Having seven figures in the bank by the time you retire may seem like an impossible dream, but you can make that dream a reality with time and discipline. Here is how.

Start Saving Early

It's never too soon to start saving for retirement. Even teens with income from lawn mowing or babysitting can do it. The sooner you start, the more time the power of compounding (when you earn interest on the interest you've earned) can work for you.

For example, if you're 23 years old and expect to retire at 67, you could save $1 million by investing $300 a month over that time in a tax-deferred account earning an average of seven percent a year. Wait until age 36, and you'll have to save $800 a month to reach the same goal (see chart).1

Another advantage to starting early: typically, the level of investment risk individuals can handle is determined by their goals, timeline and risk tolerance. With decades before you retire, you can probably handle a greater level of investment risk, putting more of your money into stocks. Historically over the long term, stocks have provided greater growth potential than other forms of investments, although they may have more volatility (ups and downs) in the short term.

For example, in the 50 years from 1965 through 2014, stocks posted an average annual return of 11.23 percent, compared with 5.04 percent for three-month Treasury bills.2 In the 10 years since 2005, stocks returned an annual average of 9.37 percent, compared with just 1.44 percent for Treasury bills.2

Starting Late? Step Up Your Game

Of course, if you're in your 40s, 50s or 60s and haven't started saving for retirement yet, it's not too late, but you'll need to increase the amount you save each month and perhaps delay your desired retirement date. Fortunately, you may be in your peak earning years, making saving a bit easier.

Yes, you have lots of competing priorities for your money, but you can make decisions—like eating out less often and choosing low-cost entertainment over expensive concert and sports tickets—that leave more money for saving.

Explore Retirement Accounts

You have many tax-advantaged options to save for retirement. If your employer offers a retirement savings plan like a 401(k), 403(b), 457 or Thrift Savings Plan, you should strongly consider taking part. Participating is even smarter if your employer offers a matching contribution.

If your employer doesn't offer a plan—or if you want to supplement your employer-sponsored retirement plan—you can open and contribute to an individual retirement account (IRA) as long as you or your spouse has earned income. Learn more about IRAs available through Navy Federal.

We'll Help You Along the Way

Whether you'd like to open a Certificate or Rollover IRA or work with a Financial Advisor to explore your retirement investment options, Navy Federal offers the tools and resources to support you as you work toward your retirement savings goals.

What Does It Take to Retire a Millionaire?

The following chart shows how many years it will take to save $1 million based on various monthly contributions. It assumes an average annual return of 7 percent in a tax-deferred account.3

Monthly Contribution Number of Years to Save $1 Million
$100 59
$200 49
$300 44
$400 40
$500 37
$600 34
$700 33
$800 31
$900 29
$1,000 28

1Rate of return is for illustration only and does not represent the return of any specific investment. Calculations assume all earnings are reinvested in a tax-deferred account. Taxes will be due upon withdrawal at ordinary income tax rates.

2Source: New York University Stern School of Business, Jan. 5, 2015. Stock performance based on the S&P 500.® Past performance is not an indication of future results.

3Rate of return is for illustration only and does not represent the performance of any specific investment. Based on monthly contributions with all earnings reinvested in a tax-deferred account.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.