Here's How $116 a Month Could Buy You a $1 Million Retirement

If you're like me, it's hard to focus on retirement plan contributions when you've got loads of expenses that need to be dealt with now. I mean, sure, I'd love to throw thousands upon thousands of dollars into an individual retirement account (IRA) or 401(k) every year and retire with a boatload of money. But sorry -- gotta pay the mortgage first, and put food on the table, pay for medication, and cover the zillion other costs associated with running a household.

You're probably in the same boat. And if you have kids, forget it -- you could probably retire on the amount you're paying your daycare center if it weren't for the fact that you're trapped forking it over just so you can hold down a job.

I used to think that retiring with a decent chunk of money was impossible. But these days, I'm feeling more optimistic about retirement. The reason? I ran the numbers and realized that it actually doesn't take a ton of money each month to build up a really nice nest egg over time. In fact, you may be surprised at how little money it takes to retire with $1 million to your name.

Do you have $116 a month to spare?

You're probably not going to believe me at first when I tell you that you can retire as a millionaire on $116 a month. But trust me -- the numbers work.

If you sock away $116 a month (which is just under $1,400 a year) over a 45-year period, you could wind up with $1 million if your invested savings deliver a 10% yearly return during that time. And if you're wondering about that 10%, it isn't a random assumption -- it's consistent with the stock market's performance over the past 50 years.

You may be hesitant to invest your retirement savings in stocks due to the risks involved. But here's the thing -- if you don't go heavy on stocks, you might see a much lower return in your retirement portfolio, leaving you with less money to cover your expenses later in life.

And remember, the 10% return above accounts for years of stellar stock market performance as well as major downturns. So if you're investing for retirement over a 45-year period, you have plenty of time to ride out market declines and come out a winner.

A $1 million nest egg is doable even if you're getting a later start

It's more than feasible to end up with a 45-year savings window for retirement purposes if you begin funding an IRA or 401(k) in your early 20s. That has you retiring by your late 60s. But what if you're 29, or 37, or 43, and you've yet to set aside so much as a dollar for retirement? Even in that situation, you're not doomed.

Sure, you're going to have to part with more than $116 a month if your goal is to have your savings reach the $1 million mark by your late 60s. But if you go heavy on stocks, you're not talking about giving up half your paycheck by any means.

In fact, here's the monthly savings amount it will take to retire by age 67 with $1 million, depending on when you start.

So there you have it. Retiring as a millionaire is possible even if you're unable to set $10,000 a year or more aside for your future. And the sooner you start saving, the less money it'll take on a monthly basis to reach that $1 million goal.

But make sure a stock investing strategy is part of your plan. Otherwise, you may have to relinquish a lot more of your hard-earned money over the years to reach the $1 million mark.