How Much 40-Year-Olds Should Invest Each Month To Have $1M By Age 65

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For many people, becoming an millionaire is an appealing milestone. For some, it may be the amount of money they need in order to leave the workforce for good. For others, a million dollars would allow them to support their own lifestyle needs while also passing down some of the money as generational wealth. But unless you were already born into extreme wealth or you win the lottery, earning a million dollars is much easier said than done.

However, investing your money can make that journey a little easier. According to Brian Stivers, a Financial Advisor and Founder of Stivers Financial Services, there are three important elements when it comes to investing: the amount you contribute each month, the rate of return and how long you have to reach your goal. With this in mind, you can actually invest enough money to earn yourself one million dollars.

Below, Select breaks down how much money you need to invest as a 40-year-old to become a millionaire by age 65, the traditional retirement age.

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How much a 40-year-old needs to invest to become a millionaire

When making calculations, Stivers accounted for three different return rates: 3% (a conservative portfolio of mostly bonds), 6% (a combination of stocks and bonds) and 9% (a portfolio that’s stock-heavy or contains index or mutual funds yielding around 9% on average). And, he used a retirement age of 65, which would give 40-year-olds 25 years to save. Here’s how much 40-year-olds would need to invest each month to become a millionaire by the traditional retirement age:

  • If making investments that yield a 3% yearly return, a 40-year-old would have to invest $2,250 per month to reach $1 million by age 65.
  • If they instead contribute to investments that give a 6% yearly return, they would have to invest $1,500 per month for 25 years to end up with $1 million.
  • But if they choose investments that yield a 9% yearly return, which is comparably more aggressive, they would need to invest $950 per month for 25 years to reach $1 million.

Previously, Select worked with Stivers to figure out how much money 35-year-olds should invest each month to become a millionaire by age 65. The same rates of return were considered and we found that — across the board — 40-year-olds would have to invest much more money each month to reach the same goal by the same age.

For example, a 35-year-old investing for a 9% average yearly return would need to contribute $590 per month. But if they waited just five years until they were 40, they’d have to invest $360 more each month.

A five-year age difference may not seem like much, but when it comes to investing it can have a huge impact on how aggressive your contributions need to be. This is because compound interest is most powerful when it has a longer amount of time to grow your money.

If you start even earlier at 25, with aggressive investments returning 9% on average, you would only need to invest $240 per month for 40 years to reach $1 million.

Depending on your circumstances, making such aggressive contributions may feel like a squeeze. In fact, many people must often prioritize other life expenses, such as raising a child or caring for aging parents — or both simultaneously, and more. However, it’s important to keep in mind that even making smaller contributions can grow and potentially have a profound impact on your financial situation over time.

So even if you can’t afford to invest $950 a month, the sooner you start investing what you can, the more time compound interest has to work its magic.

Over the years, many investing apps have made the process of growing wealth more accessible to more people with different needs. Acorns, for example, allows users to invest the “spare change” they accrue from making everyday purchases like coffee, textbooks and clothing — purchases they were going to have to make anyway. This way, they’re basically investing on autopilot. Other apps like Robinhood allow you to invest in fractional shares — a portion of a stock’s share based on the amount of money you want to invest rather than the number of shares you want to purchase — with as little as $1. Fractional shares can be instrumental if you can’t yet afford a full share of a stock but still want to get some skin in the game.

But the options don’t stop there. Some platforms apps, like Wealthfront and Betterment, use robo-advisors to help you determine which investments make sense for you based on your risk tolerance, goals and retirement date. Robo-advisors also take on the task of automatically rebalancing your portfolio as you get closer to the target date for your goals (be it retirement or buying a house). This way, you don’t have to worry about adjusting the allocation yourself.

It’s also important to note that when investing in stocks, you shouldn’t just throw your money at random individual stocks. A tried and true strategy is to invest in index funds or ETFs that track the stock market as a whole, like the S&P 500. According to Investopedia, the S&P 500 has historically returned an average of 10% to 11% annually, so you might expect a fund tracking this index to produce similar returns. Also note that past returns do not guarantee future success.

Bottom line

Investing can be a very impactful way to grow your money, especially when you consider the three main factors that play a role in how much wealth you build: rate of return, how much you invest each month and, of course, time.

Regardless of what your money goals are, beginning with small steps can make a difference. But if your aim really is to invest your way to $1 million, the sooner you start, the more time your money will have to grow.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.


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