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Investing consistently over many years is the key to building a healthy retirement fund, and the longer you give your money to grow, the less you’ll need to save each month to see significant progress.
Contributing even $100 per month to your 401(k) can go a long way over time. If you were to invest consistently for 10 years, you could accumulate more than you might think.
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Building long-term wealth for retirement
Exactly how much you could earn will depend on your return on investment, and that will differ based on the specific funds you’re buying. But the overall stock market has earned an average rate of return of 10% per year over the past 50 years.
Let’s say you’re contributing $100 per month while earning a 10% average rate of return. Over 10 years, that would add up to approximately $19,000 in total. But you could earn exponentially more if you have even a few more years to invest.
| Number of Years | Total Savings |
|---|---|
| 10 | $19,000 |
| 15 | $38,000 |
| 20 | $69,000 |
| 25 | $118,000 |
| 30 | $197,000 |
| 35 | $325,000 |
Data source: Author’s calculations via investor.gov.
Also, if you’re earning a company match through your 401(k), that could instantly double your contributions. By investing $200 per month, with half of that coming from employer contributions, you could earn a total of more than $38,000 in 10 years — assuming you’re still earning a 10% average annual return.
Saving for retirement takes time and consistency, but small steps add up over time. By contributing whatever you can afford and leaving your money alone for at least a decade or two, you’ll be on your way to building a robust nest egg.
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