How Can I Create a Million Dollar Nest Egg?

Posted by | · · · | financial planning · investing

Wouldn’t it be nice to have $1 million sitting in your bank account? Would you believe me if I told you that you could grow $33,000 to $1 million? If you’re thinking there must be some sort of catch, well there is – it’s called time. In other words, the earlier you start investing then the more likely you can make this a reality.


A helpful article by Dave Ramsey expands upon this concept. The article compares two workers who start investing towards retirement at different times. Worker #1 starts investing $3,000 per year from age 24-34, which leads to a total of $33,000 invested. Worker #2 is a little late to the party and begins  investing $3,000 per year from age 35-65,  a total of $93,000 invested (almost three times as much as Worker #1).


Who has more in retirement savings? If you said worker #1, you’re right. Believe  it or not, Worker #1 totaled $1,173,789 in savings at age 65. Worker #2 only totaled $600,413, which may not be enough for a stress-free retirement. In case you’re wondering, this illustration assumed a 10% rate of return which is unlikely to apply to everyone.


The takeaway here is that your investment time horizon (or the number of years you are invested) can be just as important as how much you invest. Worker #2 had invested almost three times as much as Worker #1, yet ended up with almost half the nest egg. All because he waited 10 years to get started.


If you’re curious what it would take you to get to a million (or maybe your next million), check out the following table:


If You Start Your Retirement Savings at Age… Then you’ll need the following annual rate of return to reach $1 million by Age 70 Put Differently, If You Start Your Retirement Savings at Age… Then you’ll need to invest the following amount each year to reach $1 million by Age 70 (assuming an 8% rate of return)
25 6% 25 $2,400
30 7% 30 $3,600
35 8% 35 $5,400
40 10% 40 $8,200
45 13% 45 $12,700
50 18% 50 $20,300
55 27% 55 $34,200


As you can see, it becomes increasingly difficult to reach the million dollar mark the longer you wait. The only important caveat to all these numbers is that they assume you only need $1 million to last 30+ years in retirement. Depending on your current age, retirement date, living expenses, and various other factors you may need a lot more.


In fact, we’ve created a FREE step by step guide that will help you calculate how much you need to retire. You can access the retirement planning guide by clicking here.


Interested  in learning more about investing? Check out our FREE Investing Guide where you can learn the basics of investing in less than 30 minutes!


If you have any other questions about investing, retirement planning, or wealth management in general, contact Perennial Trust at 781 202 6368, email or visit our website at

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