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See how much you could have by the time you’re 67 if you contribute $7,500 to your IRA every year since you’re 27.
If you contribute a 2026 Individual Retirement Account (IRA) limit of $7,500 each year from age 27 to 67, investing entirely in S&P 500 index funds, you could end up with about $1.38 million, assuming past annual inflation-adjusted returns match future ones.
A more conservative 60/40 portfolio of U.S. stocks and bonds, respectively, would produce a much smaller nest egg — just over $882,000 — with an average annual return of 4.89%.
In 2026, you can contribute up to $7,500 to your IRA, according to the Internal Revenue Service (IRS). (If you’re 50 or older, you can contribute an additional $1,100 as a catch-up contribution.) So we wondered: If you contribute $625 per month to your IRA, will you have enough money for retirement in the future?
Well, run the numbers. Let’s say you started saving for retirement at age 27 and plan to retire at age 67. While IRA contribution limits typically increase each year to keep pace with inflation, let’s say you stick with the 2026 contribution limit of $7,500 per year. (This also means no catch-up contributions.)
We can analyze two different scenarios: What if you put all your money in an S&P 500 index fund? Or how about a 60/40 portfolio consisting of equity and fixed income assets respectively?
A few notes: These numbers will exclude charges like expense ratios, and we’ll use past annual returns, which aren’t necessarily predictive of future returns. Additionally, these numbers allow you to opt for a Roth IRA, where you pay taxes up front on your contributions and withdrawals are tax- and penalty-free, as long as you’ve had the account for five years and are over age 59 ½.
You can get the greatest returns by investing your money entirely in the S&P 500 index fund, which is an index made up of the 500 largest companies in the US based on market capitalization. Starting at age 27, if you put $7,500 into an S&P 500 fund each year, the inflation-adjusted annual return from 1957 to 2025 would be about $1.38 million at age 67.
Investing your portfolio in S&P 500 index funds gives you the potential for higher returns than a 60/40 portfolio, which includes conservative assets like bonds. However, a portfolio fully invested in equities also has greater volatility, meaning the value of your portfolio may fluctuate more widely.
Conversely, if you opt for a 60/40 portfolio, you’ll end up with a much smaller nest egg. The average inflation-adjusted return for this portfolio from 1901 to 2022 was just 4.89%, according to data from the CFA Institute. If you opt for this more conservative portfolio, you’ll have more than $882,000 at age 67.
Ultimately, whether $882,000 or $1.38 million is enough to live on in retirement depends on a variety of factors, such as your preferred lifestyle in retirement and if you have other sources of retirement income, such as Social Security or a pension.
Sometimes, experts recommend using a rule-of-thumb, such as the 4% rule, to help people calculate how much they can safely withdraw each year in retirement without running out of money.
Developed in the 1990s by financial planner Bill Benzen, the 4% rule states that retirees can withdraw 4% of their portfolio the first year of retirement and adjust the rate for inflation each year thereafter. By doing this, a retiree will have enough money to last them 30 years, assuming they have a portfolio that includes both stocks and bonds.
So, if someone has $882,000 in an IRA, the 4% rule assumes they can only withdraw $35,280 in the first year of retirement. However, if that person also received the average Social Security benefit, about $2,000 a month, their total annual retirement income would be more than $59,000, net of taxes. That’s less than $1,000 less than the average amount spent annually by people 65 and older.
And if someone opted for a more aggressive portfolio, ending up with $1.38 million, they could withdraw even more annually. In the first year, they will be able to withdraw $55,200 under the 4% rule. With the average Social Security benefit, that person’s annual retirement income would exceed $79,000.
However, since Benzen’s rule holds for stock and bond portfolios, following the 4% rule would be particularly risky with a portfolio invested 100% in stocks. If the markets dip early in retirement, retirees can withdraw large portions of their portfolios to maintain their desired spending and end up with a smaller nest egg later.
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