Want $1 Million in Retirement? This Vanguard ETF Could Get You There on $500 Per Month.

Building a $1 million retirement fund may sound like an idea reserved for the wealthy, those with six-figure incomes, and someone who hit a couple of home run stock picks. In reality, it's something everyone can attain. It just takes discipline, a well-thought-out investing plan, and consistent contributions over the course of decades.

To get there, it makes sense to invest in the Vanguard Total Stock Market ETF (NYSEMKT: VTI). The exchange-traded fund (ETF) invests in roughly 3,500 U.S. stocks and charges just 0.03% annually to own it. Since its 2001 launch, it's returned around 9.5% per year.

With that in place, it's just a matter of running the numbers to see what it takes to get to the $1 million mark.

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Turning $500 a month into $1 million

Realistically, getting to that level of wealth will require a 30-year time frame.

If you're younger than that, your path to getting there gets easier because you have a longer horizon. If you likely have fewer than 30 years, your best bet is to increase your monthly contribution.

But let's start with the base-case scenario first:

• $500 monthly investment into the Vanguard Total Stock Market ETF.
• Starting balance is $0.
• 30-year time horizon.
• 10% average annual return.

If you're able to hit these markers, you will end up with a balance of just over $1.1 million. You fall just short, around $915,000, if you only average a 9% annual return. Either way, it's a significant nest egg you can accumulate as long as you stay invested and keep contributing regardless of what the market throws your way.

Managing expectations on the road to $1 million

The biggest obstacle to reaching your retirement financial goals is getting too optimistic with your return assumptions. It's the easiest number to raise, and it increases your final balance without requiring you to do anything.

But it's best to be conservative. If you're banking on $1 million being there when you retire, you have to make sure your plan gives you a high probability of getting there.

For example, if you assume only an 8% average annual return and increase your monthly contribution from $500 to $700, you can still reach $1 million in 30 years. If you can make it happen, it's almost certainly better to contribute more now. If a bear market strikes at the wrong time or lasts for years, it can quickly put your financial goals in jeopardy. That means it's better to overcontribute now in case you need the flexibility later.

It's a mistake to think that $1 million in savings is something only reserved for the lucky or wealthy. It's available to anyone willing to start now and stay consistent over time.

David Dierking has positions in Vanguard Total Stock Market ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.