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  • Dave Kinzer

How To Save One Million Dollars For Retirement

Updated: May 11, 2020

Ask people how much money they’ll need to save before they can retire, and you’ll hear one amount more than any other: one million dollars.

If that number is correct, then it’s no wonder a lot of people haven’t bothered to start saving for retirement. If you don’t make a lot of money, being told you need to save one million dollars probably feels like standing at the base of Mt. Everest dressed only in swim trunks and flip-flops. You’re never going to make it, so why even try?

How to save a million dollars.
It might take a long time, but it's entirely doable.

Luckily, accumulating one million dollars is completely doable, even if you don’t make six figures.

Here’s the thing: if you invest your money, then you don’t have to save anywhere near one million dollars to end up with one million dollars.

I’ll explain. (For a video summary of how to save $1,000,000, click HERE.)

Let’s say Bob starts saving $300/month for retirement at age 22. Due to his deep distrust of banks and the stock market, instead of depositing the money in a savings account, Bob just stuffs it in a safe in his basement. He does this month after month, for forty years. Finally ready to retire, he counts up his savings and finds he has $144,000.

That’s a nice chunk of change, but since it wasn’t invested, and was only saved, it hasn’t grown at all. Unfortunately, Bob can’t retire at age 62, as $144,000 won’t last very long if that’s his only source of retirement savings.

Let’s start over and say Bob again saves $300/month. He’s afraid to invest in the stock market because he’s concerned the stock market could go down and he’ll lose all his money. So he sticks the money in a high-yield online savings account instead that earns 2%. After 40 years, even though he saved the same amount as before ($144,000), he ends up with $219,000. That’s an increase of $75k!

Much better, but we’re still nowhere near one million dollars.

So let’s look at one more example.

This time, Bob takes his $300/month and contributes to his IRA. He invests in a low-cost mutual fund that buys stocks from the S&P 500. According to, the historical average rate of return on the S&P 500 is right around 10%. If this average continues, the traditional IRA calculator at says after 40 years of his money growing and accumulating in his S&P 500 mutual fund, he’ll have over $1.7 million dollars! If the market only returns 8% over the 40 years, he’ll still wind up with $1,007,212.

And he’s still only contributing $300/month.

There are several variables in these scenarios that will affect the numbers that we don’t have room to discuss in detail here, like Bob’s tax bracket and retirement account fees. Also, what if Bob contributes to a 403b or a 401k instead of an IRA? Does his employer match any contributions?

Would the numbers change if he contributed to a Roth IRA instead of a traditional IRA? What if the market doesn’t continue producing an average return of 10%? What if Bob, at some point, increased his monthly savings?

The answers to these and other valid questions will change the final numbers of course, but the big picture doesn’t change. If you want to amass a sizable amount of money so that you can retire one day, you can’t just save your money. You have to invest it.

If you’re not sure how to begin, don’t let that stop you. Contact me or another financial coach if you have questions. If you want advice on specific mutual funds and/or stocks to invest in, contact a licensed financial advisor.

So, while one million dollars is a lot of money, you can get there as long as you invest your retirements savings. It might take a long time, but you can do it- three hundred dollars at a time.

Doesn’t sound quite so impossible now, does it?

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