Even though $1 million doesn't go as far as it once did, it's significantly more than most Americans are able to save. In fact, when it comes to retirement, 21 percent of Americans have nothing saved at all and a third have less than $5,000, according to Northwestern Mutual's 2018 Planning & Progress Study.
So getting to a million remains a great goal. Are you on track? Here's an easy way to find out.
Personal finance blogger Zach of Four Pillar Freedom created a simple chart that breaks down exactly how many years it will take you to become a millionaire, based on your annual savings and rate of return, assuming you're starting from zero. Check out how long it will take you to reach millionaire status:
Zach points out that the less you save, the more crucial it is to invest. "By saving just $2,000 per year with 5 percent returns, it will take you 66 years to become a millionaire," he writes. "But by saving that same amount with 10 percent returns, you can become a millionaire in only 41 years."
The stock market is volatile and it's never possible to guarantee a 10 percent return rate, but the differences he cites do speak to the power of compound interest and the importance of investing generally.
The chart also doesn't account for the many variables that can affect your wealth over several decades, including windfalls, emergencies and rises or dips in the market. But if you're aiming to retire with $1 million or more in the bank, it can give you a good idea how close you are to reaching your goals.
Ready to put your money to work? The simplest way to start is to invest in your employer's 401(k) plan, a tax-advantaged retirement savings account. Next, consider other retirement savings accounts as well, such as a Roth IRA, traditional IRA and/or a health savings account.
You can also research low-cost index funds, which Warren Buffett recommends, and online investment platforms known as robo-advisers.
This is an updated version of a previously published article.
Don't miss: This simple chart will show you how close you are to early retirement
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