One of the most important parts of long-term planning is accepting the idea that setbacks will occur. If you are not prepared, these setbacks can put a stop to your savings efforts. There is no need for this to happen, however. Learn how to accept and overcome both large and small financial setbacks in order to achieve your goals.
Retiring a millionaire isn’t impossible to achieve, but you do need a plan. People sometimes think that being a millionaire is based on how much money you have. However, there are millionaires who have no idea how their net worth compares to other people.
Start saving ASAP (or as soon as you’re debt-free).
It’s never too early to start saving for retirement. The sooner you start investing, the harder your money is going to work for you. But it’s important to note: You shouldn’t invest anything if you’re still in debt. You’re not truly earning wealth if you still owe money to someone else.
As soon as you’re debt-free, start saving money for retirement—whether you’re 15 or 50 years old.
If you don’t save, you’ll never reach your goal. As obvious as this might seem, far too many people never even start to save. If your employer offers a 401(k) plan, enrolling in it is a great way to put your savings on auto-pilot. Simply sign up for the plan and contributions will be automatically taken out of your paycheck, increasing your savings and decreasing your immediate tax liability.1https://5b17d45995804ccc09ff7393029de8b5.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html
Always have an emergency fund at the ready for unplanned expenses.
If your employer offers to match your contributions up to a certain percentage, be sure to contribute enough to get the full match. It’s like getting a guaranteed return on your investment. Finding the cash to stash may be a challenge, particularly when you’re young, but don’t let that stop you from pursuing future riches. And remember that the younger you start, the more time your money has to grow.
Invest at least 15% in a tax-advantaged account.
It’s not just about investing. It’s about choosing the right type of retirement account to park your money in. Think of it like the difference between parking your car in a high-security garage versus parking it on a busy street full of reckless drivers. One is a smart move, the other is a gamble.
If you have an employer-sponsored retirement account—like a 401(k) or a 403(b)—take advantage of it, especially if your company offers a match. That’s free money!
And there’s a reason we say at least 15%. Imagine how much your nest egg could grow if you increase your contributions as your income increases. You could retire a millionaire a lot faster if you throw more money into these accounts sooner.
Add to your investing portfolio.
While the 401(k) is a great place to start, it may not be enough for retirement on its own. But have no fear—the IRA (Individual Retirement Arrangement) is here!
The IRA is a retirement savings account you can open by yourself (without an employer). Now, there are different types of IRAs, but we love the Roth IRA because it grows tax-free. That means when it’s time for you to retire, you get to keep all of the money in it. Yep, that’s right—you don’t have to share it with Uncle Sam.
The Roth IRA also lets you choose from thousands of mutual funds to invest in so you can diversify your portfolio—that’s fancy talk for spreading your money into different types of investments. We recommend splitting your investment dollars evenly across four categories: growth, growth and income, aggressive growth and international.
Don’t touch it.
The secret to retiring a millionaire is to invest early and often and then leave it alone. Seriously, don’t touch it! Your retirement fund is not a short-term investment. It’s likely the only money you’ll have when you leave the workforce—so be careful with it! (Psst—if you’re thinking Social Security will be there for you, it won’t.)
Consider your retirement money off-limits until you retire and not a day before. And don’t let a temporary downturn in the market scare you into making a poor decision that could hurt you in the long run (like cashing out your retirement account to buy a pontoon boat—trust us, the tax penalty alone will put a dent in your retirement dreams).
Talk with an investing professional.
You don’t have to bring in big bucks to win with money, but you do need to know what you’re doing. No matter what your income looks like, talking to an investing expert can make a huge difference in reaching your retirement goals.
So sit down with an investing pro and look at your options. A pro will explain their recommendations in terms you can understand so you can decide how to invest your hard-earned dollars.
Set a Goal
Nobody plans to fail, but plenty of people fail to plan. It’s a cliché, but it’s true. Making a plan is the leading self-help advice from athletes, business moguls and everyday people who have achieved extraordinary goals.
KEY TAKEAWAYS
- To retire as a millionaire, the first thing you need is a proper retirement plan for the long haul.
- Employer-sponsored retirement accounts where your company matches your contributions are a great way to sock away cash.
- Stick to your budget and spend within your means, avoiding debilitating credit card debt.
Get Aggressive
Take a hard look at your asset allocation. If you are looking to grow your wealth over time, fixed-income investments such as annuities, which offer fixed payments that can neither grow nor shrink, aren’t likely to get the job done. Why? Because inflation can take a big chunk out of your savings.
Studies have shown that the majority of the returns generated by an investment are dictated by asset allocation. Investing in equities entails more risk, but is also statistically likely to lead to greater returns. For many of us, it’s a risk we have to take if we want to see our wealth grow. Asset-allocation strategies can help you learn how to make picking the right mix of securities the core of your investing strategy.
Prepare for Rainy Days
Part of long-term planning involves accepting the idea that setbacks will occur. If you are not prepared, these setbacks can put a stop to your savings efforts. While you can’t avoid all of the bumps in the road, you can prepare in advance to mitigate the damage they can do by always maintaining an emergency fund. This fund will also help keep you from building up credit card debt or prematurely tapping your retirement funds, two ways people pay for emergencies that can undercut their financial security.
Save More
Your income should rise as time passes. You’ll get raises, change jobs, and maybe get married and become a two-income family. Every time your salary rises, so should the amount that you save. The key to reaching your goal as quickly as possible is to save as much as you can.
Watch Your Spending
Vacations, cars, kids, and all of life’s other expenses take a big chunk out of your paycheck. To maximize your savings, you need to minimize your spending. Buying a home you can afford and living a lifestyle that is below your means and not funded by credit cards are necessities if you want to boost your savings.
Monitor Your Portfolio
There’s no need to obsess over every movement of the Dow Jones Industrial Average. Instead, check your portfolio once a year. Rebalance your asset allocation to keep on track with your plan.
Prepare for Rainy Days
Part of long-term planning involves accepting the idea that setbacks will occur. If you are not prepared, these setbacks can put a stop to your savings efforts. While you can’t avoid all of the bumps in the road, you can prepare in advance to mitigate the damage they can do by always maintaining an emergency fund. This fund will also help keep you from building up credit card debt or prematurely tapping your retirement funds, two ways people pay for emergencies that can undercut their financial security.
Save More
Your income should rise as time passes. You’ll get raises, change jobs, and maybe get married and become a two-income family. Every time your salary rises, so should the amount that you save. The key to reaching your goal as quickly as possible is to save as much as you can.
Watch Your Spending
Vacations, cars, kids, and all of life’s other expenses take a big chunk out of your paycheck. To maximize your savings, you need to minimize your spending. Buying a home you can afford and living a lifestyle that is below your means and not funded by credit cards are necessities if you want to boost your savings.
Monitor Your Portfolio
There’s no need to obsess over every movement of the Dow Jones Industrial Average. Instead, check your portfolio once a year. Rebalance your asset allocation to keep on track with your plan.
Conclusion
Retiring a millionaire is a simple goal many people have for themselves. The idea of being able to have everything you have ever desired and still have a little more to supplement the kinds of things that money cannot buy, retirement a millionaire is a worthy goal. But how do you plan on achieving that kind of lifestyle? A lot of people wonder if it is even feasible for the common man or woman to reach that level of wealth accumulation, especially if their retirement savings are doing little more than treading water. In this article, we will explore the different routes you can take for your retirement savings and how to achieve some results that will further your hopes and aspirations of retiring a millionaire.