For many, a million dollars may seem like a lot of money, and an impossible savings to reach. In reality, a million dollars is the recommended minimum amount to save for retirement, if you wish to maintain a comfortable lifestyle. According to PBS News Hour, 77 percent of Americans are not on track to retire at the age of 67, and 4 out of 5 Americans have less than a year’s income saved for retirement. Not to fret, even if you aren’t as on track as you would like, we have some tips that can help get you on the right track to being a millionaire by your retirement.
Meet With a Financial Advisor
Financial Advisor can help you determine if you are on track to retire. And, if you aren’t on track, they can help you create a new savings plan. You can also use one of our convenient retirement calculators here.
Get Aggressive with Savings
Consider more aggressive investments while you are younger and further from retirement. As you get closer to retirement, you may want to shift to more conservative investments.
Contribute as much as you can comfortably afford, and take advantage of any 401(k) matches your employer may offer. If you are able to max out 401(k) contributions, explore other retirement options, such as IRAs, in order to save more.
Monitor Your Portfolio
It is recommended you check your retirement portfolio once a year. This is your time to evaluate your returns and make any wanted adjustments.
Once you reach the age of 50, you are eligible to increase contributions to any tax deferred savings plan. This can be a good time to start catching up if you aren’t currently on track for retirement.
Watch Your Spending
In order to contribute the most to your retirement, it is best to live below your means. Put retirement savings as one of your top priorities for your money, and be aware of how much debt you are taking on, as debt payments can take away from potential retirement savings.
Don’t Borrow Against Retirement
Many retirement plans will allow you to take out loans for certain expenses. Unless it is an absolute emergency, it is best to avoid this. Many will pay additional in taxes for withdrawing these funds, not to mention, it is a loan that will have to be paid back with interest. Consider your retirement savings off limits until you reach retirement to avoid these savings setbacks.
Start Saving for Retirement Today
The younger you are, the less you will need to contribute out of pocket due to compound interest on retirement accounts. According to The Motley Fool, by starting your retirement savings at 25, your monthly contributions only need to total about $400/mo ($192,000 in total)to reach $1 million by 65, versus the $3200/mo ($576,000 in total) you will need to contribute if you start at age 50.
Saving for retirement is never easy, but it can be a little easier if you start early and plan ahead. Even lofty goals, like saving $1 million by the time you retire, can be achieved if you start early and take advantage of all the resources you have available. Contact our Financial Advisor today to get started.
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