How much money would you be willing to sacrifice for one year if you knew that making that sacrifice would enable you to retire as a millionaire? A large enough single investment, compounded at a high enough rate of return for a long enough time, can potentially grow to be a \$1 million nest egg by the time you need to tap it.

Think about that for a moment. After a single year of living a Spartan lifestyle to save up a big investment, you can then spend every dollar you take home for the rest of your career and still wind up with a seven-figure nest egg. With that in mind, here's how 2022 can put you on the path to millionaire status.

Image source: Getty Images.

## What does it take?

The table below shows how big an investment you'd have to make to reach \$1 million, depending on the rate of return you achieve and the number of years you can let that money compound. The math says it's possible to get there, but as a practical reality, you'd need to earn historical returns and either start really early in your career or earn a phenomenal salary to make it happen.

Number of Years

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns

45

\$13,719.21

\$31,327.88

\$72,650.07

\$171,198.41

40

\$22,094.93

\$46,030.93

\$97,222.19

\$208,289.04

35

\$35,584.10

\$67,634.54

\$130,105.22

\$253,415.47

30

\$57,308.55

\$99,377.33

\$174,110.13

\$308,318.67

25

\$92,296.00

\$146,017.90

\$232,998.63

\$375,116.80

20

\$148,643.63

\$214,548.21

\$311,804.73

\$456,386.95

15

\$239,392.05

\$315,241.70

\$417,265.06

\$555,264.50

Calculations by author.

With the median household income around \$67,521 and the poverty level for a family of four around \$26,500, saving aggressively enough may be just within the realm of possible. Still, unless you're making bank pretty early in your career, it's probably an impossibly steep climb.

For perspective, in 2022, people under age 50 can generally sock away up to \$20,500 in their 401(k) or other employer-sponsored retirement plan. They can also save an additional \$6,000 in an IRA for a combined total of \$26,500 across those tax-deferred, retirement-focused accounts. Married couples where both spouses work can typically double that amount to a total of \$53,000. If you're above 50, you can add \$6,500 to the 401(k) total and \$1,000 to the IRA total.

## Is there a better path to \$1 million?

For most of us mere mortals, that one-year aggressive savings challenge is well out of reach. Fortunately, there's another, much easier way to get to that million-dollar milestone: saving a bit each year between now and when you need the money.

The table below shows how much you need to invest each year to reach that \$1 million milestone, depending on what rate of return you earn and how many years of saving you have ahead of you. While this approach still involves saving some serious money, it's much more achievable for ordinary people.

Number of Years

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns

45

\$1,391.00

\$2,587.28

\$4,700.50

\$8,262.46

40

\$2,259.41

\$3,860.16

\$6,461.54

\$10,523.49

35

\$3,689.71

\$5,803.26

\$8,973.86

\$13,577.32

30

\$6,079.25

\$8,827.43

\$12,648.91

\$17,830.10

25

\$10,168.07

\$13,678.78

\$18,226.72

\$24,011.96

20

\$17,459.62

\$21,852.21

\$27,184.56

\$33,581.75

15

\$31,473.78

\$36,829.54

\$42,962.76

\$49,941.10

Calculations by author.

While this shifts the sacrifice from a single massive one into a series of smaller ones, 2022 can still likely play an important part in making you a millionaire. This is because the toughest and most important part of investing is getting the rest of your finances into good enough shape to allow you to invest for your future.

## Why that foundation matters

Even in a good year, the market can drop temporarily, and not every year ends up being a good one. As a result, you should invest only the money that you don't need to spend for at least the next five years, so you don't need to sell your stocks while they're down just to pay your bills.

To do that, you need to be earning more than you're spending. That means keeping your everyday costs low and getting your debts under control before you even think about investing. That's an important foundation no matter what path you'd like to take in your quest for that \$1 million nest egg.

If you're in a position where money has been going out faster than it has been coming in, perhaps thanks to the rapid increase in inflation we've seen, it may take time to get you where you need to be. Even if that describes you, you might be able to make 2022 the year that gets you on your way to millionaire status. It just means that instead of investing, your immediate focus is more likely debt reduction or cost containment, which should help you get set up to invest more later.

## Get started now

No matter how you get there, one thing is clear from both of those tables above: The earlier you start, the easier it is. 2022 is just a few days away, which makes now the perfect time to get your plan in place to make it the year you start toward that substantial financial goal.

You don't need a lot of money to start investing, but you do need a good plan in place to enable the money you do invest to stay invested for the long haul. Make that your top financial priority, and 2022 could be the year that gets you on the path to becoming a millionaire.