Many of us dream of hitting the million dollar mark for retirement. It’s a great goal to pursue, but **how long does it actually take to save $1 million dollars**? The answer, as with most money questions is… it depends!

If you’re young, you have one of the most important elements of saving $1 million dollars on your side; the element of time. It’s amazing how big of a difference 10 extra years can make in your quest for a million. If you get one thing out of this website, I hope it’s **the importance of starting to save and investing today.**

Time is an important factor because it allows your money to have babies (earnings) and then those babies eventually have more babies! This babies having babies concept is called compounding. Even the genius Albert Einstein understood the importance of compounding when he called it the “8th wonder of world”.

How does time impact your quest for a million? Let’s say your goal is to save $1 million by the age of 60 and you invest in the stock market and are lucky enough to average a 10% return on your money. Here’s what you will have to save each month to hit a million:

If you are 10 years old: $50/month

If you are 20 years old: $150/month

If you are 30 years old: $450/month

If you are 40 years old: $1,250/month

If you are 50 years old: $5,000/month

You see why I say it’s important to start early??? Yes, in 50 years $1 million won’t be nearly as significant as it is today, but neither will your $50/month savings!

The second most important factor in your quest to save $1 million dollars is risk. You must take risk if you want your money to work for you. There are different levels of risk you can take with your money. The less risky moves are to store your money in a bank savings account or a similar low interest account such as a CD or money market account. The riskier options are investing in the stock market or other areas such as commodities. How does risk affect your quest for a million?

Let’s take the same sample above, except change the average return to 2%. You will have to save this much money each month to hit a million:

If you are 10 years old: $1,000/month

If you are 20 years old: $1,350/month

If you are 30 years old: $2,000/month

If you are 40 years old: $3,200/month

If you are 50 years old: $5,000+/month

Wow! Now instead of your money doing the heavy lifting over time, you’re doing all of the work yourself! I never would have guessed it would take $1,000/month for 50 years at 2% return to reach $1 million. The main reason is it takes 36 years for your money to double at 2% return vs 7.2 years to double at 10% return.

Unless you have a ton of money to throw at the problem, you have to take risk if you want to hit that million dollar mark. The amount of risk you need to take in order to reach one million is largely dependent on your timeline and contribution amount. If you aren’t willing to take risk, your quest to $1 million will take much longer.

The other important part of risk is to manage it depending on your age. We’ve already established the most important part of investing is dollar cost averaging and staying the course, but remember the stock market is quite volatile and goes down from time to time.

My favorite rule for determining how much risk you should take is the rule of 100. Take your age and subtract it from 100; this is the amount you should invest in the stock market (vs bonds, CDs, etc). For example, if you are 30 years old, you should have 70% of your money in the stock market (100-30 = 70%).

Saving one million dollars is possible, but you must start today. Click here to find out how to start investing. How long will it take you to save one million dollars?

Check out the full “how long will it take to save one million” chart in the money tools. ** Do you think you’ll be able to save $1 million dollars?**

So, I checked out your money tool, and found that at my current rate of saving/investing and the percent I get on that, it will take me 40 years to make that first million. That means I will be 77 years old. That sucks. I need to save ALOT more to hit it sooner. I need to go back to that tool and see how much I have to amp it up to make that first million a lot sooner. The numbers you provided here were very enlightening to me.

I need to start investing. I’ve known this. But it seems like such a scarey proposition since I know nothing about it. I see you have a link for this, investing. 🙂

It can be very overwhelming, but investing for the long term is definitely more ‘tortoise’ than ‘hare’… the important thing is that you’ve started, and the second most important thing is that you continue!

You couldn’t have hit it on the head any better. Generally, a younger person is less concerned about saving money. For them, it’s all about getting the newest shining thing that catches their attention (present company included). If by some miracle the saving bug catches a younger person very early on, they will never want for anything when it is most needed (as your model shows). Great post, 🙂

Thanks Susan,

I was also included in the group of younger people who liked shiny things… but luckily I was able to snap out of it and preserve a few years in my 20s to start saving to my million(s).