Money Pile

Source: Wikimedia Commons user Moritz Wickendorf.

If your job offers you a 401k or similar retirement plan, you've got one of the very best investment tools at your disposal. If you use that tool to its full potential, it is possible to become a 401k millionaire and amass a seven-figure net worth through that plan alone.

All you really need is a paycheck, reasonable options in your 401k, and time.Once you start putting money into the plan, compound interest and the very features of a traditional 401k -- a tax-deductible investment that grows tax-deferred and may even come with matching funds from your boss -- will take care of the rest. In fact, once you fill out the paperwork and get started, the rest can be automatic, with no further effort on your part.

The key ingredients for growing your fortune
Three factors matter more than any other in determining your chances of becoming a 401k millionaire:

  • Time: The longer you are able to contribute to your 401k, the stronger your odds of success.
  • Rate of return: The stronger your returns, the faster you'll reach that goal.
  • Invested capital: The more you're able to put away, the better a foundation you'll build.

The table below shows how those factors work together. It shows you how many years it will take for you to reach that 401k millionaire status, based on how much you (and your boss) put away each month and how well your investments perform.

Monthly Contribution

Years to Reach Millionaire Status

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns

$2,875

13.7

15

16.8

19.3

$2,187.50

15.8

17.5

19.9

23.2

$1,916.66

16.8

18.8

21.4

25.2

$1,458.33

19.1

21.5

24.9

29.8

$1,250

20.5

23.1

26.9

32.5

$1,000

22.4

25.5

29.9

36.7

$750

25

28.7

34

42.4

$500

28.8

33.4

40.1

51

$250

35.5

41.6

50.9

66.7

$100

44.5

52.9

65.7

88.6

Source: Author's calculations. 

If you're under age 50, you can put $17,500 into your 401k in 2014. If you've reached age 50, you can sock away an additional $5,500 as a catch-up contribution, bringing your total to $23,000. Those maximum amounts correspond to the $1,458.33 and $1,916.66 monthly contribution lines in that table, respectively. The top two figures represent those same contributions supplemented by a 50% employer match.

Yes, you can save that much
If those numbers seem impossibly high, don't worry. So long as you have more time on your side, you can still reach 401k millionaire status with a contribution rate farther down that table.

First of all, don't forget that you don't have to get there all on your own. In a traditional 401k, Uncle Sam kicks in to help via a tax deduction on your contribution and tax deferral on the growth, and your boss may provide a matching gift, too, to help you reach that total.

Additionally, you don't have to go all the way from $0 to $1,400-plus per month in one fell swoop. Start with what you can and build up over time. Here are a few painless strategies to help you start small and build your contributions:

  • Each time you get a raise, increase your contribution. If you were living on your salary before your raise, you can live on that same amount after the raise. If you don't want to save it all, that's fine -- but saving at least part of each raise is an easy way to boost your plan.
  • As you pay off debts, increase your contribution. Your debt payments represent money you're paying today for something you bought in the past. As you rid yourself of that debt, you free up cash that you can invest with no impact on your lifestyle.
  • Every Jan. 1, increase your contribution. The federal tax brackets get adjusted for inflation every year. All else being equal, your first paycheck in January will likely be higher than your last paycheck in December. Raising your contribution by the boost you get from that adjustment is a painless New Year's resolution to help you save more money.

No matter how much you can invest in your 401k, it will take time -- time that can be measured in decades -- to go from $0 to 401k millionaire status. The sooner you get started down that path, the sooner you can wind up there and the better your chances of actually arriving while you're young enough to enjoy the fruits of your labor. Time is on your side, but only if you get started now.

Chuck Saletta is a Motley Fool contributor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.