How to Have $1 Million By The Time You Retire
In this episode of Money Rehab, Nicole Lapin breaks down how the timing of retirement investments affects the amount needed to reach a million-dollar goal by retirement age. The discussion examines how monthly contribution requirements increase significantly with each decade of delayed investment, demonstrating the substantial impact of compound interest on long-term savings.
The episode explores practical strategies for those who need to catch up on retirement savings, including catch-up contributions for individuals over 50, ways to generate additional income through side work, and the benefits of delaying retirement. Lapin explains how small daily savings can add up to meaningful monthly investment contributions, and details how extending working years can both increase Social Security benefits and provide more time for investments to compound.
This is a preview of the Shortform summary of the Sep 11, 2025 episode of the Money Rehab with Nicole Lapin
Sign up for Shortform to access the whole episode summary along with additional materials like counterarguments and context.
1-Page Summary
Retirement Investment Amount By Starting Age
The age at which you begin investing for retirement significantly impacts the monthly contribution needed to reach your retirement goals. Starting at age 20, a monthly investment of $165 can grow to $1 million by age 67. However, waiting until age 30 requires doubling the monthly investment to $340. This amount increases dramatically to $820 per month when starting at age 40, and rises to $1,920 monthly for those beginning at age 50.
For those starting at age 50, extending retirement from 67 to 70 can reduce the required monthly investment from $5,700 to $3,700.
The Impact of Compound Interest and Starting Early
The power of compound interest makes early investment particularly advantageous. When investments generate returns that are then reinvested, the growth becomes exponential. This explains why someone who starts investing $165 monthly at age 20 can reach $1 million by age 67, while waiting until age 30 requires nearly double the monthly contribution to achieve the same goal.
Strategies For Catching Up On Retirement Savings
For those behind on retirement savings, several strategies can help bridge the gap. Those 50 or older can take advantage of catch-up contributions, with an additional $7,500 allowed in 401(k) contributions by 2025. Additional income through side hustles, freelancing, or monetizing assets like unused space can boost investment potential.
Reviewing and revising spending habits can free up additional funds for retirement savings. For instance, saving $27 daily amounts to $820 monthly in potential investment funds. Additionally, delaying retirement to age 70 not only allows for more years of investment compounding but also increases Social Security benefits by 8% annually between ages 67 and 70.
1-Page Summary
Additional Materials
Clarifications
- The monthly investment needed to reach $1 million by retirement varies based on the age you start investing. Starting at age 20 requires $165 monthly, age 30 requires $340, age 40 requires $820, and age 50 requires $1,920. Extending retirement from 67 to 70 can reduce the required monthly investment for those starting at age 50 from $5,700 to $3,700.
- Compound interest is the interest calculated on the initial principal and also on the accumulated interest from previous periods. In the context of retirement savings, compound interest allows your money to grow exponentially over time. By reinvesting the returns earned on your investments, you can benefit from compounding, which accelerates the growth of your retirement fund. Starting to invest early harnesses the power of compound interest, enabling your savings to grow significantly over the long term.
- Catch-up contributions are additional amounts that individuals aged 50 or older can contribute to their retirement accounts beyond the standard limits set by the IRS. These extra contributions are designed to help older individuals boost their retirement savings as they have less time to save compared to younger investors. The IRS sets specific catch-up contribution limits for various retirement accounts like 401(k)s and IRAs, allowing older savers to make higher contributions to catch up on their retirement savings. Catch-up contributions can provide a valuable opportunity for individuals nearing retirement age to accelerate their savings and better prepare for their financial future.
- To increase retirement savings through side hustles, individuals can take on additional work outside of their primary job, such as freelance projects or part-time gigs. Freelancing involves offering services independently to clients for a fee, allowing for extra income that can be directed towards retirement savings. Monetizing assets like unused space involves leveraging underutilized resources, such as renting out a room or property for supplemental income. These strategies provide opportunities to boost one's overall investment potential and contribute more towards retirement goals.
- When you delay claiming Social Security benefits past your full retirement age, you can earn delayed retirement credits. These credits increase your benefit amount by 8% for each year you delay, up to age 70. This means that if you delay claiming benefits from age 67 to 70, you could potentially receive up to 24% more in Social Security benefits.
Counterarguments
- The calculations assume a constant rate of return, which may not reflect real-world market fluctuations and economic downturns.
- The model does not account for inflation, which can significantly erode purchasing power and investment returns over time.
- The figures do not consider changes in tax laws, investment fees, or other costs that can impact net savings and investment growth.
- The assumption that one can consistently save a fixed amount monthly may not be realistic for everyone, given life's uncertainties and financial emergencies.
- The strategy does not take into account individual risk tolerance and the potential need for a more conservative investment approach as one nears retirement.
- The idea of delaying retirement to increase Social Security benefits assumes that the individual is in good health and can continue working, which may not be the case for everyone.
- The suggestion to monetize assets or start side hustles may not be feasible for all individuals, depending on their skills, resources, and life circumstances.
- The text assumes that catch-up contributions will be a viable option for everyone over 50, but this may not be possible for individuals with limited income.
- The daily savings example of $27 may be simplistic and not take into account the variability in daily expenses and the challenge of consistent saving for some individuals.
- The text does not address the potential psychological and lifestyle impacts of working longer and delaying retirement, which may be significant for some individuals.
Related Shortform Content
Get access to the context and additional materials
Retirement Investment Amount By Starting Age
Planning for retirement is crucial, and the sooner one starts, the lower the monthly investment required to achieve a comfortable retirement will be.
Ideal Monthly Investment Varies By Retirement Start
Invest $165/Month From Age 20 to Reach $1 Million By 67
For those looking to retire with $1 million by age 67, beginning to invest at age 20 is the most cost-effective strategy. It requires a manageable monthly investment of just $165. The total contributions over 47 years would amount to approximately $93,000. The rest of the million dollars is expected to be made up through the power of compound interest.
Invest $340 Monthly From Age 30 to Hit $1M By 67
However, if the investment journey starts at age 30, the amount needed to achieve the same goal by age 67 rises significantly. A monthly investment of $340 becomes necessary to reach that $1 million milestone.
Investment Requirement Rises To $820/Month At Age 40
Putting off starting the investment until age 40 further increases the monthly investment required.
Starting At 50: Invest $1,920 per Month
Those who wait until age 50 to begi ...
Here’s what you’ll find in our full summary
Retirement Investment Amount By Starting Age
Additional Materials
Clarifications
- Compound interest is the interest calculated on the initial principal and also on the accumulated interest from previous periods. It allows your savings to grow faster over time as the interest earned in each period is added to the principal for the next period's calculation. This compounding effect accelerates the growth of your retirement savings, especially over long periods. The earlier you start saving and investing, the more time your money has to compound and grow, leading to a significant increase in your retirement fund.
- Starting retirement savings early is crucial due to the power of compound interest, which allows money to grow over time. By beginning to invest at a younger age, individuals can benefit from more years of compounding returns, requiring smaller monthly contributions to reach their retirement goals. This strategy helps to alleviate the financial burden in later years and provides a more comfortable retirement lifestyle. Starting early also allows for more flexibility and the potential to adjust investment strategies over time.
- The relationship between the starting age of retirement savings and the required monthly inv ...
Counterarguments
- The assumption of a $1 million target may not account for individual differences in retirement needs, inflation, or changes in purchasing power.
- The calculations assume a constant rate of return, which may not reflect the volatility and uncertainty of real-world investing.
- The text does not consider the impact of taxes or fees on investment returns, which can significantly affect the final retirement amount.
- The model assumes that the investor will not experience any interruptions in their ability to contribute, such as periods of unemployment or financial hardship.
- The strategy does not account for potential changes in life expectancy, which could affect how long retirement savings need to last.
- The text does not address the potential benefits of other retirement savings vehicles, like employer-sponsored retirement plans or government benefits.
- The idea of a "comfortable retirement" is subjective and varies greatly depending on personal circumstances, location, and lifestyle expectations.
- The text assumes that the individual has the financial capacity t ...
Related Shortform Content
Get access to the context and additional materials
The Impact of Compound Interest and Starting Early
The financial benefit of starting to invest early is likened to a superpower due to the effects of compound interest, which allows for smaller monthly contributions to lead to significant growth over time.
Start Investing Early, Contribute Less Monthly to Reach Retirement Goals
Compound Interest Causes Your Investments to Grow Exponentially
The concept of compound interest is highlighted as a pivotal element in the growth of investments. It's described as an instance where the money you invest earns a return, and those earnings then generate additional earnings. This cycle causes the value of the investment to increase exponentially over time.
Investing $165/Month At 20 Can Grow To $1 Million By 67
To illustrate the impact of starting early, the speaker outlines a scenario where an individual begins investing $165 per month at a 7% annual return rate starting at the age of 20. Due to the power of compound interest, this consistent monthly investment strategy would result in a total sum of $1 million by the age of 67.
Start Investing At 30 ...
Here’s what you’ll find in our full summary
The Impact of Compound Interest and Starting Early
Additional Materials
Clarifications
- Compound interest is the interest calculated on the initial principal and also on the accumulated interest from previous periods. This compounding effect allows investments to grow exponentially over time. Essentially, the money you invest earns interest, and that interest then earns more interest, leading to accelerated growth of your investment. Starting to invest early harnesses the power of compound interest, enabling even small contributions to accumulate significantly over the long term.
- Compound interest allows money to grow exponentially over time as the initial investment earns returns, which then generate additional earnings. Starting to invest early with smaller monthly contributions can lead to significant growth due to the compounding effect. In the scenario provided, starting to invest $165 per month at 20 with a 7% annual return can accumulate to $1 million by age 67, showcasing the power of compound interest. Conversely, starting at 30 would require almost double the monthly contribution, $340, to reach the same $1 million goal by age 67, emphasizing the advantage of early investing.
- Investing early involves putting money ...
Counterarguments
- The assumption of a constant 7% annual return may be overly optimistic and does not account for market volatility, inflation, or economic downturns.
- The model does not consider taxes or fees, which can significantly reduce the effective return on investment and the final amount accumulated.
- The strategy assumes that an individual has the financial capacity to invest consistently from a young age, which may not be feasible for everyone due to varying socio-economic backgrounds.
- The focus on a single investment strategy does not take into account the need for diversification to mitigate risk.
- The example does not consider life events that may interrupt or alter the ability to make consistent investments, such as unemployment, health issues, or family obligations.
- The narrative may oversimplify the challenges of investing and the discipline required to invest regularly over a long period.
- The illustration assumes that the individual has no debt or other financial obligations that could be prioritized over investing, such as student loans or emergency savings.
- The scenario does not ad ...
Related Shortform Content
Get access to the context and additional materials
Strategies For Catching Up On Retirement Savings
Many individuals find themselves behind on their retirement savings goals. However, there are strategies that can help catch up, maximize contributions, and potentially secure a more comfortable retirement.
Catch Up On Retirement Savings
Maximize 50+ Catch-Up Contributions for 401(k) & IRA
For those who are 50 or older, taking advantage of the increased contribution limits for retirement accounts is a key strategy. In 2025, for example, the 401(k) limit is $23,000, but if you’re 50 or older, you can add an additional $7,500. Make sure you're maximizing these contributions to take full advantage of the catch-up provisions offered by these accounts.
Boost Investment Potential With Side Hustles, Freelancing, or Asset Monetization
Earning additional income through a part-time freelance or consulting gig can assist in meeting monthly investment targets. You could also leverage unused space by renting out a room, garage, or parking spot. Furthermore, evaluate unused assets, such as extra vehicles or old collectibles. Getting these items appraised and sold can transform clutter into investment capital.
Revise Spending Plan to Increase Retirement Savings
Review your spending plan to identify and eliminate lifestyle creep—a situation where increased earnings lead to proportionally increased spending. Addressing any "leaky" areas in your budget, like daily expenses that could add up to significant savings over a month, is essential. For instance, saving $27 a day adds up to $820 a month. Also, automate increases in your investment contributions by 1-2% each time y ...
Here’s what you’ll find in our full summary
Strategies For Catching Up On Retirement Savings
Additional Materials
Counterarguments
- Maximize 50+ Catch-Up Contributions for 401(k) & IRA
- Counterargument: Not everyone may have the financial capacity to maximize their contributions, especially if they are already behind on savings and facing other financial obligations.
- Alternative POV: Some individuals may benefit more from paying down high-interest debt before maximizing retirement contributions to improve their overall financial situation.
- Boost Investment Potential With Side Hustles, Freelancing, or Asset Monetization
- Counterargument: Side hustles and freelancing require time and energy, which may be scarce resources for individuals already struggling to balance work and personal life.
- Alternative POV: The gig economy can be unpredictable and may not provide a stable enough income to significantly impact retirement savings.
- Revise Spending Plan to Increase Retirement Savings
- Counterargument: Cutting expenses has a limit and may not be a viable long-term strategy for significantly increasing retirement savings.
- Alternative POV: Overemphasis on cutting costs could lead to a lower quality of life and may ...
Actionables
- You can create a visual roadmap of your retirement goals by using a free online mind mapping tool to visually connect your current financial status with your desired retirement outcomes, including catch-up contributions and potential side hustles. This visual aid can help you see the direct impact of your actions on your retirement plans and keep you motivated to follow through.
- Consider starting a micro-saving habit by setting up automatic transfers of small amounts from your checking to your retirement accounts whenever you engage in daily activities like buying coffee or commuting. Apps that round up your purchases to the nearest dollar and transfer the difference into a savings account can make this process seamless and build your savings without feeling the pinch.
- Engage in a mon ...
Related Shortform Content
Get access to the context and additional materials
Create Summaries for anything on the web
Download the Shortform Chrome extension for your browser
