This is How Long it Takes to Save a Million Dollars

One Million Dollars
Investing
2

Ever wonder how long it takes to save a million dollars? The short answer is it depends how much you can save each month and how well your investment performs.

Admittedly, one million dollars is not what it used to be, thanks to inflation. But it’s still a reasonable goal for many considering the median net worth of the average U.S. household is only $97,300. The number is even lower if you exclude the equity in their homes.

A very liquid million dollars invested in BAA-rated corporate bonds can easily yield over $50,000 passive income per year. Not enough to fund a lifestyle that involves multiple vacations to Hawaii, but sufficient for many couples who are retiring in their mid 60’s debt free.

Here’s how long it would take using a variety of ways to stash your money.

$100 saved per month

Savings vehicleRate of returnYearsInflation adjusted value
Under the Mattress0%833 $.01 (one penny)
Savings (CD)2%144 $42,000
High-Yield Bonds5%75 $190,000
S&P 500 Index Fund10%44$378,000

“Holy cow! It takes 833 years to save $1 million if I stash one Benjamin per month under my mattress??”

Yes, sir. I doubt that your mattress (or the United States of America, for that matter) will last that long, but if it did, your one million dollars would be more or less the equivalent of one penny in today’s money.

If you want to see a million dollars in your brokerage account, you’ll need to invest more— a whole lot more!

This is why I’m no fan of investing your spare change using a phone app like Acorns or Stash. You think you’re investing for your future, but it’s more like you’re saving for your next iPhone.

May I suggest, a thousand dollars?

$1,000 saved per month

Savings vehicleRate of returnYearsInflation adjusted value
Under the Mattress0%83$160,000
Savings (CD)2%49$338,000
High-Yield Bonds5%33$482,000
S&P 500 Index Fund10%22$615,000

Now that looks more like it! Saving your Benjamins under your mattress still sucks, but at least you don’t need to be reincarnated nine or ten times to be able to see your $1 million pile of stash.

If you’re smart, you’ll invest it in low-cost index funds like the one that tracks the S&P 500. That way, it will take you only 22 years, hypothetically speaking, based on a 10% Compound Annual Growth Rate or CAGR.

Of course, the stock index might be up 30% one year and down by 10% the next depending on how volatile the market is. But the CAGR will give you the annual rate of return as if your investment had grown at a steady upward (or downward, if you are losing money) pace.

But that 10% annual return is only hypothetical, “How long has it historically taken to save a million dollars?” you may ask.

Let’s find out.

The chart below shows the actual returns of the index since 1928. We’ll use the data to calculate the results.

S&P 500 Historical Annual Returns

Related: Visualizing the Best and the Worst Days of the Dow

Of course, index funds didn’t exist until John Bogle introduced it in 1975. But assuming you could, let’s see how long it would have taken if you invested $1,000 per month.

Here are the results in various periods.

Post Great Depression: 22 years

Growth of $1,000 per month invested in S&P 500
1929 to 1951

It’s unlikely that you’d be able to stash $1,000 early in the period as many Americans were lining up in soup kitchens. But if you did, you’d save a million by 1951. Not bad considering that the returns were in the red in 10 of the 22 years.

Post World War II: 16 years

Growth of $1,000 per month invested in S&P 500
1941 to 1956

As the Cold War unfolded in the decade and a half after World War II, the country experienced phenomenal economic growth.

$1,000 monthly contribution from 1941 to 1956 will grow to a million in just 16 years!

Not so Fabulous ’50s to ’70s: 27 years

Growth of $1,000 per month invested in S&P 500
1953 to 1979

The ’70s weren’t particularly fabulous for stocks. Thanks to Nixon’s ending the convertibility of the U.S. dollars to gold. The 1973 Oil Embargo didn’t help either.

It would have taken you 27 years— the longest in any period— to save a million dollars.

The Roaring 80’s and 90’s: 16 years

Growth of $1,000 per month invested in S&P 500

The great bull market of the ’80s and technology boom of the ’90s would have pulled you into millionaire status the fastest— also 16 years— faster by a hairline than the postwar boom!

Final thoughts

The median household income of Americans in 2018 is around $60,000. If every household saves just 20% of their income ($1,000 per month) and invests them in a low-cost index fund that tracks the S&P 500, most could become millionaires in as little as 16 years.

Sadly, many will instead lease or finance a brand new car that can cost them $500 a month for freaking seven years. Heck, that’s a thousand dollars for a couple!

Is driving a new car worth a million dollars to you?

Think about it. A used Toyota can easily last 20 years— enough time to save one million dollars.

See also: Is $1 Million Dollars Enough to Retire? – Dividend Power



Nice and easy to digest the info. It’s amazing how even with the great impact of historically significant events like in the 50’s to 70’s, the market trends still go up in the long term.

With everyone and their cat talking about a looming recession in the US, it’s great to keep this in mind.

Very true. If the stock market can survive the Great Depression and two World Wars, events like Brexit, Chinese tariffs, etc. are just small hiccups. Passive investors have nothing to fear but themselves.

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