How to Save a Million Dollars in 20 Years

Saving a million dollars in 20 years is possible with a consistent plan, disciplined contributions and a reasonable rate of return. The exact path depends on how much you can save each month and the performance of your investments over time. Compound interest plays a major role, especially when funds are invested in accounts with long-term growth potential. Whether using tax-advantaged retirement accounts or regular brokerage accounts, small adjustments to savings habits and investment choices can add up over two decades.

A financial advisor can help you create a financial plan for your retirement needs and goals.

Delay Retirement, If Possible

If you’re working toward saving $1 million in 20 years, extending your career even slightly can dramatically improve your odds. Delaying retirement gives your investments more time to compound, which can add tens or even hundreds of thousands of dollars to your portfolio. A few additional years of growth, without withdrawals, can ease the pressure on your savings rate.

Your highest earning years often occur later in your career, which makes them especially valuable for wealth building. Continuing to work allows you to maximize retirement account contributions, including catch-up contributions if you’re eligible. The combination of larger contributions and compounding growth can accelerate your path toward the seven-figure mark.

Retiring later also shortens the number of years your savings must support you. Even delaying retirement by two or three years can reduce the total amount you’ll need to fund your lifestyle over time. That can make the goal of accumulating $1 million more achievable and sustainable.

Delaying retirement doesn’t necessarily mean working full time indefinitely. Transitioning to part-time work, consulting or a lower-stress role can help you continue earning income while maintaining a better work-life balance.

Target a Rate of Return

Whenever you have a financial goal, the first question is to choose a rate of return you want to target. The idea here isn’t that you can select your rate of return, obviously not. Rather this is about risk and reward planning.

A more aggressive portfolio allows you to contribute less each month. But you’ll need flexibility to recover from potential losses. This is a good strategy if you want to dedicate less of your take home income to this retirement account, but can also make large catch-up contributions at need.

If you build a less aggressive portfolio that targets a lower rate of return, you will need to contribute more to the portfolio on a regular basis to reach your goals. But you don’t need to plan for as much risk, so you don’t need as much financial flexibility to make up for losses.

A good rule of thumb is to target 10%. Historically, this has been the average rate of return of the S&P 500. That doesn’t make 10% a guarantee; there are no guarantees in investing. It offers a middle ground between conservative investments, like bonds, and speculative investments, like individual stocks.

Adjust Your Investments for Inflation

Twenty years is a long time. Even during ordinary periods, that’s long enough for inflation to eat away at the value of any fixed-rate contributions. Be sure to account for that in your plans.

However you build your retirement plans, make sure to periodically adjust those contributions for the value of money. If you contribute $100 per month to this account, for example, try to adjust it to $105 in the next year. Ideally, actually adjust your investments based on current inflation numbers. Even small adjustments help preserve your money’s value over time.

Calculate Daily, Monthly and Annual Investments

SmartAsset: How to Save a Million Dollars in 20 Years

If you want to save $1 million in 20 years, how much should you set aside? If we assume a 10% rate of return (again, not a guarantee but an estimate based on the historic average rate of return from the S&P 500), then the truth is that this will take a lot of money. Use an investment calculator to figure out exactly how much to contribute.

In general, you will need to contribute around $1,400 per month to this account in order to reach $1 million in 20 years. For some investors, it may be easier to consider this in terms of annual income, which comes to $16,800 per year.

If you do plan this budget annually, make sure to invest the money in January rather than December. Market timing aside, you’re better off investing early so you can capture the gains of the coming 12 months.

Adjust Your Savings and Time Horizon

Now, the good news for people with a 401(k) plan is that this may be less difficult than it seems. If you have a job with matching contributions, your employer will likely cover several hundred dollars of those monthly savings.

Beyond that, the hard truth is that setting aside $1,400 per month is an enormous lift for most people. If possible. One solution is to extend your savings timeline beyond 20 years. If you’re younger, can you start saving now? If you’re older, can you work a little bit longer?

Both might seem like difficult answers, but even adding a few years to your savings can make a massive difference. For example, it takes $1,400 per month to reach $1 million in 20 years. If you can save for 30 years instead, you only need to set aside around $443 per month.

Bottom Line

Saving $1 million in 20 years is an ambitious but achievable goal with a disciplined plan and consistent execution. By prioritizing higher contributions, investing for long-term growth, managing expenses and taking advantage of tax-advantaged accounts, you can put the power of compounding to work in your favor. Small adjustments, such as increasing savings rates or delaying retirement, can significantly improve your results over time.

Tips to Invest in Retirement

A financial advisor can help you pick retirement investments for your financial plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
SmartAsset’s free retirement calculator can help you figure out how much money you will need to pay for retirement.