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3 Realistic Paths to a $1,000,000 Retirement

By Catherine Brock – Updated Nov 23, 2021 at 12:17PM

Key Points

  • Tax-deferred accounts allow for faster wealth production because you don't have to liquidate investments to pay taxes.
  • You can keep taxes low in a taxable account by focusing on buy-and-hold stocks that don't pay dividends.
  • Real estate investing can build wealth, but there are big risks to consider.

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The clock is ticking. Kick off one of these three millionaire retirement plans now.

Dreaming of a millionaire retirement? Good news: Your goal is realistic. Given enough time and the right plan, you can grow your wealth to the seven-figure mark. Here are three accessible ways to do it.

1. Invest in your 401(k)

If you have a workplace retirement account, that may be your simplest path to million-dollar wealth. This is because your contributions to that account are tax-deductible and the earnings are tax-deferred. The tax deduction lowers your cost of saving. The tax deferral allows all your money to stay invested over time, which expedites growth.

Senior celebrates with hands in the air at home, sitting at desk.

Image source: Getty Images.

There are two keys to taking your 401(k) balance to $1 million: You must start young and keep investing. You can see this in the table below. It shows the continuous monthly contributions required to reach $1 million, depending on the age you start saving.

Starting Age

Monthly Contribution (Including Employer Match)









Table data source: Author calculations via

These numbers make two assumptions:

  1. Your account is growing 7% annually on average, which is in line with the stock market's long-term performance.
  2. Your planned retirement age is 65.

As you can see, the monthly contribution that gets you to $1 million is more realistic when you start no later than age 35. The $1,318 number, for example, is 27% of the average 40-year-old's salary. Contributing that much probably requires a lifestyle downgrade.

2. Invest in an IRA and taxable account

If you don't have access to a 401(k), you can invest in an IRA and a taxable brokerage account. You need both because the IRA contribution limits aren't sufficient unless you start saving in your mid-20s.

Here's how this plan will work. You'll max out your tax-deductible IRA contributions every year and then save additional amounts to your taxable brokerage account. In 2022, the maximum IRA contribution for anyone under age 50 is $6,000. The table below shows how you might split contributions between the two accounts to reach a seven-figure balance by retirement.

Starting Age

Monthly IRA Contributions

Monthly Deposits to Brokerage Account



None needed










Table data source: Author calculations via

This scenario also uses an average annual growth rate of 7% and an expected retirement age of 65. There's one more assumption, and it's a doozy. If you incur taxes in the taxable brokerage, you'd have to absorb them on your own -- without pulling cash from that account.

To keep your tax bill low, use your brokerage account exclusively for "buy-and-hold" stocks that don't pay dividends. That way, you only incur taxes when you sell a position to take profits. You'd keep any dividend- or interest-paying securities in your tax-advantaged IRA.

3. Buy real estate

Investing in real estate is riskier and more work than 401(k) investing, but it may allow for a shorter timeline.

The timeline can be shorter because you would finance your property purchases. That's the good news. The bad news is you'd need funds for a down payment. You'd also need to buy the right properties under the right terms. Essentially, your debt repayments plus taxes and expenses must be less than the rents you collect.

As your property increases in value, you can refinance to convert some of your home equity into cash. That cash could then fund another down payment. You can build out your portfolio that way until your equity value exceeds $1 million.

To improve your chances of success, find a mentor who can show you the ropes. Learn as much as you can about real estate investing and being a landlord before you put any money on the line. This plan requires debt, which you'll eventually have to pay off. Don't underestimate the risk involved.

The millionaire path

There are other ways to become a millionaire retiree. You could start a business that becomes successful, for example. Or, less practically, you could inherit money or win the lottery. These other strategies obviously require varying degrees of luck to be successful.

Investing in stocks or property only relies on luck when you don't have time. Give yourself 20 years or more to build wealth, and you can make things happen through discipline. That's liberating, right? Start working your plan now, and a millionaire retirement could be yours for the taking.

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