If You Put $5K Into Retirement Investments Right Now, What Would That Grow To?
Written by
Andrea Norris
Edited by
Molly Sullivan
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Northwestern Mutual’s 2024 Planning & Progress Study revealed that U.S. adults believe a comfortable retirement requires $1.46 million. It’s a figure that can overwhelm a saver of any age, but it may seem particularly challenging for older savers who got a late start and younger savers who don’t feel like those minor monthly contributions they can afford are enough.
If you’re 50 or older and feel like you’re behind on your savings, you can make catch-up contributions to get as close as possible to your retirement nest egg goal. But if you’re still several decades away from retirement, you have a better tool for reaching your retirement goal: compound growth. It does much of the wealth-building for you — and the sooner you get started, the better.Â
Here’s a look at how compound growth works and how big your nest egg could grow if you put $5,000 into retirement investments right now.
Retirement Investing and Compound Growth
You may know how compound interest works with a savings account. It’s when you earn interest on the money you deposit and on the interest you earn — interest earning interest.
Compound growth works the same on your retirement investments. You earn returns on your investments as well as your previous returns.
The Growth of a $5K Investment Over Different Periods
Suppose in 1974, at 20 years old, you invested $5,000 in an S&P 500 index fund. Then, you left your investment untouched for 50 years. Based on historical data, your $5,000 investment would now be worth about $1.1 million at age 70. If you waited until 1994 — age 40 — to invest, your $5,000 would have had only 30 years to grow to a little over $100,000 by age 70.Â
The following table highlights compound growth’s impact on a one-time $5,000 investment over 10 to 50 years. These figures assume that you reinvest all dividends, and they aren’t adjusted for inflation. Â
| Investment Period | ROI | Ending Balance |
| 10 years: 2014 to 2024 | 264.37% | $18,218.37 |
| 20 years: 2004 to 2024Â | 616.42% | $35,820.80 |
| 30 years: 1994 to 2024 | 1,945.06% | $102,253.06 |
| 40 years: 1984 to 2024 | 8,067.87% | $408,393.60 |
| 50 years: 1974 to 2024 | 22,526.24% | $1,131,312.03 |
How Many Years Do You Have Until Retirement?
In the table, notice how significantly the balance jumps every 10 years. By giving your money 30 years to grow rather than 10, you’ll earn an additional $84,034 on that $5,000 investment. If you have 40 years, the difference is $390,175. So if retirement is still decades away, there’s no better time to invest than now.Â
The longer you leave your investment untouched, the more you benefit from the snowball effect of compound growth.
A $5,000 investment may seem like a small drop in the retirement savings bucket until you realize how much it can grow. But it also might be more than you can afford to invest right now. Thankfully, you don’t need $5,000 to begin. By saving small amounts regularly and increasing your contributions as you can, you can grow a nice nest egg over however many decades you have until retirement.
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