Can You Actually Retire a Millionaire With ETFs Alone?

With retirement becoming more and more expensive, building a million-dollar nest egg may be a necessity for some seniors. In fact, the average worker expects to need around $1.7 million to retire comfortably, according to a 2022 survey from Charles Schwab.

The stock market can be intimidating enough, but it's even more daunting trying to accumulate $1 million or more -- especially if you're not an experienced investor.

Fortunately, you don't need to be a stock market expert to make a lot of money investing, and there's one ETF that can help you reach millionaire status with little to no effort on your part.

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The best ETF to retire a millionaire

While everyone's investing preferences will differ, one of the best ETFs for building long-term wealth is an S&P 500 ETF.

This fund tracks the S&P 500 index, meaning it contains stocks from 500 of the largest and strongest publicly traded U.S. companies -- think household names like Apple, Amazon, and Microsoft. Some of the biggest advantages of the S&P 500 ETF include:

• Instant diversification: The S&P 500 ETF includes roughly 500 stocks from a wide variety of industries, which limits your risk. If a few stocks in the fund don't perform well (or even if an entire sector is hit hard), it won't sink your entire portfolio.
• A perfect track record: Since 1929, the S&P 500 itself has faced 21 bear markets (not including the current downturn). Yet no matter how severe those slumps were, the index recovered and went on to see positive returns. While past performance doesn't guarantee future results, it's extremely likely the S&P 500 will recover from any upcoming volatility.
• Low-maintenance: If you're looking for a set-it-and-forget-it type of investment, the S&P 500 ETF is for you. You never need to worry about choosing stocks or deciding when to buy or sell. Just invest whatever you can afford each month, then let the fund do the rest.

The S&P 500 ETF is also a fantastic long-term investment, and research shows that if you hold this ETF for at least a couple of decades, you're almost guaranteed to make money.

Crestmont Research analyzed data from the S&P 500 spanning over a century, and researchers found that in all the years examined (from 1919 to 2022), the S&P 500 earned positive 20-year total returns. In other words, if you had invested in an S&P 500 ETF at any point after 1900 and held that investment for 20 years, you'd have made money.

The path to $1 million

Although it's one of the safest ETFs out there, this fund can also help you make a lot of money over time.

Historically, the S&P 500 itself has earned an average rate of return of around 10% per year. While you likely won't experience 10% returns year after year, all the ups and downs should average out to roughly 10% per year over the long run.

How much you'll need to invest per month will depend on how long you have until retirement. Assuming you're earning a 10% average annual return, here's approximately what you'd need to invest per month to reach $1 million, depending on the number of years you invest:

Calculations by author via Investor.gov.

Time is your most valuable resource when it comes to saving for retirement. The sooner you get started, the less you'll need to invest each month to reach your goals.

You don't need to know a lot about investing to retire a millionaire, but you will need the right strategy. Regardless of where you invest, getting started early and saving consistently will make it far easier to build a million-dollar nest egg.