At 32, a million dollars may sound like an unfathomable sum. Getting there by age 65 may seem even more daunting. So, how do you do it? The answer is...there's no simple answer. That's because a number of uncertain variables shape the outcome.

## 401(k)/IRA

One way to reach a million dollars saving from age 32 to retirement at 65 is to invest in tax-deferred investments, such as an IRA or 401(k). To cross $1 million in 33 years, you'll need to invest 17 percent of your pre-tax salary with every paycheck. Company matching funds can make up part of the 17 percent. This figure assumes you're making $50,000 a year at age 32, get a 3-percent pay raise each year, begin with a 401(k) balance of zero, get a 5-percent yearly rate of return and expect an annual inflation rate of 3 percent.

## Rates of Return

A significant challenge is that the rates of return on most investments are unpredictable. For example, $100,000 compounded monthly at 3 percent over 33 years is $268,791; while the same amount growing at 7 percent will add up to just over $1 million. This is a straight-line calculation and assumes that a lump sum is deposited with no additions down the line and that the return does not fluctuate. However, this is not a typical real-world scenario: in reality, returns fluctuate and deposit amounts may vary. Further complicating the matter, most experts recommend a diversified portfolio. This multiplies the number of growth trajectories and fragments the analysis.

## Timing

Another variable is how much and how often you invest. A lump sum of $200,000 invested in tax-deferred or tax-free investments at age 32, with nothing invested annually, thereafter reaping a 5 percent annual gain over 33 years, will land you $1 million when you reach 65. However, an initial investment of only $100,000, with $100,000 distributed over 33 years ($3,030.30 a year), only yields $742,912.

## Present vs. Future Value

But here's the catch: $1 million today isn't the same as $1 million in the future. When $1 million is adjusted for inflation, by the time someone who's 32 today reaches 65 in 2046, it will be worth only $371,406 in today's dollars. That assumes that the rate of inflation -- here, 3 percent -- can be accurately predicted and remains constant.