If you've been saving and investing 10% of your income for retirement, that might not be enough -- especially if you haven't been doing so for most of your working life. Many of us will need to retire with close to a million dollars -- and some of us will require considerably more than that, if we want to keep living our current lifestyle.

Here's a look at how you might amass $1 million -- or more -- via your 401(k). (Note that a 401(k) isn't required -- you can amass $1 million via a regular taxable brokerage account, too.)

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How to amass $1 million

Getting to $1 million is, in a sense, all about math. There are several key variables:

  • How much you invest, ideally regularly
  • The length of time you are investing
  • Your growth rate

The stock market's average annual growth rate over long periods is close to 10%, but over the 10, 20, 30, or 40 years in which we invest, the average growth rate is likely to be at least a little higher or lower. This table assumes an 8% growth rate.

Growing at 8% For:

$10,000 Invested Annually

$15,000 Invested Annually

$20,000 Invested Annually

Five years




10 years




15 years




20 years




25 years




30 years




Data source: Calculations by author.

You might amass $1 million over just 20 years if you can save aggressively. Even if your means are more limited, you could get there over 30 years. And for those with fewer dollars and fewer years to save, some significant sums can be amassed over shorter periods.

Two main requirements for success are patience and perseverance. You can't let yourself lose interest or get discouraged if your money isn't growing quickly -- or if your nest egg shrinks at some point. The stock market is a great wealth builder, but it doesn't go up in a straight line.

Building wealth with a 401(k) account

Now let's turn to your 401(k) account to see what it can do for you. First off, there are two main kinds of 401(k) accounts -- traditional and Roth, just as with IRAs. With a traditional 401(k) (or IRA), you contribute pre-tax dollars, shrinking your taxable income in the year you contribute and thereby shrinking your tax bill. When you eventually withdraw money in retirement, it's taxed as ordinary income to you.

With Roth 401(k) accounts (and Roth IRAs), contributions are made on a post-tax basis, meaning you get no up-front tax break. But if you play by the rules, you'll get to withdraw money in retirement tax-free.

A key difference between 401(k)s and IRAs is the size of the permitted annual contribution. For 2022, the limits are listed here. (Note that the 401(k) limits also apply to 403(b) accounts.)

For 2022



Contribution limit for all



Additional "catch-up" limit for those 50 and older



Total possible contribution



Data source: IRS.gov. 

Clearly, 401(k) accounts allow you to sock away much more each year, for much greater tax benefits. (IRAs do have their own advantages, though -- so read up on the differences between IRAs and 401(k)s. For example, IRAs will let you invest in just about any mutual fund or individual stock.)

A typical 401(k) plan will offer you a small or large menu of investments to choose for your money, varying in riskiness and likely performance. Ideally, there will be at least one broad-market index fund, such as one that tracks the S&P 500. For many, if not most of us, putting most or all of our long-term dollars in a broad market index fund is a simple, smart, and effective move, as index funds are great long-term performers.

Now imagine that you park your long-term 401(k) dollars in an index fund that delivers 8% growth, on average. Imagine, too, that you're investing, say, $20,000 per year in that 401(k). In the first table, you can see what annual $20,000 investments can achieve -- potentially growing $1 million in just 20 years. 

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Building wealth with other accounts

But maybe you don't have a 401(k) plan at work. Or you'd rather make use of an IRA, so that you can buy individual stocks in it. Or you want to invest more than IRAs permit, so you'll be making use of your regular, taxable brokerage account. You can amass $1 million with those, too. (You might even use a combination of accounts, maxing out your IRA and then also saving in a 401(k) and a brokerage account.)

This table shows how money grows (again, at 8%) if you're socking away different sums than the ones above. You might be investing $6,000 annually in an IRA, for example. (Remember, too, that contribution limits will increase over time, and you may well be earning much more over time and be able to save and invest more.) 

Growing at 8% For:

$6,000 Invested Annually

$12,000 Invested Annually

$24,000 Invested Annually

Five years




10 years




15 years




20 years



$1.2 million

25 years



$1.9 million

30 years


$1.5 million

$2.9 million

Data source: Calculations by author. 

Assuming you still have, say, five or more years before you retire, you may be able to improve your financial condition by getting serious about saving and investing. If you have 20 or more years, you may be able to amass more than you ever thought possible.

Do consider making good use of your 401(k) account -- and avoid making common 401(k) mistakes, such as cashing out your account when you change jobs. The more you can save and the longer that money can remain invested, the more financially secure you can end up in retirement.