Can Saving $300 a Month Buy You a Financially Secure Retirement? Here's the Math.

When it comes to building retirement savings, it's easy to assume you need to invest a huge sum of money every month to build a sizable nest egg. But let's be real -- in today's economy, that's not an easy thing.

Housing prices are through the roof. Food and gas are expensive. And travel? Forget about it. Even one modest trip per year could eat up a huge chunk of your budget.

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If you're struggling to find large chunks of money each month to fund your IRA or 401(k), you're not alone. But if you're able to save a moderate amount, like $300 a month, you may be surprised at how far it can go -- provided you start early enough.

Use time to your advantage

If you're in your late 40s and trying to catch up on retirement savings, contributing $300 a month to your IRA or 401(k) probably won't cut it. But if you're new to the workforce and have more than 40 years to build retirement wealth, you may be surprised at what $300 a month can do for you.

Let's assume your portfolio can earn a 8% annual return, roughly in line with the stock market's historical long-term average. If you start contributing $300 a month to an IRA or 401(k) at age 23 and you're not looking to retire until 67, that's a 44-year window. And by the end of that window, you could be sitting on about $1.186 million.

Now, is that enough to retire on? It depends on your needs and other income streams.

If you use the popular 4% rule, a $1.186 million portfolio gives you a little more than $47,000 in annual income. Meanwhile, the average monthly Social Security benefit of $2,083 today amounts to about $25,000 in annual income. All told, that's $72,000 a year, or $6,000 a month, to spend. If you have modest expenses and manage to retire with little to no debt, you may find that that's an income you can live comfortably on.

To be clear, though, if you start saving $300 a month for retirement much later on in your career, you won't be looking at the same results. If you begin funding your savings with $300 a month at age 47, shrinking your growth window to 20 years, you may end up with more like $165,000, assuming that same 8% return.

Now a $165,000 nest egg isn't nothing. But using that same 4% withdrawal rate, you only get $6,600 a year to supplement your Social Security. That puts you in a completely different financial situation.

Smaller contributions can really add up

Many people put off saving for retirement because other expenses get in the way. If you prioritize IRA or 401(k) plan contributions early on, you may find that you're able to build up a sizable nest egg by socking away $300 a month. Wait until you're well into your career, and you probably won't have the same results.

If it's a struggle to come up with that $300 a month early on, it might help to follow a budget that shows you where every dollar of yours is spent. And if you have a 401(k), your monthly $300 may not all have to come from you. You may be eligible for a workplace match that helps you meet that monthly goal.

Finally, don't discount the options a side hustle could give you. While balancing a gig on the side isn't easy, if that's what it takes to help you start funding a retirement account early in your career, it's a move that could pay off in a very big way over time.