How Much do you Need to have a $1,000,000 Nest Egg?

What your current portfolio balance would need to be to have a million dollar nest egg when you retire will depend on your retirement date, your market returns and your investment expenses.
    Someone that is retiring in ten years and wants to retire with a million dollar nest egg would need $744,094 if they are getting a 3% return, $654,497 with a 7% market return with a 2.5% MER or $508,349 with a 7% market return with no fees attached.
    Someone that is retiring in thirty years and wants to retire with a million dollar nest egg would need $411,987 if they are getting a 3% return, $280,365 with a 7% market return with a 2.5% MER, $131,367 with a 7% market return with no fees attached or as little as $2,630 if you can compound at the standard credit card rate for thirty years.  That's right, $2,630 will turn into a $1,000,000 after thirty years at 21.9%.  In case you are wondering, a $1 will compound to a $1,000,000 after seventy years at the credit card rate!
    In the short term, a high MER and a subpar growth rate might not hurt you that much, but in the long term you could be having a much smaller nest egg if you have high investment expenses as well as lower returns.


Return Need to Have a $1,000,000 Nest Egg after 30 Years

Below is a chart to show you the present value and return needed to turn your portfolio into a million-dollar nest egg after thirty years.



Return Needed to have a $1,000,000 Nest Egg

The Present Value Needed to have a $1,000,000 Nest Egg based on Time and Compound Rate

Compound Rate

10 Years

20 Years

30 Years

3%

$744,094

$553,676

$411,987

4.325%
(7% with 2.5% MER)

$654,497

$428,367

$280,365

5.93%
(7% with 1% MER)

$562,096

$315,952

$177,595

7%

$508,349

$258,419

$131,367

7.25%
(10% with 2.5% MER)

$496,623

$246,635

$122,484

8.9%
(10% with 1% MER)

$426,306

$181,737

$77,475

10%

$385,543

$148,644

$57,309

12.125%
(15% with 2.5% MER)

$318,402

$101,380

$32,280

13.85%
(15% with 1% MER)

$273,319

$74,703

$20,418

15%

$247,185

$61,100

$15,103

21.9%
(Standard Credit Card Rate)

$138,027

$19,051

$2,630



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A Wake Up Call

In the short term, a high MER and a low growth rate might not hurt you that much, but in the long term you could be having a much smaller nest egg if you have high investment expenses as well as low returns.
    You should also note that delaying your retirement planning will require you to save more.  If you are expecting a 7% net annual return, then you would need to have a starting present value that is more than double if you wait an extra ten years to start your retirement planning and you will need more than four times the present portfolio value if you wait another ten years on top of that.


Data Sources:
Present Value Calculator
Present Value Calculator