The old adage "you've got to spend money to make money" is largely true, but it generally refers to business owners or companies spending money to scale up their businesses. For the average American who doesn't own a business and works a regular job (or two), the more appropriate saying might be "you've got to invest money to make money."

At the end of 2020, the average salary for a full-time American worker was about $51,000. Would that be enough income to retire with over $1 million? It's definitely possible -- here's how.

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Your 401(k) alone could get you there

Time is your friend when it comes to investing, so the longer you have to invest, the larger your retirement nest egg will grow. But even if you are in your 30s and haven't saved a dime, you can still accumulate over $1 million by the time you draw that first Social Security check.

The key to doing that is to set aside about 20% of your salary to save and invest for future expenses, like retirement. To do that, you need a budget so you're covering essential expenses -- housing, cars/transportation, child care, food, utilities, healthcare, gas, etc. -- as well as discretionary expenses, such as eating out, entertainment, and travel.

Let's say you make $50,000 per year. If you set aside 20% for savings and investing, that comes out to $10,000 per year, or roughly $833 per month. A big chunk of that should be allocated to an employer-sponsored plan. If you contributed 6% of your annual salary to the plan, that comes out to about $3,000 per year, or $250 per month.

Your employer-sponsored plan, or 401(k), alone could pretty much get you to that $1 million goal by retirement. If you go online, you'll find there are numerous 401(k) calculators to help you do the math. I found one where I input a 6% contribution based on a $50,000 annual salary, with a 50% employer match up to 4%. I included a 3% annual raise over a 30-year time horizon, with retirement at age 65. I also assumed a 10% annual return on investment, which is about the long-term average of the S&P 500.

That came out to $904,000 after 30 years. But if it was only over 20 years, the total with the same inputs was roughly $296,000, so it really shows the importance of starting as early as possible. 

Additional investments in stocks or ETFs could pad your nest egg

If you could save and invest 20% of your salary, you'd still have almost $600 more per month to save and invest after contributing to your employer-sponsored plan. With that roughly $600, you could put, say, half of it in a savings account and invest the other half in the stock market, giving you an additional $300 per month to invest.

Maybe you take half -- $150 per month -- and invest it for your kids' future college tuition or wedding. The other $150 per month could be invested to pad your retirement next egg. Let's say you took $5,000 from your savings and invested in a portfolio of stocks or exchange-traded funds (ETFs).

And let's assume the investments average a 10% annual return. If you invested $150 per month in that portfolio, with a 10% return, you'd have about $438,000 after 30 years. The combination of your employer-sponsored plan and this portfolio would amount to over $1.3 million after 30 years.

Now, let's say setting aside 20% for savings and investing is unrealistic, and you only had $100 per month to invest in a few stocks or ETFs. That $5,000 investment, with a 10% annual return, would jump to $325,000 after 30 years.

As this hypothetical shows, it is definitely possible to amass more than $1 million for retirement on a salary of $50,000 per year. The key is starting early, investing in your employer-sponsored plan, and developing a budget that prioritizes saving and investing.