Lots of us think that, ideally, we'll need to retire with a million dollars -- though it can also seem like an unreachable pipe dream to many. Amassing a million dollars for retirement may be much more achievable than you think, though -- especially if you're starting now with $100,000.

Here are two ways to go about doing so:

  • No. 1: Earn a phenomenal rate of return
  • No. 2: Invest for many, many years
A finger is pointing to the word millionaire.

Image source: Getty Images.

Investment, time, return

How well you can build wealth all comes down to three factors: How much you can invest (and how regularly), how much time you have, and the growth rate of your investments. This article is focused on a single $100,000 investment, but will also make clear how you can invest more effectively with smaller (or larger) sums.

Check out the table below, showing how $100,000 can grow over time -- and how it all boils down to how rapidly your money grows and the period of time in which it's growing:

Over This Period...

You'll Need This Average Annual Growth
Rate to Amass $1 million

5 years


10 years


15 years


20 years


25 years


30 years


35 years


40 years


45 years


50 years


Source: Author calculations. 

Clearly, if you have $100,000 and a lot of time, you can amass $1 million with little effort. Consider that the stock market has averaged annual returns of close to 10% over many decades. If you have 30 or 35 years before you retire, just parking that $100,000 in a low-fee, broad-market index fund that tracks the S&P 500 or the entire U.S. market will be likely to get you to $1 million, even if the overall growth rate during that period is below average.

Here are some good index funds to consider:

  • SPDR S&P 500 ETF (NYSEMKT:SPY): This fund will have you invested in 500 of the biggest companies in America, together representing more than 80% of the overall U.S. market.
  • Vanguard Total Stock Market ETF (NYSEMKT:VTI): In this fund, you'll be invested in just about all of the U.S. stock market -- including not only big companies, but also small- and medium-sized ones.
  • Vanguard Total World Stock ETF (NYSEMKT:VT): This fund aims to track the performance of the stock markets of the world -- those of the U.S. and in other countries, as well.

You might do well to split your invested money between the three funds above or some other funds. If you're interested in investing in individual stocks, it can also be effective to have a big chunk of your portfolio in one or more low-fee index funds and the remainder in some carefully chosen stocks. Dividend-paying stocks are a particularly powerful and sturdier-than-average group of stocks.

Find your sweet spot

The table above might help you figure out how you can best turn your $100,000 into $1 million, but there's another way, too -- by continuing to add to that sum over the years. For example, if you start with $100,000 and invest an additional $12,000 each year, earning an average annual gain of 7.5%, you can amass $983,000 over 20 years. Try crunching numbers that reflect your own situation. Here's a handy online calculator to use. It's meant to model growth with interest, but you can just insert your expected growth rate in the interest-rate box.

Remember, too, that you might not need to amass $1 million for retirement. Spend some time estimating your income and expenses in retirement (being sure to expect significant healthcare costs), and figure out how much you can expect from Social Security. You may only need to amass, say, $600,000. The table below shows how much you can end up with by saving different sums over different periods:

Growing at 8% for

$5,000 Invested Annually

$10,000 Invested Annually

$15,000 Invested Annually

10 years




15 years




20 years




25 years



$1.2 million

30 years


$1.2 million

$1.8 million

Source: Calculations by author.

Whether you do or don't have $100,000 right now, and whether you can sock away $20,000 every year or just $5,000, you can probably improve your future financial security -- perhaps significantly -- by having a plan to get where you need to go and by sticking with it over many years.

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.