I Only Earn $50,000 a Year. Can I Still Build Up a Retirement Fortune?

Retiring with millions of dollars is something you might dream about. It's also a goal that might seem unattainable if you only earn a modest wage.

But here's the thing. If you commit to saving for retirement from a young age, you can build a lot of wealth on a pretty small amount of money. So don't assume that a large nest egg is out of the question just because your salary isn't so high.

Making the most of a $50,000 income

Saving $10,000 a year or more for retirement may be doable if you're bringing home a $100,000 salary. But if you're only earning half that much, it's a different story.

To save $10,000 a year for retirement would mean parting with 20% of your income if you earn $50,000. That may not be doable unless you happen to have really low expenses.

So let's be realistic and say that the most you can save from a $50,000 salary is $3,000 a year, or about 6% of your pay, which is pretty respectable in its own right. That has you contributing $250 a month to an IRA or 401(k).

Now in time, your $50,000 salary is likely to increase. And from there, it makes sense to try to allocate your raises to retirement savings if possible.

Perhaps that next year, you find yourself earning $52,000. A smart move is to send that extra $2,000 into your retirement account before you get used to the extra money.

But let's actually assume for a second that your income doesn't rise through the years, even though that's extremely unlikely. Can you retire with a nice sum of money if you never contribute more than $250 a month to a retirement account in your lifetime?

Actually, you can -- if you invest your savings wisely.

Over the past 50 years, the stock market has rewarded investors with an average annual 10% return. Go heavy on stocks, and your return might be the same.

So, let's say you start funding a retirement plan at age 25 and retire at 67, all the while contributing $250 a month and enjoying a 10% return on your money. By the time you're ready to end your career, you'll have $1.6 million to your name. Really.

It's all about getting an early start on retirement savings

People who retire as millionaires don't necessarily earn six-figure salaries throughout their careers. Some of them earn modest wages. But what they do is start saving for the future at a young age so their money gets an opportunity to compound and grow.

The $1.6 million balance above? That's coming at a cost to you of just $126,000. The reason your contributions are able to grow so much is your lengthy savings window.

If you're first starting out in the workforce and aren't earning a whole lot of money, don't tell yourself you'll save for retirement when your income rises. Start saving now. It could do you a world of good.