Can You Retire a Millionaire by Investing Just $10 a Day? The Answer Is Yes -- Here's the Math.

Does the goal of saving enough money for a comfortable retirement seem so far out of reach that it's not even worth trying? That's understandable. The $1.26 million that Northwestern Mutual says the average American thinks they'll need to retire comfortably is a large, intimidating number.

Don't dismiss the power of doing just a little bit every day, though. While this approach has a painfully slow start, once it reaches a tipping point, growth can become explosive. In fact, if you do it for long enough, tucking away a mere $10 per day can get you to the million-dollar mark. Here's the math.

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Time and commitment to regular contributions are key

To illustrate the point, a handful of reasonable assumptions are necessary. Chief among them is the assumption that you'll be investing this money in an S&P 500 index fund, which continues delivering the annualized gains of about 10% that it has averaged over the long term. Let's also assume you only set aside $10 on weekdays when the stock market is open. That's about 250 days per year, or $2,500 of annual contributions. Finally, the math assumes this is all being done within an IRA, so your progress made along the way won't be impeded by taxes.

Although the market's volatility means your retirement savings journey wont happen with the same consistent growth the graph below suggests, investing $10 per day in an S&P 500 index fund 250 days per year should get you to $1 million in just a little under 38 years.

Calculations by author via Calculator.net. Chart by author.

That's admittedly quite a long time. If you start investing when you're 18 years old, this plan assumes you'd still be setting that $10 aside every weekday at least until you turn 56. And if you don't start until you're 22 years of age -- perhaps when you wrap up your undergraduate education -- that pushes the seven-figure milestone back to the age of 60.

Let's also not forget that while $1 million is certainly a respectable amount of money, it's not enough to provide a lavish retirement completely free of financial concerns. You could still easily burn through that sum in your golden years if you're not careful.

Also, bear in mind that $1 million won't be the same sort of nest egg in 38 years that it is now. Assuming that inflation continues to average 2.8% annually, in 2063, $1 million will be more like $350,000 in today's dollars. That's a huge difference in actual buying power.

On the other hand, you'll likely receive pay raises as you age, providing you with more investable income. Most people will also be working until they're 62 or older regardless of when they first go to work, giving you a few more high-earning years to make some meaningful contributions to your retirement account -- and a few more years to let compounding growth bolster your portfolio balance.

Just start

If you're still so discouraged about the slow progress you've personally made with your own retirement savings (despite your best efforts) that you're thinking about giving up, realize the start is slow for most people.

Go back and take a good look at the chart above. Notice that the annual net gains on your accumulated savings don't start getting really big until about halfway through that 38-year time frame. Once your yearly investment gains become greater than your contributions of new cash, the growth of your nest egg accelerates sharply.

This might help make the point in a different way: Based on the assumptions mentioned above, every $1 you save and invest now will be worth $2.60 in 10 years. In 20 years, however, that invested dollar will be worth $6.73. And in 38 years, that single dollar will be worth a whopping $37.40, as long as you remain invested and reinvest any dividends dished out along the way.

And to be clear, in all three cases, that's without any additional money being added to the account in the meantime. That's the power of compounding growth, or more accurately, the power of compounding growth plus plenty of time. The key is to get started as soon as you can in life.

Image source: Getty Images.

Even if you can't consistently come up with an extra $10 every day right now, that's OK. Save what you can when you can do so. Investing something is always better than investing nothing. Setting aside just a few hundred bucks per year now can still make a meaningful difference down the road.

Just be sure you're making the most of your savings. To meaningfully outgrow inflation, you need to be in the stock market for as long as you can. Leaving your savings in the bank -- even in an interest-bearing savings account -- won't be enough.

Fortunately, many discount online brokers such as Schwab and Fidelity have no minimum purchase requirements on some of their funds, and very low minimum purchase thresholds on others. For that matter, they also don't impose minimums to open most kinds of brokerage or retirement accounts. So, regardless of how little you may be able to set aside for retirement at the beginning of your investment journey, there's nothing to stop you from picking out a smart index fund and starting now.

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Charles Schwab is an advertising partner of Motley Fool Money. James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab and recommends the following options: short June 2025 $85 calls on Charles Schwab. The Motley Fool has a disclosure policy.