bear markets is that they often bring job losses along with them. Your bills won't go away just because your job does, and if all your money is tied up in stocks, you could get forced to sell near market lows just to make ends meet. That won't help you on your path to millionaire status and could instead set you back.

One key tool in your arsenal is an emergency fund. With three to six months of living expenses socked away in cash, you can better handle a short-term disruption in your income. With interest rates well below inflation, you don't want too much in savings, but somewhere in that three to six month range at least gives you some buffer to help you make adjustments.

In addition, getting your debts under control is an important part of being able to successfully invest. You don't have to be completely out of debt to invest, but your debts need to be reasonable. Reasonable debts are ones with low interest rates where you can point to a clear value for your future because of having that debt. In addition, your total payment levels should be low enough that you can easily cover them and still have breathing room in your budget each month.

If you're not there yet, the debt avalanche approach is the most efficient way to pay off debt. To use it, line up your debts in order from the highest interest rate to lowest interest rate. On everything except your highest interest rate debt, pay the minimum. On that highest interest rate debt, pay as much as you can above the minimum until it is paid off. Once it is paid off, take the money you had been paying toward it and add it to the amount you're putting to your new highest interest rate debt.

Keep it up until your total debt load reaches that reasonable level.

Step 2: Take advantage of all the free money you can

If you get a match for contributing to your 401(k) at work, putting enough money toward that plan to maximize your match is hands down the first investment you should make. Adding your boss' money to your own gets that much more compounding for you on your behalf.

Once your match is maximized, it generally makes sense to keep contributing to your 401(k) as long as it doesn't charge high fees and it offers strong index funds with low expense ratios. If you're under age 50, you can generally contribute as much as $20,500 to your account in 2022. If you're age 50-plus, that amount rises to $27,000. 

In addition to any matches, 401(k) plans also offer you tax advantages. In any qualifying 401(k), your money compounds tax deferred as long as it's in the plan. In Roth 401(k) type plans, you can pull the money out in retirement completely tax free. In Traditional 401(k) type plans, you get an immediate tax deduction for the money you contribute, but the money gets taxed when you withdraw it.

Between money from your boss and money from the tax advantages, 401(k) style plans offer great ways to build wealth. If you've maxed out your 401(k) plan, if it costs too much to participate, or you don't have one available, you can also contribute to an IRA. IRAs also come in Traditional and Roth varieties, but the contribution limits are lower. In 2022, you can contribute up to $6,000 if you're under age 50 or $7,000 if you're age 50-plus. 

Step 3: Invest in broad stock market indexes

Unless you want to get very involved in your investing, by far the easiest approach to building wealth over time is to put each contribution into a low cost, broad stock market index fund. That simple approach tends to beat the vast majority of Wall Street's professional money managers over time, and it's available to anyone eligible to invest in the US stock market.

Step 4: Keep on keeping on

The following table shows how many years it will take to reach $1 million starting from scratch, depending on how much you can sock away each month and what rate of return you earn along the way.

Monthly Investment

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns































Data source: author.

That $2,833 number is what a person age 50 or up who maxes out both a 401(k) and an IRA can sock aside tax deferred. The $2,208 one holds true for folks below 50. If you're not able to invest that much, even as little as $300 a month -- about $10 a day -- can give you a reasonable path to millionaire status by the time you retire. If you can't get all the way to your target savings rate right away, start with what you can, and increase your savings as you are able to.

Get started today

As the table shows, the more time you have until you retire, the less you need to sock away each month to build a comfortable nest egg by the time you get there. The sooner you get started, the more of that precious time you have at your disposal to execute your plan. So get started today, and give yourself the best possible chance you can have of all but clinching a millionaire retirement for yourself.