A lot of people saving for retirement see $1 million as a major milestone. A lot can't even imagine retiring with a net worth of less than $1 million.

But it can be hard to judge your progress toward that milestone. You do what you're "supposed to do": Diligently invest in your retirement accounts every year and try to maximize your savings, but your account balances still seem small compared to that big seven-figure number. You might be halfway through your working years but still well short of $500,000, the halfway mark to $1 million.

But you may be a lot closer to $1 million than you realize.

Compound interest plays a huge role in growing your investment account balances in the latter half of your career. So keep sticking with the plan, and you'll see that $1 million balance.

A close up on a pile of $100 bills

Image source: Getty Images.

The halfway mark to $1 million

To illustrate some typical account balances for people halfway through their working careers, let me introduce you to a hypothetical guy named Adam. Besides his name, Adam has nothing in common with me. He contributes the same $10,000 to his retirement accounts every year. He also miraculously earns the same return on his investments every year.

Actually, there are three Adams (four, if you count me) living in parallel universes, all earning slightly different returns. Average Adam earns a 7% return every year, Awesome Adam earns 9%, and Evil Adam (there's always an evil universe) earns 5% because being evil doesn't pay.

Here's a breakdown of the Adams' paths to $1 million.


Evil Adam (5%)

Average Adam (7%)

Awesome Adam (9%)

Years to $1 million




Total contribution




Even by investing consistently and earning a high rate of return it takes a long time to make it to $1 million. But consider that even Evil Adam only had to contribute $360,000 total ($10,000 per year for 36 years) to his portfolio to reach $1 million. Compound interest did the rest of the work.

And compound interest works a lot harder in the second half of the savings timeline than the first half. Check out the following table.


Evil Adam (5%)

Average Adam (7%)

Awesome Adam (9%)

Account balance halfway through saving $1 million

$295,390 (after 18 years)

$268,880 (after 15 years)

$250,192 (after 13 years)

Account balance one-quarter of the way through saving $1 million

$115,779 (after 9 years)

$101,189 (after 7.5 years)

$91,144 (after 6.5 years)

13 years in and halfway through his journey to $1 million, Awesome Adam has a mere $250,000 in his account. But instead of having to work another 39 years, as that account balance might suggest, compound interest helps shorten that to just 13 more years. In fact, it contributes nearly half of the entire $1 million total compared to the first 13 years.

Important caveats for real life

All of these different scenarios are based on stuff that doesn't happen in real life. Very few people contribute the exact same amount to their retirement goals every year. And nobody is going to earn the same exact return year after year for 30 years.

That said, the principles still apply. Continue to save as much as you can for retirement, and that big number will start to quickly creep up on you.

In fact, several factors can help accelerate your account growth. Most people earn more as they progress through their careers. That provides the opportunity to contribute even more to your retirement savings. Likewise, the government periodically raises the limits on tax-advantaged retirement contributions, which could allow you to save more.

A small retirement balance today is nothing to get discouraged about. If you've saved up between $250,000 and $300,000, you're already about halfway to $1 million. If you've topped $100,000, you're around a quarter of the way there. You're a lot closer than it looks at first glance.

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