If you start investing today, when could you retire?

Investing in stocks can unlock an early retirement in my opinion.

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Investing in ASX shares can help investors achieve excellent wealth-building and enable people to retire early. What if someone started investing today – how long would it take for them to retire?

Everyone has different personal finances, with various levels of starting wealth and income. I'm going to try to work out what it would take for a 20-year-old, a 30-year-old, a 40-year-old and a 50-year-old to achieve retirement.

How much to aim for?

I used to think that $1 million was a good goal to work towards. However, inflation of various goods, services and housing has meant we may need a bit more than that. I'm going to talk about a goal of $1.25 million. That may sound like a lot, but I will show how compounding can do a lot of the work for us.

If we can reach $1.25 million, and we own a portfolio with a dividend yield of 5%, that could pay $62,500 of passive income. Other forms of income could make up any further required cash flow.

In each of the below scenarios, I'm not specifically talking about superannuation because I'm thinking about a scenario where we can retire before being able to fully access it. However, mandatory superannuation contributions and long-term growth can do a lot of the heavy financial lifting if someone doesn't aim for early retirement.


Someone just starting out with $0 may not have a long time to build wealth, but it can still be possible to reach an early retirement.

If we're aiming for $1.25 million by 65, that's 15 years away. The age pension starting point is currently set at 67, so we're aiming to retire a couple of years early.  

Let's assume the portfolio matches the long-term return of the share market of around 10% per annum.

To get to $1.25 million in 15 years, if the portfolio returns 10% per annum, that person would need to invest $2,650 per month.


Someone who has just turned 40 still has more than two and a half decades until they reach the right age for the pension.

Let's say this person wants to retire by 60, which is seven years earlier than the pension age, it gives them 20 years to compound the wealth.

To reach $1.25 million in 20 years, if the portfolio is returning 10% per annum, that person would need to invest $1,500 per year.


A 30-year-old has decades of time ahead of them before reaching typical retirement age.

More time until retirement could mean being able to target a retirement date of 55 years which is roughly a decade before being able to access the pension (under the current rules).

To reach $1.25 million in 25 years, assuming the portfolio returned 10% per annum, we're talking about needing to invest around $850 per month.


People just starting their careers don't really need to be thinking about retirement. But, any progress made in the 20s can make a big difference to how things turn out in the long term.

With so many years of potential compounding ahead, it can make a lot of sense to invest a bit now. Let's say we're aiming for $1.25 million by 50, which is in 30 years.

To reach $1.25 million in 30 years, and the portfolio makes 10% per annum, a 20-year-old would only need to invest $510 per month.

Foolish takeaway

Inflation will play a big part in how much passive income we need in future retirement. A $1.25 million balance will probably have a lot more purchasing power next year than in 30 years, so I'd suggest younger Aussies try to invest more than the above calculations if they want a very comfortable retirement.

It may also be possible to find investments that can deliver returns that are stronger than 10% per annum. I like quality-based exchange-traded ETFs (ETFs) such as VanEck Morningstar Wide Moat ETF (ASX: MOAT) and VanEck MSCI International Quality ETF (ASX: QUAL).

The right individual ASX shares may be able to produce the most appealing returns of all.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended VanEck Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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