Want to Get Your Portfolio to At Least $1 Million by Retirement? Here's How Much You Should Invest Today.

Retiring with $1 million or more can be an excellent goal to aim for. You could slowly withdraw from it each month to help pay for bills, or you could put it into an exchange-traded fund (ETF) that pays you a dividend on a regular basis. This can help preserve your capital while giving you a consistent stream of cash flow. And when it comes to dividends, the bigger your balance, the more recurring income you'll have.

But just how much should you plan to invest today if you want to retire with $1 million, and what type of investment should you consider? Below, I'll aim to answer those questions and give you a realistic expectation of how much you may need to invest in the stock market right now to achieve your goals.

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A top S&P 500 ETF can be crucial for relatively safe long-term returns

The S&P 500 index (SNPINDEX: ^GSPC) is a collection of some of the largest and safest stocks you can invest in. Over the long term, the index has grown by an average of 10% per year when you include dividends. Tracking it with an ETF can enable you to generate similar returns and benefit from the stock market's long-term success. After all, if the stock market is doing well, it's likely because top-performing stocks in the S&P 500 are also performing well.

One fund mirroring the index that can make for a suitable long-term option is the Vanguard S&P 500 ETF (NYSEMKT: VOO). What's attractive about this ETF is that it has a razor-thin expense ratio of just 0.03%. You won't have to worry about fees eating up a big chunk of your returns over the years. As you can see from the chart below, it follows the index very closely.

^SPX data by YCharts.

How much should you invest today to end up with a million-dollar portfolio by retirement?

The earlier you invest and the more years you have until you retire, the less you will need to invest today. That's because the effect of compounding over the long term will be much greater. An investment that rises by 10%, on average, over a period of 20 years will have grown to 6.7 times its original value. But over a 10-year period, it will only have risen to approximately 2.6 times its original value.

The table below shows you how much you would have to invest today in the Vanguard S&P 500 ETF, or a similar fund, assuming a 9% rate of annual growth, based on the number of years you have until retirement. Why 9% instead of 10%? First, it's always best to be cautious with projections. Second, despite the market's pullback this year, it's still coming off two straight years with overall growth of 20%, so it's a good idea to brace for a bit of a slowdown.

Calculations by author.

With 35 years to retirement or more, you would need to invest less than $50,000. But if you have 25 years or less to go until you retire, then you're looking at a six-figure balance that's necessary to get you to $1 million.

Don't get discouraged if you're starting late

Ideally, everyone would love to invest early and not have to worry about saving up a big six-figure balance later on in life in order to retire with $1 million. But that doesn't mean there's nothing to be gained by starting a little later. You'll still likely end up growing your portfolio balance over the years, and if you're able to invest more along the way, that can help accelerate your gains, getting you closer to your target. Plus, the above scenario assumes a 9% growth rate. Over a shorter duration, the market's returns can look drastically different.

There's no guarantee of how well you'll do by investing in an ETF that tracks the S&P 500, but odds are, you'll probably be in a much better financial position by doing so.

Where to invest $1,000 right now

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.