Financial essentials
Could you retire as a millionaire? A simple strategy to help.
Compound growth and time are two of the most powerful tools you can use to help build your retirement savings.
A simple approach to saving
You don’t need a six-figure salary or to be a financial wiz to grow your retirement savings. One of the most effective strategies1 to saving more is surprisingly simple—consistency over time.
By adopting a long-term approach and assuming the market will trend upward, you allow your savings to benefit from the power of compound growth. And by harnessing this power, even someone who earns a modest living could have significant savings by the time they reach retirement age.
What is compound growth?
Think of compound growth as a snowball rolling down a hill—starting small, then gaining momentum as it grows. Over time, your money earns interest, then that interest earns even more interest.
By leveraging compound growth, you can accelerate your savings.
While it may not make you an overnight millionaire, with patience and consistency, compound growth can possibly get you there over time.
From modest living to retiring as a millionaire
For the purposes of this example, let’s assume:
- You start with an annual salary in the U.S. of: $33,318.2
- Your salary increases by 3% annually (which is slightly below the most recent U.S. average).3
- You begin by contributing 3% of your salary, increasing your contribution by 1% per year, capping at 10%.
If you follow this strategy over 40 years and earn a modest 8% return (S&P 500 has averaged a return of 10% since 1926), your retirement savings could grow to more than $1.05 million—a clear demonstration of how compound growth and consistency can work in your favor.4
Increasing your contributions over time, whether through raises, bonuses, or extra savings, can further accelerate your growth. Some employers also offer a contribution match, which can also amplify your saying without having to put more towards retirement.
Keep growing: tips for smart investing
To maximize compound growth potential, consider these strategies.
- Diversify your investments5: Spread your investments across various asset classes to balance risk. This helps ensure that your portfolio isn’t overly dependent on a single type of investment. How you diversify depends on factors like your risk tolerance and career stage. A diversified portfolio can provide more stability over time.
- Understand your risk tolerance: Different investments carry different levels of risk. The younger you are, the more risk you may be comfortable taking because you have time to recover from market downturns.
- Rebalance your portfolio: Adjust your evolving risk tolerance over your working life and as you draw closer to retirement age.
- Stay the course: Market volatility can be unsettling, but sticking with your investment plan is essential. Over the last 30 years, history has shown us that by missing out on the 20 best days in the market your returns could be reduced by 73%.6 That’s why staying invested is key.
Pursue your goals with confidence
Compound growth is a powerful ally in your journey toward financial security. You can build a strong foundation for your future by starting early, staying consistent, and making informed decisions.
No matter where you are in your career, TIAA is here to help you build confidence in your financial future by strengthening your long-term investment strategy.
Make planning decisions with confidence.
When reviewing your retirement plan, you may want to talk through ideas. TIAA retirement plan participants can schedule a free session with a financial professional.
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1No strategy can eliminate or anticipate all market risks, and losses can occur.
2ZipRecruiter, May 2025, Entry Level Salary,
3Bureau of Labor Statistics, U.S. Department of Labor, Employment Cost Index – March 2025,
4MorningStar Data 1926-2024. Example calculation in article is based on a hypothetical average return of 8%. This illustration is intended to show a hypothetical example of the principle of compounding. The example does not include the impact of any investment fees, expenses or taxes that would be associated with an actual investment. If such costs had been taken into account, the result shown would have been different. It also does not factor in market volatility.
5Diversification is a technique to help reduce risk. It is not guaranteed to protect against loss.
6Data source: FactSet, 31 Dec 2024. Performance data shown represents past performance and does not predict or guarantee future results. Data represent the hypothetical investment of $10,000 in the S&P 500 index held for a 30-year period beginning in Q3 Jan 1995. Index returns include reinvestment of income and do not reflect investment advisory and/or other fees that would reduce performance in an actual client account. They do not reflect the experience of any Nuveen product or service.
This material is for informational or educational purposes only and is not fiduciary investment advice, or a securities, investment strategy, or insurance product recommendation. This material does not consider an individual’s own objectives or circumstances which should be the basis of any investment decision.