Financial experts consider having a cool million stashed away in your retirement fund to be the best indicator of being able to retire in complete comfort. A million might seem unattainable, but it’s perfectly feasible if you follow the basic recommended guidelines on how to save $1 million by the time you retire.
Start Saving ASAP
It’s normal to be tempted to put off any serious retirement savings. But if you want to hit that $1 million benchmark in time for retirement, you need to start saving when you’re young. Younger than you think.
Say that you start saving at age 25. You’d need to be saving $405 each month. With an average return of 7%, you’ll have that $1 million by the time you’re 65 and thinking about retiring.
Chances are, you’ve already seen your 25th birthday come and go. In this case, you’d need to up the amount that you’re saving each month. It’s absolutely infuriating, but the longer you wait to start saving, the harder you have to work to catch up.
When you’re in your twenties, you often have an unstable income. You’re not earning enough to be able to afford to put much into your savings. But the important thing is that you do your best to start saving SOMETHING. If you start from $0 at age 30, you’re going to be hard-pressed to reach that $1 million mark by 70. Do what you can as often as possible. It’s better than putting it off entirely!
According to Bruce Hemler, founder of Wealth Enhancement Group, “There is tremendous power in starting early. You’ll earn even more through compounding (interest) than if you save more later.”
Clear Your Debts
The sooner you get out from underneath your debts, the better your chances of getting to that $1 million in savings. Debt isn’t something that you can truly financial progress with… it’s just something that you manage.
So even if you’re forced to stop saving for a year, it’s more important to pay off all your debt as quickly as possible. Then you can get back to the business of saving; without your debt holding you back like a chain. When you’re no longer paying all that money in interest and debt payments, you’ll notice how much easier it is to save money.
If you have debt, make it your first priority to eliminate that entirely before you begin saving for retirement. And to keep yourself free from debt in the future, keep this simple rule from Dan Neiman, partner and portfolio manager with Neiman Funds, in mind: “Most people treat credit cards irresponsibly. If you don’t have cash in your checking account to cover the charges, don’t spend the money.”
Budget A Bit Tighter, And Keep At It
The purpose of saving for retirement is to have enough money saved up so that you can live out the rest of your days in relative comfort and without any undue financial strain on yourself or your family. So it’s a lifelong commitment to saving money.
That starts by living below your means and sticking to it. Reassess your budget; find where you can cut back in order to save more and spend less.
Having $1 million by the time you retire isn’t an easy goal, but it’s not an impossible one, by any means. It takes some sacrifice and a whole lot of willpower and dedication. But if it means that your future is 100% safe, it’ll be worth it. Happy saving!