3 Ways to Grow $100,000 Into $1 Million for Retirement Savings

Building a million-dollar retirement fund isn't easy, but it is possible. And for many older adults, saving $1 million or more is a realistic goal. In fact, the average worker expects to need a whopping $1.8 million to retire comfortably, according to a 2023 survey from Charles Schwab.

There's no single best way to build long-term wealth, as your strategy will depend on your personal preferences and risk tolerance. But these three approaches can grow $100,000 into $1 million or more, and at least one of them will likely fit your needs.

1. Contribute to your 401(k)

Perhaps the simplest way to grow your savings is through a 401(k) at your job -- if you have access to one. With many plans, you can set up automatic contributions straight from your paycheck directly to your retirement account, making it easier to build saving into your budget.

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Some 401(k) plans also offer matching contributions from your employer, which is essentially free money. By taking full advantage of the employer match, you can instantly double your savings with next to no effort on your part.

One downside to 401(k)s, however, is that they usually don't offer many investment options. Most plans have a small variety of mutual funds to choose from, and if none of those options fit your needs, you're out of luck. In some cases, it can be tougher to substantially grow your savings.

That said, it's still possible to retire a millionaire with a 401(k). If you're earning a modest 7% average annual rate of return on your investments and you're starting with $100,000, here's what you'd need to contribute each month to reach $1 million:

Data source: Author's calculations via investor.gov.

The more time you have to save, the easier it will be to accumulate $1 million or more. If you're looking for a simple investment that requires little effort and you still have a few decades left to save, investing in a 401(k) may be your best bet to retiring as a millionaire.

2. Invest in low-cost index funds

An index fund is a collection of stocks that aim to replicate the performance of a particular index, such as the S&P 500. An S&P 500 index fund, for example, will include the same stocks as the index itself and earn roughly the same returns as the index over time.

Investing in index funds requires slightly more effort than contributing to a 401(k). Depending on where, specifically, you invest, index funds could also carry more risk than a 401(k). However, you'll also have more control over your portfolio, and there's a better chance you'll earn higher returns over time.

There are countless index funds to choose from, including broad-market funds that track major market indexes like the S&P 500 to more niche funds that follow certain industries. The possibilities are nearly endless, and with index funds, you can build a well-diversified portfolio that fits your unique needs.

It's also possible to reach millionaire status with this type of investment. Say, for example, you're starting with $100,000 in savings and earning a 9% average annual return -- which is just below the market's historic average. Here's what it would take to reach $1 million:

Data source: Author's calculations via investor.gov.

In this case, if you have at least 30 years to save, you may not need to invest anything each month. Thanks to compound earnings, the returns you earn on your initial $100,000 could be enough to take you to $1 million without any additional investments.

3. Invest in individual stocks

Investing in individual stocks is the most effort-intensive option of the three here, but it's also the most potentially lucrative. When you have a portfolio full of strong and healthy stocks, it's possible to earn far higher-than-average returns over time.

This strategy does require much more research than contributing to a 401(k) or investing in index funds, as you'll need to study each company's underlying fundamentals to decide whether a stock is a strong investment. Even after you buy, you'll need to keep up with all of your stocks to determine whether they're worth holding or if you should consider selling.

Not everyone is willing or able to put this much time and effort into investing, and that's OK. But if you're serious about maximizing your retirement savings, it could be worthwhile. Say you're starting with $100,000 and are earning an 11% average annual return. Here's what you'd need to invest each month to reach $1 million:

Data source: Author's calculations via investor.gov.

Keep in mind that as you get closer to retirement, it's wise to start shifting your investments toward the conservative side -- perhaps by investing less in stocks and more in bonds. Market volatility can wreak havoc on your retirement fund, and if you're investing in individual stocks, it's even more important to ensure your asset allocation is safe for your age.

There's not necessarily a right or wrong way to invest, as it will depend on your situation and preferences. But whether you're looking for a low-effort way to build wealth or aiming to maximize your returns, there's a strategy to fit your needs.