Think you can't become a millionaire if a salary of $30,000 a year? Think again. The tactics real people use to save $1 million or more even with modest incomes.

Ah, retirement. If you’re square in the crosshairs of our Money Under 30  demographic, then “Money After 65” is all you can think about, right?

We didn’t think so. But the facts are beyond dispute for anyone who wants to accumulate wealth over time: Retiring in your 60s with a million dollars or more largely depends on how much money you put away starting in your 20s or 30s.

Of course, other forces may call us as young adults: traveling, pub crawls, or a sports car that does 0-60 in $40,000. Or we might find ourselves — to quote a recent popular post — young, broke and single. At either extreme, we may indulge the kind of magical thinking that sees us hitting the lottery or launching a multi-million dollar tech startup in six months or less.

Still, the law of compound interest applies just as much as the law of gravity, and those who help young adults build wealth have some definite views on the subject. Money Under 30 spoke with Holly Kylen, a financial advisor and retirement coach at ING. In a male-dominated finance world, she’s also the co-author of the “Retirement Planning for Women Seminar” with ING Financial Partners. Here are her tips for recent college grads and young adults hoping to get retirement planning off on the right foot.

1. Practice the 80/20 rule 

“Put 80 percent of your income towards living expenses and any other spending needs,” Kylen says. As for the remaining 20 percent, “That goes right into retirement savings.”

And yup, she said 20 percent.

Kylen cites the example of a 20-year-old grad making $30,000, saving 20 percent annually to yield $6,000 a year. By maintaining this savings level of $6,000 for 45 years to age 65 , with an annual compound interest of 5 percent, guess what the grad winds up with? $1,037,868, thanks to the magic of compound interest.

“Students in the young adult financial education classes I teach every summer are always amazed and inspired by this figure,” she says. “And it doesn’t even account for likely increases in contributions during those 45 years of working as your salary increases.” So there: Kylen just showed you how to become a millionaire. (You might want to send her a Starbucks card as a thank you.)

2. Start your Roth 

In a Roth IRA, earnings grow tax-free because the money you put in is after-tax dollars — as opposed to a traditional IRA or 401(k) which are pre-tax. Kylen favors the Roth, which she says offers flexibility as well: “The amount you contribute is liquid after one year and can be tapped for emergencies, while up to $10,000 can be accessed without penalty for education expenses or a first-time home purchase. You should however, try as best you can to avoid touching that money until retirement.”

Read more: Where to open your first IRA.

3. Treat financial education like a college course

If you think one course in Economics taught you all you’ll ever need to know about finance, guess again. “Financial education is a lifelong pursuit, so your studies should continue in your post-grad life,” Kylen says. She recommends reading a financial magazine and at least one financial book annually.

“The best way to feel in control of your finances is to educate yourself on key concepts, such as asset allocation, differences between Roth and traditional IRAs, and your employer retirement plan options and matching contributions.” We especially concur with that last statement; if an employer matches your IRA contribution, that’s like free money to safeguard your future.

4. Know your budget — and live by it

Raise your hand if you have a daily, monthly and/or yearly budget mapped out. While we’d hope to see all hands go up, we won’t shame you if you didn’t raise yours — though Kylen says now’s the time to apply the same precision to money that you might to oil changes on you car, or building you iPod playlist.

“After putting away 20 percent of your money into retirement savings, consider 50 percent of your income for necessities — such as rent, transportation and food — and the remainder for other financial goals and ‘play.'” The budget should act like a compass, guiding you through major financial commitments and decisions before you have to make them. That includes “getting your own apartment, accepting employment positions, purchasing a car or heading off on a post-graduation European vacation,” she says. Hey, a budget beats using the Magic 8 Ball.

Read more: The easy way to budget for people who hate budgets.

5. Be goal-oriented

You had a goal to graduate college, and congrats if you made it. You had a goal to land a job, and thumbs up if you cleared that hurdle. Now, apply that same moxie to your savings ambitions. “Set one-year, five-year and ‘don’t-touch-until-retirement’ goals,” Kylen says. “For your one-year goal you might aim to save $500 for holiday gifts, while a five-year goal might be to purchase a car loan free.”

To hit these various targets, “figure out how much you need to put aside each month to reach that goal and set up an automatic transfer into a separate savings account.” This we heartily endorse, because the money that’s easiest to invest — and that usually eludes wasteful spending — is the money you don’t see or stuff into your wallet. Consider direct deposit of a paycheck followed by automatic transfers into your retirement and savings accounts.

It’s tempting to put off the “adult world” of retirement for a time when it’s more convenient. You may feel like you’ve earned a rest from all such responsibilities after putting in so much time at school or your job. And it’s true to some extent that time is on your side when you’re under 30. But it’s even more so on your side when you set modest retirement savings goals at a young age, and follow through on them. Compound interest, consistency and careful planning should do the rest.

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About the author

Total Articles: 33
Based in Chicago, Lou Carlozo is a personal finance contributor for Reuters Money, a columnist with, and a former managing editor at AOL's Contact him with story ideas for Money Under 30 at [email protected], or follow him via LinkedIn and Twitter (@LouCarlozo63).