One day, when I was in my late 20s and starting a job at a major newspaper chain, the treasurer pulled me into his office to explain what I'd be missing if I failed to join the company's 401(k) plan -- something totally foreign to me at the time.
The company was matching 50 percent of whatever part of my earnings I was willing to put into the retirement savings program, up to 6 percent of my total pre-tax paycheck with taxes coming out at retirement.
"There is no better investment in the world," said the treasurer. "You're being guaranteed a 50 percent return on whatever you decide to invest, up to 6 percent of salary, with each and every paycheck. You will never get a better deal anywhere -- ever."
And it's true: Putting away as much of your salary as you can each pay period and maxing out your 401(k) plan is the first critical step toward saving $1 million or more for retirement, said Leon LaBrecque, CEO of LJPR, a fee-only financial advisor and wealth management firm.
But maxing out your 401(k) probably won't be enough to get your retirement savings to $1 million. You'll need to take a few more steps in order to hit that magic seven-figure number.
How you can save $1 million for retirement
LaBrecque has helped clients save well over $1 million for their futures and believes he has found a solid formula: saving a larger percentage of income.
"Just give me something simple to do," a client -- then in his early 40s -- asked LaBrecque in the early '80s. "I said, 'Save 18.7 percent of your money in the Vanguard Windsor fund.'" In 20 years, the client had amassed a whopping $2.5 million.
The client, who had all of his Vanguard statements stacked up unopened, was happily surprised. With the ability to withdraw roughly $100,000 each year -- once more, taking just 4 percent of his total -- his replacement rate was a full 100 percent.
"I've been on the 18.7 percent solution ever since," said LaBrecque, noting that figure includes employer contributions. "So, if your employer matches 5 percent, your job is to save just 13.7 percent."
So, an individual making $50,000 a year and investing 18.7 percent of their salary for 30 years with an 8 percent rate of return would also have that same $1 million nest egg and be able to withdraw around $40,000 a year.
Here are some other steps you should take to save $1 million for retirement.
1. Check out your 401(k) match
Go to your benefits director, and find out how much your employer will match in your 401k or other retirement savings plan, said Todd Rustman, a certified financial planner and founder of Clarity Capital Partners. Then, put as much money into the 401k plan as you can to earn the maximum match.
"Free money is free money," said LaBrecque. "And the match is free money."
2. Save half of any raise you get
If you get a 2 percent raise, increase your 401k contributions by 1 percent, LaBrecque suggested. By don't stop there -- keep doing this with every raise you get.
"Don't just increase the sum you put into the plan, but increase your percentage contribution as well," he advised.
3. Don't freak out when markets tumble
Sometimes, the stock market experiences a downturn, causing some investors to panic and immediately sell their stocks. However, this can be a huge mistake.
"Don't quit. Don't stop," said LaBrecque. "I've seen people stop their 401(k) in down markets. Awful idea. Down markets are sales. We buy steak on sale and clothes on sale. Make investments on sale."
In other words, a down market is a chance to buy at a discount. Also, remember that saving for retirement is a long-term process. Eventually, the stock market will recover -- and so will your investments.
4. Invest Your Tax Refund
Next year, don't splurge your tax refund on a flat-screen TV, a new pair of shoes or a last-minute vacation. Instead, invest your tax refund in some type of savings or retirement account to help you reach your $1 million savings goal.
"I see folks who claim they can't save for retirement, yet get a $2,600 refund," said LaBrecque.
According to the IRS website, direct deposit is the "best and fastest way" to get your tax refund. Plus, this option can help you resist the urge to spend your tax refund on non-essentials by letting you split your refund into two or three additional financial accounts -- including an IRA.
5. Invest in Yourself
Rustman suggested taking classes, earning an MBA or doing whatever you can do to increase your value as a professional. You'll earn more and can, therefore, invest more.
Depending on the company you work for, you might not even have to pay for the classes out of your own pocket. Ask your employer and human resources department if your job can foot the bill for your classes.
Why You Probably Need at Least $1 Million for Retirement
You might think that saving $1 million for retirement is an impossible goal. Or, you might ask yourself, "Do I really need $1 million in retirement savings?"
The answer to that question depends on your lifestyle and the extent you want to replicate that in the future -- that is, how much of your current income you hope to replace a few decades down the road. In many cases, yes, you might need $1 million or more in retirement savings if you are not going to continue working.
And yes, getting there is doable if you start early enough, know how you much to put away and understand how to withdraw funds in a disciplined fashion, according to LaBrecque and other financial advisors.
"If you are living in a metropolitan center, are middle class making at least $75,000 per spouse, you probably need $1 million or more," said Rustman.
This article originally appeared on gobankingrates.com.