A Financial Pro Shares 4 Smart Moves to Reach $1.2 Million in Retirement Savings

If you have your sights set on a seven-figure retirement nest egg, it can help to learn from financial professionals who focus on practical ways to grow savings over time.

For Americans enrolled in a workplace retirement plan, a comfortable retirement is estimated to require $1.2 million, according to Schroders’ U.S. Retirement Survey. Yet 51% of respondents expect to retire with less than $500,000, and 24% believe they will have under $250,000. Only 30% say they think they will reach $1 million before retirement.

Below are four important steps experts say can help.

1. Determine Your Savings Target

“The so-called sweet spot to set aside likely varies from person to person,” said Brianna Rodgers, director of investor education at Madison Trust Company. “For some, $1.2 million would be substantial, lasting decades.”

Echo Wang, founder of EpicBooks, a Toronto-based bookkeeping firm and a financial voice for small-business owners, says the first step is deciding how much you want to save.

“Most people tend to save whatever remains from their spending. I would do the opposite,” Wang said. “First, decide how much money goes into investments, automate this process and figure out how to live off of what remains.”

Terrance Amen, founder of Family Business Circle, says the better question is not how to reach $1.2 million, but how to build a financial system that consistently converts income into long-term assets.

“When that system is in place, retirement savings become the natural outcome of disciplined financial habits rather than a distant financial target,” he said.

2. Raise Contributions Over Time

Wang recommends increasing investment contributions as your salary rises, before lifestyle spending has a chance to catch up.

“In all likelihood, you won't feel too much month-to-month, but after 10 years, you will be contributing much more to your investments while managing your spending quite well,” she said.

Even a 1% increase in your contribution rate can translate into tens or even hundreds of thousands of dollars more in retirement, thanks to compound interest, which lets investment gains generate additional gains over time.

3. Use the Right Accounts in the Right Order

After building the habit of increasing contributions with each raise, Wang advises using the appropriate accounts in sequence. That means first establishing an emergency fund, then contributing enough to your 401(k) to get the full employer match, and adding money to a health savings account, or HSA, if you qualify.

She also recommends choosing a Roth or traditional IRA based on your tax situation, then returning to your 401(k) and maximizing it if possible. Any savings left over can go into a taxable brokerage account. From there, Amen suggests strengthening your emergency reserves with a still-liquid option for less urgent needs.

“Building a separate source of accessible capital, sometimes called a 'family bank,' can help reduce that risk by providing funds for life's unexpected events without automatically disrupting a long-term investment strategy,” Amen said.

4. Create Dependable Income Sources

Instead of fixating on one savings total, Amen recommends building dependable income streams and protecting purchasing power throughout retirement. Rodgers also stresses the value of a diversified portfolio with multiple cash flow sources to help preserve wealth over the long run.