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3 Millionaire Retirement Strategies That Don’t Rely on Social Security

3 Millionaire Retirement Strategies That Don't Rely on Social Security

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Social Security is one of the most entrenched government programs in modern life, and you will get benefits from it in retirement. But the average benefit is just $1,543 per month and even the maximum benefit of $3,895 isn’t going to make you a millionaire. 

The good news is, though, almost anyone can save a seven-figure nest egg if they follow the right approach. Check out these three strategies proposed by Motley Fool retirement experts that won’t leave you reliant on Social Security retirement checks to support you in your later years. 

Two adults reviewing financial documents.

Image source: Getty Images.

Save from an early age

Maurie Backman: It’s definitely important not to rely too heavily on Social Security in retirement. Though the program is not drying up, benefit cuts may be inevitable. Plus, even if benefits aren’t cut, they don’t come close to replacing seniors’ pre-retirement income.

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If your goal is to retire comfortably without having to be dependent on Social Security, then a good bet is to start socking money away in an IRA or 401(k) plan from a young age. Many people start working full-time in their early 20s and don’t retire until their late 60s or even beyond. If you begin saving as soon as you start collecting a steady paycheck, you’ll have a real opportunity to grow a lot of wealth.

Imagine you start saving at age 22 and don’t retire until 67. If you manage to sock away $400 a month and you invest your nest egg heavily in stocks, you might generate an average annual 7% return in your IRA or 401(k), since that’s a few percentage points below the stock market’s average.

In that case, you’d wind up with $1.37 million. That may be enough money to not have to think about Social Security in retirement, let alone rely on it.

Of course, the longer you wait to begin funding your nest egg, the less time you’ll give your money to grow. So while focusing on your senior years may not be an easy thing to do in your 20s, you’ll be thankful for prioritizing your IRA or 401(k) later in life.

Invest in S&P 500 ETFs

Katie Brockman: Choosing the right investments is critical when you want to earn as much as possible in the stock market, but it’s easier than you may think to build a million-dollar portfolio.

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S&P 500 exchange-traded funds are a smart investment regardless of whether you’re an experienced investor or are brand new to the stock market. These ETFs track the S&P 500 index itself, meaning they include the same stocks and mirror the index’s performance.

There are several advantages to this type of investment. For one, your portfolio is instantly diversified. Each S&P 500 ETF contains roughly 500 stocks from some of the largest and strongest companies in the U.S., and these stocks span a wide variety of industries. When your money is spread across multiple different sectors, it’s more protected against market volatility.

S&P 500 ETFs are also more likely to recover from market downturns. While no investment can avoid volatility entirely, the S&P 500 has a decades-long track record of surviving even the worst crashes. There are never any guarantees in investing, but there’s a good chance it will recover from future downturns as well.

Finally, S&P 500 ETFs can help you make a lot of money over time. Historically, the index has earned an average rate of return of around 10% per year. While you probably won’t experience 10% returns each and every year, if you hold your investments for decades, your annual returns will likely average out to roughly 10% per year.

Say you’re investing $400 per month in S&P 500 ETFs. Assuming you’re earning a 10% average annual return, here’s approximately how much you’d have over time:

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Number of Years Total Savings
10 $76,000
20 $275,000
30 $790,000
40 $2,124,000

Calculations by author via Investor.gov.

By investing consistently and staying invested for the long haul, it is possible to retire a millionaire with S&P 500 ETFs. And the best part is that these investments perform best when you leave them alone, so you never need to worry about trying to time the market or choose individual stocks.

Most retirees will need to rely on their savings for a significant portion of their income, so building a healthy nest egg is critical. By investing in S&P 500 ETFs, you can supercharge your savings and build a million-dollar retirement fund.

Invest in a wide range of assets

Christy Bieber: In order to become a millionaire retiree, you’ll likely need to earn a reasonable return on your investments. That means you can’t afford to be too conservative in your asset allocation, or it may be too hard to amass the nest egg you’re hoping for. At the same time, it becomes harder to achieve millionaire status if you are repeatedly suffering huge losses due to overly risky investments.

That’s why it’s crucial to find the right balance. And diversification is key to doing that.

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You’ll want to invest in a mix of different assets so that you have some in your portfolio that have the potential to provide a huge return on investment and others that are less likely to beat the market but also less likely to see major, permanent declines in value. 

Today, you have more opportunities than ever to spread your money across a wide range of different investments as there are new asset classes available such as cryptocurrency as well as investments such as ETFs that provide easy, instant diversification even if you aren’t great at picking stocks. 

By becoming an educated investor and putting together a portfolio that’s well balanced, you should be well on your way to ending up with $1 million or more in your nest egg. 



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