The average American has just over $148,000 in retirement savings, according to Vanguard’s latest How America Saves report But this number is slightly skewed by higher balance accounts. In fact, only three out of 10 defined contribution plan accounts held at Vanguard have a balance of more than $100,000.

On the other hand, the average balance in a Vanguard retirement account, which means half the accounts have more and half have less, is $38,176. Of course, this includes some accounts where the balance should be low, like now 401(k) accounts owned by employees who have recently started working, or old accounts of former employees who only stayed at their job for a few years. But this is still an alarmingly low figure.

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You might be surprised how effectively you can build retirement savings without aggressively saving money or taking huge risks with individual stocks.

As an example, let’s say you invested $10,000 20 years ago in a low-cost S&P 500 index fund, such as the one offered by Vanguard. It is available in the form of both ETFs and mutual funds, such as the Vanguard S&P 500 ETF (NYSEMKT: VOL) or the Vanguard S&P 500 Admiral Shares Index Fund (NASDAQMUTFUND: VFIAX).

Now, that reversal would have occurred in March 2006. It wasn’t long before the financial crisis sent the S&P 500 down more than 55% from its peak. And the past 20 years also include the COVID-19 pandemic, the bear market of 2022, and several other turbulent periods.

With all of this in mind, you may be surprised to learn that a $10,000 investment in a Vanguard S&P 500 Index Fund 20 years ago it would be worth almost $78,000 today. As we said earlier, half of all Vanguard retirement accounts are worth $38,176 or less.

A key point to note is that this is how you would have done it if you had just made one once $10,000 investment. Imagine how much you could have if you add to it over time. For example, if you had started with an investment of $10,000 20 years ago and added $5,000 a year after that, you would have more than $513,000 today. As legendary investor Warren Buffett once said, you don’t have to do extraordinary things to get extraordinary results.

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Matt Frankel, CFP has positions in the Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has one disclosure policy.

A $10,000 investment in this S&P 500 ETF 20 years ago is worth more than most Americans have in retirement savings was originally published by The Motley Fool