Most of us have the goal of retiring with more than $50,000 to our names. But $50,000 is most certainly a respectable amount of money to start out with.

At this point, I've had my retirement savings invested for years across a range of assets. But if I were to start over with a $50,000 lump sum, I'd take a very basic but effective approach to building my nest egg.

I'd aim for diversity and simplicity

I own a fair number of stocks in my portfolio. And I'm both happy with and comfortable with that. But if I were to start over on the retirement savings front, I don't think I'd buy up individual stocks. Instead, I think I'd keep things simple by loading up on S&P 500 index funds.

A person at a laptop.

Image source: Getty Images.

Index funds are passively managed funds that aim to match the performance of different benchmarks. I like the idea of S&P 500 index funds because that way, you're effectively putting your money into the 500 largest publicly traded companies. And you're also getting instant diversification in your portfolio without having to do a lot of research.

To be clear, loading up on S&P 500 index funds won't mean beating the market, but rather matching it. However, that's something I'd be OK with in the context of my retirement savings. If you have loftier goals, then this approach may not work for you, and that's fine!

It's not like I'm trying to sell myself short. But over the past 20 years, the S&P 500 Index has delivered an average annual return of almost 10 %. So a $50,000 lump sum in an IRA or 401(k) plan invested over 45 years would result in around $3.645 million at that return. That assumes no additional contributions -- just that initial $50,000.

Now it happens to be that I'm self-employed and can therefore fund a solo 401(k), which could, in theory, allow for a $50,000 annual contribution depending on your income. So while traditional and Roth IRAs and 401(k)s max out at lower levels, it is technically possible to sock away $50,000 in a tax-advantaged retirement plan in the course of a single year -- and grow it into over $3.5 million.

Does this mean you should fund your retirement savings with a single lump sum of money and then walk away? Not at all. It pays to fund your savings steadily on a yearly basis, not only to build more wealth, but also for the tax benefits involved.

The point, however, is that I'd fall back on S&P 500 index funds if I were to start saving for retirement from scratch, because it just plain takes a lot of the guesswork out of the equation while producing a return I know I'd be happy with. And while I happen to have taken a different approach in the course of building my actual nest egg, I think this one could actually make a lot more sense for the average investor.