Here's How Much You'd Need to Put in Your 401(k) to Save $1 Million in 30 Years

What’s your ultimate investing goal? For many people, a million-dollar retirement nest egg is still a symbol of financial freedom.

And such a figure isn’t out of reach for those earning average incomes. The key isn’t a few brilliant trades or pouring all of your discretionary income into your retirement fund. Saving $1 million for retirement is achievable with modest but consistent contributions over the course of your career.

To that end, here’s how much you’d need to put into an employer-sponsored 401(k) plan every month to end up with $1 million after 30 years.

Crunching the retirement savings numbers

There are a couple of assumptions needed to calculate the number. One of them is the expected return on your money, which you must not only save but invest. For this hypothetical scenario, let’s assume you’re investing your contributions into a fund that more or less mirrors the S&P 500‘s long-term average annual return of 10%. Let’s also assume your monthly contributions throughout your career remain constant.

Given just these two parameters, $450 per month would do the trick. That’s $5,400 per year and $162,000 in total contributions over the entire 30-year period.

Data source: Calculator.net. Chart by author.

In other words, your ending balance consists of more than $800,000 of net gains on your investments, most of which materialize in just the last decade of this time frame as you can see above. Time does most of the work here, but it does take a lot of time for compounding to start working in earnest.

Although this simple example is a good starting point for understanding the kind of money you need to save in a 401(k) over many years to reach millionaire status, it’s missing something. That’s the impact of inflation, both good and bad.

While the above scenario assumes monthly contributions never change, the “good” part of inflation is that it’s usually accompanied by higher wages, so your contributions to your 401(k) can increase as you age and earn more money. That $450 might be tough to set aside every month right now, but it should get easier as your career progresses. You can even increase your contributions and reduce the time needed to reach the $1 million milestone or have an even bigger account balance after 30 years.

However, the “bad” side of inflation is that 30 years from now, $1 million won’t have nearly the same value it does today. Based on the U.S. Bureau of Labor Statistics’ reported long-term average annual inflation rate of about 3%, in 30 years’ time, you’d need roughly $2.5 million to match the buying power of $1 million in today’s dollars.

With that in mind, the chart below offers a look at how your 401(k) balance would look if you intend to save the equivalent of $1 million today over the course of 30 years. Assuming you’ll receive average annual raises of 3% that will increase your contributions by the same amount, you’ll have to save $930 per month in your first year (roughly $11,180 in year one) and increase it 3% every year thereafter.

Calculations performed using Google Gemini. Chart by author.

While this more aggressive scenario accounts for inflation and growing contributions, it does not reflect taxes on your withdrawals in retirement, nor does it factor in a common benefit of 401(k) plans: the company match.

Just do what you can, as soon as you can

Some of you reading this will come away with an appreciation for how steady contributions invested in a simple index fund can add up to a sizable nest egg over time. But some of you may feel discouraged, especially if making any contributions to your 401(k) each month is a tall order, let alone $450.

If you count yourself among the latter, don’t fall into the trap of saving nothing because what you can afford doesn’t fit into one of the tidy scenarios discussed above. Setting aside what you can here and now provides you with a foundation to build on when opportunities come along in the future. Your income is likely to change, and life’s circumstances may eventually allow you to start saving considerably more money.

Most importantly, starting now means your 401(k) balance is more likely to have the runway it needs to benefit from long-term compounding. Time will do most of the heavy lifting for any portfolio’s growth.