Retiring a millionaire may seem like a lofty goal, but it's more realistic than you might think. In fact, as costs continue to rise, many Americans may need at least $1 million to retire comfortably.
The average U.S. worker expects to need around $1.7 million in retirement, according to a 2022 survey from Charles Schwab, and around 53% of those survey participants believe they're not likely or only somewhat likely to reach their savings goals.
While not everyone will be able to save $1 million or more, these three steps can get you as close as possible.
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1. Determine how many years you have left to save
Time is your most valuable resource when it comes to saving for retirement, and the sooner you begin investing, the easier it will be to reach millionaire status.
If you don't already have a retirement age in mind, now is the time to start thinking about it. Be as realistic as you can here, too. If you're in your 40s and are already itching to retire, for instance, it may be tough to continue working into your 70s or beyond. Or if you're battling health issues, be honest with yourself about how many more years you can devote to your career.
Also, keep in mind that retiring before certain ages will affect your strategy. If you withdraw from your 401(k) or IRA before age 59 1/2, for instance, you may face taxes and penalties. You also won't be able to take Social Security until age 62, and you'll need to wait until age 65 before you're eligible for Medicare.
Of course, life can still throw curveballs at you. But when you have a rough idea of how many years you have left before retirement, you can move on to the next step.
2. Figure out how much to invest each month
The number of years you have to save will directly impact the amount you need to invest each month to reach your goal. Again, the more time you have, the less you'll need to invest monthly.
For example, say your investments are earning a modest 8% average annual return. Here's approximately how much you'd need to invest each month to reach $1 million, depending on how many years you have left to save.
| Number of Years | Amount Invested per Month | Total Savings |
|---|---|---|
| 35 | $500 | $1.033 million |
| 30 | $750 | $1.020 million |
| 25 | $1,150 | $1.009 million |
| 20 | $1,850 | $1.016 million |
Source: Author's calculations via Investor.gov
These calculations assume you're starting with zero savings, so if you already have some money socked away for retirement, you've got a head start. Also, your investment returns may vary, so if you're earning a higher or lower average return than 8% per year, your monthly contributions may differ.
In general, though, the sooner you can begin investing, the easier it will be to accumulate $1 million. So if you haven't started (or have been lax on your savings lately), now is the time to supercharge your retirement fund.
3. Invest as consistently as possible
Consistency is key to retiring a millionaire. Even if you have plenty of years left to save and can afford to invest hundreds of dollars per month, you may not reach your goal if you only invest sporadically.
One of the easiest ways to be consistent about your savings is to set them on autopilot. If you're investing through a 401(k), you may be able to set up automatic transfers straight from your paycheck to your retirement account. With an IRA, check your account to see if you can make recurring deposits from your bank on a routine schedule.
When you don't have to think about saving, it's much easier to stick to it. This also makes it easier to build saving into your budget. Rather than investing whatever cash you have left at the end of the month, you can make saving a priority to ensure you reach your goals.
Retiring a millionaire isn't easy, but it is possible -- with the right strategy. By getting started investing as early as possible and saving consistently, you'll be well on your way to retiring wealthy.
