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How Long Will It Take You to Build a $1 Million Retirement?

Successful retirement investing is a long-term business. You can’t time the market, so you must spend time in the market to save a sizeable nest egg.

But even with the proper long-term perspective, it’s not unusual for investors to end up disappointed—even concerned that their retirement plans are failing them—when after several years of investing, they’ve barely saved enough to replace one year’s income!

Slow and Steady Really Means Slow and Steady

For example, an investor with an annual salary of $50,000 invests 15% of his income, $7,500, each year for retirement. He works with an investing professional who helps him decide on a long-term retirement strategy and keeps him on track. At a 10% growth rate, it takes our investor five years for his retirement savings to reach the $50,000 mark.

But things soon pick up steam. Just five years later, his savings has more than doubled and now exceeds $130,000.

You can’t time the market, so you must spend time in the market to save a sizeable nest egg.

That’s just the beginning of what compound interest does for our investor. The amount of money his money earns continues to grow, and finally, 22 years after he first began investing for retirement, he reaches his tipping point. That’s the year his investments earn more than $53,000—more money than our investor earns for a whole year of work!

Coasting to the Finish Line

That’s the moment you know you’ve done this retirement investing thing right—that you’re going to be able to retire with dignity and even leave a legacy for your family.

Be confident about your retirement. Find an investing pro in your area today. 

Dave compares it to that feeling you got as a kid when, on a hot summer day, you rode your bike to the top of a hill, sweating and swerving with every last bit of energy you had. When you finally reached the top of the hill, after a moment’s hesitation, your bike rolled forward. You were speeding downhill with a thrill in your stomach and the wind ruffling your hair. All you had to do is smile and enjoy the ride!

The next few years of investing feel like a blur to our investor—just like the scenery on that downhill bike ride. His money is earning money at a dizzying pace. Just six years after he reaches his pinnacle point, his money earns twice as much as he does at work that year. And, to top it off, his nest egg now exceeds $1.1 million!

Perfect Timing

It’s important to note that our investor’s $1 million year comes only two years before he plans to retire. So if you’re thinking retirement investing is about getting rich quick, think again!

Our investor was 35 years old when he began investing for retirement. Now he’s 65. In that 30 years he and his wife have raised children, bought homes, changed jobs, and paid for college—all the things it takes a lifetime to do, including saving for retirement.

The Best Is Yet to Come

There’s an interesting epilogue to our investor’s story. He retires at age 65 with $1.4 million in savings. The next year, without adding any more to his savings, our investor’s money grows an additional $135,000. For someone used to making ends meet on a $50,000 income, do you think it’s possible for our investor to live off the growth of his retirement savings and still have money left over?

Absolutely! And that’s the ultimate goal of your retirement savings plan—to build enough wealth so you can live off the growth of your savings without touching the principal.That way, you can leave a legacy for your family and bless others through generous giving.

The ultimate goal of your retirement savings plan is to build enough wealth so you can live off the growth of your savings without touching the principal.

Our example investor had a near-perfect investing experience. Yours will be different. You’ll actually get raises—our example investor never did. And sometimes you’ll feel like you’ve taken two steps forward and one step back, thanks to the ups and downs that naturally come with stock market investing. It’s all progress, so don’t get discouraged. Remember, you’re in this for the long term!

If you have the dedication to see your plan through, it’s possible to achieve the same result (or better) than our example investor. Begin with the end in mind and work with an investing professional who can help as you build a plan for your future.

Don’t put it off! Find an investing pro in your area today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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