It's easy to assume that those people who retire with $1 million or more in savings earn a lot of money during their careers or come from rich families. The reality, however, is that many retirement millionaires achieve that milestone not by commanding huge salaries or inheriting windfalls, but by making smart choices that enable them to grow wealth over time.

If your goal is to reach millionaire status by the time you retire, you should know that it's more than possible. Here's how to get there.

Smiling older man resting chin on hands


1. Start following a budget

Without a budget, it will be difficult for you to see where your money is going, which means you're likely to spend more and save less. Having a budget in place will help you live below your means so that you're able to consistently fund your 401(k) or IRA to build wealth year after year.

To set up your budget, all you really need to do is comb through your bank or credit card statements from the past six to 12 months and see what your bills generally cost you. List those expenses on a spreadsheet so they're easy to follow, and compare your total spending to your total earnings, all the while making sure there's ample room for savings -- ideally, 15% of your income or more.

2. Steer clear of debt

The more money you throw away on interest charges, the less you'll have available to set aside for retirement. If you're currently carrying debt -- especially the unhealthy kind, like credit card debt -- see what it's costing you interest-wise and pay it down in order of highest interest rate to lowest. For example, if you have a credit card balance at 14% interest and a personal loan at 8% interest, it pays to knock out the credit card balance first.

3. Save from an early age

Many people don't put retirement savings on their radar until they're in their 30s or 40s. The assumption is that with that milestone being so far away, there's plenty of time to build savings later in life. But if you don't give yourself a longer window to set funds aside for the future, you might miss out on the power of compounding -- and fall short of your goals.

Compounding is the concept of earning interest on interest, and it's what helps so many savers turn a series of modest retirement plan contributions into a substantial amount of money. If you were to save $450 in a retirement plan starting at age 25 with the goal of retiring at 65, and your investments in that account were to generate an average yearly 7% return (more on that in a bit), you'd wind up with close to $1.1 million. Start five years later, and you're looking at just $746,000. The reason? Fewer gains in your account due to that shorter timeframe.

4. Load up on stocks in your retirement portfolio

Though stocks are considered a relatively risky investment, they tend to reward savers who stick with them for the long run by delivering high returns. Safer investments like bonds, on the other hand, may be more stable, but they're less likely to deliver the same solid returns over time, so if your goal is to amass a nice amount of wealth, stocks are the way to go.

We just saw that investing $450 a month over a 40-year period would result in over $1 million in savings at a 7% average annual return. Well, that 7% is actually a few percentage points below the stock market's average, and it's a reasonable percentage to apply to a portfolio that's stock-heavy. On the other hand, if you were to play it safer by sticking largely to bonds so that your investments deliver a 3% average annual return over time, saving $450 over 40 years would leave you with just $407,000 -- nowhere close to the $1 million or more you're hoping for.

Retiring with $1 million to your name is more doable than you'd think. Follow the steps above, and with any luck, you'll meet your goal -- and then some.