Is the S&P 500 All You Need to Retire a Millionaire?

Retiring a millionaire may seem like something reserved for the ultra-wealthy. But with the right investments, you could earn more than you might think.

Saving for retirement is tough, especially when the stock market is volatile. It can also be difficult to distinguish the good investments from the bad when stock prices are down, and it’s tempting to avoid the market altogether.

However, there’s one type of investment that’s safe, requires very little effort, and could help you retire a millionaire: the S&P 500 ETF.

Person holding several hundred-dollar bills.

Image source: Getty Images.

What is an S&P 500 ETF?

The S&P 500 itself is a stock market index that includes stocks from 500 of the largest and strongest companies in the U.S. — think household names like Amazon, Apple, and Microsoft.

You can’t invest in the index itself, but you can invest in an exchange-traded fund (ETF) that tracks it. That’s where the S&P 500 ETF comes in. This fund includes the same stocks as the index itself, and it aims to mirror the index’s performance over time.

There are several advantages of investing in an S&P 500 ETF, including:

  • Instant diversification: Each ETF includes stocks from 500 companies across a wide variety of industries, and that diversification can help limit your risk. Even if a few stocks don’t perform well, it won’t sink your entire portfolio.
  • Protection against volatility: No investment is immune to short-term volatility, but the S&P 500 itself has a perfect track record when it comes to recovering from downturns. No matter what the market has in store, it’s extremely likely that the S&P 500 (and S&P 500 ETFs) will be able to rebound.
  • Positive long-term returns: Despite all the short-term ups and downs, the S&P 500 has historically earned positive returns. In fact, since 2000, it’s up by more than 176% — despite experiencing the dot-com bubble burst, the Great Recession, the COVID-19 crash, the current downturn, and countless smaller corrections along the way.

There are never any guarantees when investing in the stock market, but S&P 500 ETFs are one of the safer options. And with the right strategy, they can also help you make a lot of money.

How to retire a millionaire

By investing consistently and giving your money plenty of time to grow, you could accumulate $1 million or more.

Historically, the S&P 500 itself has earned an average rate of return of around 10% per year. This doesn’t necessarily mean you’ll earn 10% returns year after year, but rather all the annual returns will average out to around 10% per year over the long term.

Assuming you’re earning a 10% average annual return, here’s how much you’d need to invest each month to retire a millionaire, depending on how many years you have to save:

Number of Years Amount Invested Per Month Total Savings
20 $1,500 $1.031 million
25 $850 $1.003 million
30 $525 $1.036 million
35 $325 $1.057 million

Data source: Author’s calculations via

It’s never too early to begin saving for retirement, and the sooner you start, the less you’ll need to invest each month to retire a millionaire.

Also, while waiting decades to build a million-dollar portfolio is tough, keep in mind that S&P 500 ETFs are hands-off investments. You don’t need to research companies, choose individual stocks, or keep up with market movements. Simply invest whatever you can afford and wait for your money to grow.

Downsides to consider

S&P 500 ETFs have plenty of advantages, and they’re a smart option for many investors. However, they do have their downsides.

If you’re looking to take a more active role with your portfolio, for example, an S&P 500 ETF may not be the best fit. With this investment, you can’t choose which stocks you buy, as you will automatically own a stake in all the companies within the S&P 500. If there are certain stocks you’d prefer to avoid, that’s not possible with an S&P 500 ETF.

In addition, S&P 500 ETFs cannot beat the market. They’re designed to follow the market, so the best they can do is earn average returns. For many people, the ease of an S&P 500 ETF outweighs the lower returns. But if you’re looking to maximize your earnings, individual stocks may be the way to go.

Retiring a millionaire isn’t easy, and it will require the right strategy and a long-term outlook. But S&P 500 ETFs can help protect your savings while making you a lot of money.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends, Apple, and Microsoft. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.