Here's How Much You Should Have Invested in the Stock Market Today If You Want to Retire Comfortably in 25 Years

Investing in the stock market can be a great way to build up your wealth and save for retirement. But just how much do you need to truly retire comfortably, and how much should you have invested in the market today to be on track to hit that magic number in 25 years?

Below, I'll look to answer those questions -- and also provide you with a good investment option that can help you keep your risk relatively low while also benefiting from the market's long-term growth.

The magic number for retirement may be far higher than $1 million

A goal of having $1 million in savings by the time you retire might have seemed like a good one just five years ago. But with inflation giving many investors a reality check about just how quickly things can go off the rails and chip away at your savings, it's clear that investors may want to consider much more of a buffer than that.

A 2024 survey from Northwestern Mutual found that Americans estimate they'll need around $1.46 million to be able to retire "comfortably." That's up from $951,000 in 2020.

In a few years, the number may go up again. Assuming inflation remains under control, the jump may not be nearly as significant as it has been in just the past four years. But for argument's sake, let's round up and say $1.5 million is the number to aim for.

How much should you have invested today?

To determine how much you should aim to have invested today, it's important to consider what type of annual return you'll expect to average over the long haul, which isn't necessarily easy.

The S&P 500 has averaged an annual return of around 10% per year for decades. But with the stock market at record levels, it may be a good idea to factor in some conservatism when projecting your future returns. Setting expectations too high could lead to disappointment later on. Let's assume a more modest annual growth rate of 8%, which will allow you to factor in a slowdown in the future.

A good exchange-traded fund (ETF) to invest in that mirrors the S&P 500 is the SPDR S&P 500 ETF Trust (SPY 0.15%). It tracks the broad index, which can be ideal for long-term investors as it gives you exposure to 500 of the largest and safest stocks on the market. It's a lot easier than picking growth stocks on your own, and it's also an easy way to diversify.

SPY data by YCharts.

The table below shows how much you would need to have invested in a fund that mirrors the S&P 500 and might grow at a rate of 8% per year.

Calculations by author.

If you have 25 years to retirement, then you'll need to invest around $219,000 today, based on an 8% annual growth rate. But the further out you are from retirement, the lower that investment will need to be, as it will mean more years of compounded returns.

A lump sum gives you a good start, but it isn't necessary

If you don't have as much saved up as what the above table shows, that doesn't mean you won't be able to hit your retirement goals -- the table simply serves as a guide. If the S&P 500 ends up averaging better than 8% returns, the investment you'll need today will be less than those amounts. You can also add to your investment over time.

The earlier scenario assumed that that's how much you have invested today, and that you simply let that lump sum sit in an ETF and allow it to grow. But over time, you can invest more money, which can help accelerate your portfolio's growth.

However, regardless of how much you have saved up or can afford to invest, putting whatever money you can afford in a diversified fund that tracks the S&P 500 can be a great way to ensure you end up in a stronger financial position by the time you retire.