How much money would you be willing to sacrifice for one year if you knew that making that sacrifice would enable you to wind up a millionaire in retirement? A large enough, one-time investment compounded over a sufficient number of years at a high enough rate of return can grow to $1 million by the time you need to tap it.

Think about that. After one year of living a spartan lifestyle to save up enough to make a massive investment, you could spend through every dollar you take home for the rest of your career and still wind up with $1 million. With that in mind, here's how 2021 can put you on the path to millionaire status.

Man leaping across a chasm from 2020 to 2021.

Image source: Getty Images.

Can you get there from here?

The table below shows just how large that one-time investment needs to be to reach $1 million by retirement, based on how many years the money is invested and what rate of return you receive. What should be very clear from it is that this type of investing is only possible if you either earn an incredibly high salary or you start very early in your career and earn traditional market-like returns.

Years Invested

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns




































With the median household income around $68,703 and the poverty level for a family of four around $26,200, saving aggressively enough may be possible. Still, unless you're making bank pretty early in your career, it would likely be an impossibly steep climb.

For perspective, people under age 50 can generally contribute $19,500 annually to their employer-sponsored 401(k) plans They can also sock away an additional $6,000 to their IRAs, for a total of $25,500 in those tax-deferred, retirement-focused accounts. Married couples where both spouses work and are covered by 401(k) plans can double that amount, for a total of $51,000. If you're above 50, you have the opportunity to sock away another $1,000 to your IRA and $6,500 to your 401(k).

What's a more likely path to that $1 million?

For most of us mere mortals, that one-year aggressive savings challenge is well out of reach. Fortunately, it does hint at another, much more sustainable path to that million dollar milestone: saving each year between now and when you need the money.

The table below shows how much you need to sock away each year to reach $1 million, depending on what rate of return you earn and how long you're able to keep up your savings. While still some serious coin, the annual numbers are much more achievable for ordinary people.

Years to Go

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns




































Although this shifts the sacrifice from a single massive one to several smaller ones, 2021 will likely still play a pivotal role 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 put some of your money away for your future.

Why that foundation matters

clock balanced against a pile of coins

Image source: Getty Images.

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

To be able to do that, you need to have space between what you're earning and what you're spending. That means keeping your everyday costs low and getting your debts under control before you even think about investing. That's critical whether you're looking to make a single year's contributions the foundation for your million-dollar nest egg or whether you're willing to save and invest regularly for decades to get there.

Of course, if you've been in a position where money has been going out faster than it has been coming in, it will likely take time to make the changes needed to start investing successfully. Even if that describes you, you might still be able to make 2021 the year that gets you set up to get on that path to millionaire status. It just might mean that instead of investing, your immediate focus could be debt reduction, which will ultimately get you in the position where you can invest even more later.

Get started now

Regardless of what path you take on your quest to become a millionaire, one thing is perfectly clear from both of those tables above: The earlier you start, the easier it is to get there. 2021 is just a few days away, which makes now the perfect time to get your plan in place to make it the year you get on the path to 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 priority No. 1, and 2021 could be the year that puts you on the path to becoming a millionaire.