8 Steps to Retiring a Millionaire on a $50,000 Salary

When you earn several hundred thousand dollars a year, retiring a millionaire doesn't read like an unreasonable goal. But when you're more of an average earner, it becomes more challenging. The good news, however, is that it's more than possible to retire a millionaire even on a $50,000 salary. Here's how.

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If you give your savings enough time to grow, you can amass a lot of wealth even if your retirement plan contributions are modest. Socking away $350 a month over a 40-year period will leave you with well over $1 million, assuming an 8% average annual return in your IRA or 401(k). That means parting with $4,200 a year, which is less than 10% of your annual $50,000 wage.

ALSO READ: 4 Ways to Grow $100,000 into $1 Million for Retirement Savings

The less money you spend, the more you'll have available to save and invest. To this end, it's important to get into the habit of living below your means. You may be able to afford a more expensive home or car, but if you stick to a cheaper one, you'll be better positioned to meet your retirement goals.

The less debt you have, the less money you'll lose to interest payments -- and the more money you'll have available to sock away for the future. While it's OK to finance a home with a mortgage, do your best to stay away from credit card debt, which can not only cost you money but also damage your credit score.

If your employer offers a 401(k) match, be sure to contribute enough money out of your own paycheck to snag that bonus cash in full. The more free money you get in your account, the easier it'll be to work your way toward becoming a retirement millionaire.

ALSO READ: How to Save $1 Million for Retirement With Minimal Effort

Ideally, your income will increase from year to year, and you should aim to capitalize on that by boosting your savings rate as your earnings go up. You don't necessarily have to bank your entire raise, but if you can set aside a portion of it, you'll get yourself closer to your goals.

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You may come into extra money at different points in life, whether it's a tax refund or a bonus at work. If you make a point to save those windfalls, you'll grow your retirement plan balance even more.

Though stocks are known to be volatile, if you want to achieve solid growth in your retirement plan, they're really the way to go -- at least while you're younger and retirement is many years away. If you go heavy on stocks, you might easily snag an average annual 8% return in your portfolio (which is the percentage we used in our earlier example). Play it safe by sticking with bonds, and you'll see a lower return -- and a lower ending retirement plan balance.

ALSO READ: 5 Moves to Ensure You're a Retirement Multimillionaire

There may be times when you're tempted to raid your retirement plan ahead of schedule. In some cases, this will result in a financial penalty, but in other situations, that's avoidable. You can withdraw up to $10,000 from an IRA, for example, to buy a first-time home. But remember, the money in your retirement plan is there for a reason -- to be an income source for you during your senior years. If you pledge to leave that money alone, you'll have a greater chance of eventually winding up with $1 million or more.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

While you don't necessarily need $1 million in savings to enjoy a fulfilling retirement, there's also nothing wrong with setting that goal. And if you follow these steps, you could end up sitting on a substantial amount of wealth by the time your career comes to an end.

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