Want a $1 Million IRA? Here’s How to Pull It Off on an Average Income

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As of the second quarter of 2024, the average individual retirement account (IRA) balance was $129,200, according to Fidelity. But what if you could retire with $1 million, or roughly eight times that sum?Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. I’m here to tell you it’s more than possible — even if you only earn an average salary. But there’s a bit more to the story than that.How much can you reasonably contribute to an IRA?The average U.S. household income in 2023 was $114,500, according to Motley Fool Money research. Financial experts will often tell you to aim for 15% to 20% of your income as a yearly retirement savings goal. But that may not be realistic, even if you earn six figures.But first, let’s clear one thing up about that average salary. The median household income in 2023 was $80,610, and that may be more representative than the average. Usually, when there’s a discrepancy like this, it’s because a small percentage of very high earners skew the average up.It’s also important to note that many people who earn higher salaries have to live in expensive parts of the country to command those incomes. So $114,500 might seem like a lot of money, but that’s only the case for people in moderate-cost areas. For those in big cities where rent costs $3,000 a month or more, it’s not all that much.It’s important to be realistic about how much money can go into an IRA. Saving 5% of $114,500 has you contributing $5,725 a year toward retirement, or $477 per month. That $477 a month is more like 7% of an $80,610 income. Either way, this reads like a more reasonable savings goal. And you may be surprised to see what you can do with it.Growing your IRA strategicallyLet’s say you’re looking to retire at age 65 and you’re 34 years old. This gives you 31 years to grow your IRA.If you put in $477 a month over 31 years, you’re contributing around $177,700 in total. But I’m going to show you how to get to $1 million without putting in $1 more. It boils down to one key strategy: investing your money in stocks.Over the past 50 years, the stock market has rewarded long-term investors with an average annual 10% return. That includes both strong years and weak ones when the market did poorly. If you invest $477 a month in your IRA over 30 years and earn an average 10% a year, you’re looking at a balance of a little more than $1 million thanks to the returns your portfolio generates during that time.However, let’s say you wait even three years to start contributing $477 a month to your IRA. At that same 10% return, you’d reduce your balance to $768,000. That’s still a lot of money for retirement, but it’s also so much less money than what you could have by giving yourself those three extra years.The takeaway? You can absolutely pull off a $1 million IRA on an average salary. But the key is to get started early so you give your money plenty of time to grow. So if you haven’t begun saving for retirement yet, check out this list of the best IRAs and open one today. The sooner you begin funding that account, the higher a balance you’re apt to end up with.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of Motley Fool Money. Maurie Backman has positions in Citigroup. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.”}]] [[{“value”:”

As of the second quarter of 2024, the average individual retirement account (IRA) balance was $129,200, according to Fidelity. But what if you could retire with $1 million, or roughly eight times that sum?

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

I’m here to tell you it’s more than possible — even if you only earn an average salary. But there’s a bit more to the story than that.

How much can you reasonably contribute to an IRA?

The average U.S. household income in 2023 was $114,500, according to Motley Fool Money research. Financial experts will often tell you to aim for 15% to 20% of your income as a yearly retirement savings goal. But that may not be realistic, even if you earn six figures.

But first, let’s clear one thing up about that average salary. The median household income in 2023 was $80,610, and that may be more representative than the average. Usually, when there’s a discrepancy like this, it’s because a small percentage of very high earners skew the average up.

It’s also important to note that many people who earn higher salaries have to live in expensive parts of the country to command those incomes. So $114,500 might seem like a lot of money, but that’s only the case for people in moderate-cost areas. For those in big cities where rent costs $3,000 a month or more, it’s not all that much.

It’s important to be realistic about how much money can go into an IRA. Saving 5% of $114,500 has you contributing $5,725 a year toward retirement, or $477 per month. That $477 a month is more like 7% of an $80,610 income. Either way, this reads like a more reasonable savings goal. And you may be surprised to see what you can do with it.

Growing your IRA strategically

Let’s say you’re looking to retire at age 65 and you’re 34 years old. This gives you 31 years to grow your IRA.

If you put in $477 a month over 31 years, you’re contributing around $177,700 in total. But I’m going to show you how to get to $1 million without putting in $1 more. It boils down to one key strategy: investing your money in stocks.

Over the past 50 years, the stock market has rewarded long-term investors with an average annual 10% return. That includes both strong years and weak ones when the market did poorly. If you invest $477 a month in your IRA over 30 years and earn an average 10% a year, you’re looking at a balance of a little more than $1 million thanks to the returns your portfolio generates during that time.

However, let’s say you wait even three years to start contributing $477 a month to your IRA. At that same 10% return, you’d reduce your balance to $768,000. That’s still a lot of money for retirement, but it’s also so much less money than what you could have by giving yourself those three extra years.

The takeaway? You can absolutely pull off a $1 million IRA on an average salary. But the key is to get started early so you give your money plenty of time to grow. So if you haven’t begun saving for retirement yet, check out this list of the best IRAs and open one today. The sooner you begin funding that account, the higher a balance you’re apt to end up with.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of Motley Fool Money. Maurie Backman has positions in Citigroup. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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