Three Simple Steps to Retire a Millionaire With Little Effort
3 Really Simple Ways to Retiring a Millionaire With Little Effort
By Floyd Saunders, The Author of Five Paths To Wealth,Family Financial Freedom and Figuring Out Wall Street.
The Three Simple Steps
1. Take Advantage of Employer Matching Contributions
2. Set-Up Automatic Retirement Fund Contributions
3. Start Investing Now
Almost anyone would like to be wealthy right now. The idea of financial security quickly compels many of us to gamble, buy lottery tickets and even invest in cryptocurrency hoping for a quick payday and money to burn.
But it doesn’t really work that way for most of us. The path to wealth is really a long journey you take over your lifetime, building your financial security one step at a time.
If you are like most of us, you have dreams, or maybe goals of retiring with enough money to be able to enjoy a standard of living that allows you to time to travel, be with family, and enjoy your hobbies and interests we put off during our working years.
Start by is getting your finances in order and living below your means so you have money to invest. This requires just a little bit of self-restraint and planning. But you can do this. The path to wealth is really very simple, almost anyone can do it. If you are an employee and your employer offers a 401k plan for your retirement, one of the first steps you want to take is to start making contributions to that company provided retirement plan.
It may not seem like much at first and as it grows there might be the temptation to make tax-able withdrawals to handle an unexpected expense or to cover the down payment on a house, pay for a child’s college education or even start a business. All of those choices will limit your ability to enjoy your retirement and build wealth, so it’s best to save for those big expenses in another account.
How much will you need to enjoy that comfortable retirement? according to a survey last year from Charles Schwab, you are likely to need around $2 million in savings to retire and enjoy the life of your dreams.
The good news is that most workers feel confident in their ability to retire to a comfortable retirement. According to Annual Retirement Confidence Survey(RCS), conducted by Greenwald research seven out of ten workers remain at least somewhat confident about their retirement planning. Three out ten are very confident. The RCS is the longest-running survey of its kind, measuring worker and retiree confidence about retirement, and is conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Research.
The majority of Americans understand that retirement with just a social security check is retiring into poverty. You don't want to do that. So start planning for your retirement now. Even if you don't save a million dollars, having a net egg with something there is going to help you.
Does having two million for retirement seem unlikely to you? The thing is, it is possible but you have to make a few changes. The first thing is to stop dreaming and start putting a plan in place.
Actually, if you start right now, it is still possible to retire wealthy, even if you're only earning an average salary -- and it's simpler than you think.
To retire with at least $1 million in your investment accounts you gave to start with where you are now.
Start by learning to live below your means so you can start each month by paying yourself first. Just invest a portion of your earnings every month into a few really simple investments. If you are struggling to make ends meet, work up a side gig that can provide extra income.
By taking just three steps, you'll be on your way to a wealthy retirement by putting you money to work, even while your sleep.
There's never a bad time to start preparing for retirement, and the earlier in life you begin investing, the easier it will be to build a million-dollar retirement fund.
In order to retire a millionaire, you'll need to save as consistently as possible. Here is how to start:
1. Take Advantage of Employer Matching Contributions
Employer-matching 401(k) contributions are basically free money. All you have to do is invest money in your 401(k), and you'll earn a bonus amount from your employer. The employer matching is free money, so start by taking advantage of it.
Most employers will match workers' 401(k) contributions up to a percentage of their salary. Among 401(k) plans that do offer matching contributions, the average employer match is 3.5% of a worker's wages, according to the Bureau of Labor Statistics. That can add up to more than you think. Most of us know that social security is not enough to retire comfortable on. Yet 92% of Americans receive or will receive money from Social Security. But the key is having additional sources of income. For 66% of Americans that will be personal savings and for more than half of Americans they will also get a monthly check from a retirement plan, either an individual retirement plan, or pension plan or a defined contribution plan, like a to 401K.
Say, for instance, you're earning $50,000 a year and your employer will match 3.5% of your salary. That amounts to $1,750 per year in matching 401(k) contributions. And that is free money that avoids taxes until you start withdrawal if the money.
If your investments can earn a 10% average annual return that $1,750 per year can amount to around $475,000 after 35 years. That means just the employer matching contribution puts 1/4 of the way toward the two million you need for retirement.
Add in your own contributions and you are likely to have the other 25 percent you need to have a two million nest egg.
You can get to that million in your 401k providing you start now and consistently invest. And the best part is it's really simple, let that employer match get you half way there.
2. Set-up Automatic Retirement Fund Contributions
The next step is really simple too, because most 401k and similar retirement plans allow you set your contribution to a retirement plan to be on autopilot, with an automatic payroll deduction. This not only makes saving easier, but it can also help you save more.
With automatic contributions, you're setting up your retirement account so that you're automatically transferring a set amount of money each paycheck.
The next really simple trick, with a retirement plan, is to increase the percent you are saving with every pay increase you receive.
This makes saving the priority it should be to retire wealthy. Just stick to your financial plan and build investing into your budget.
3. Start Investing Now
If you are 35 years old with no savings, but you want to save $1 million by 70 you can. If you are younger than 35, start investing now. You can reach that objective of having a million invested easier my starting earlier and allowing the magic of compounding returns to work for you. Just check this graph below to see how much compounding returns can mean for your total returns on investing over time.
Assuming you're earning an 8% average annual return on your investments, you'd need to save around $500 per month at 35 years of age to reach that goal. But if you start five years sooner, you can reach your goal by starting with a few hundred a month. And then later as your earning increase, increase your monthly investment amount as part of your monthly budget.
But suppose you put off saving for until age 40. Now you need to invest $800 per month to achieve your goal. That might be hard to do. So start earlier and allow compounding returns to work.
Retiring a millionaire takes time, but it's not as hard as it can seem. With these three simple ideas to boost your savings, you can reach being a millionaire at age 70 and enjoy your retirement. Just get started today.
Now where to start? That where my book, Five Paths To Wealth will help. It provides you with the guidance you need to use passive index funds, dividends growth stocks, dividends reinvestment plans, dollar cost averaging and investing in Real Estate Investment Trusts as your personal paths to wealth. The best part? Each of these is easy to start with very little money.
10 Steps Toward Wealth for Beginners
Start Your Investing By Building a "Core" Portfolio
Compound Interest Will Make You Wealthy
You can learn more about building your wealth, just get a copy of the book, Five Paths To Wealth,Floyd is the author of Five Paths To Wealth, available as a paperback or ebook from Amazon. You can learn more about him at his author web site.
You can find how what readers are saying about Five Paths to Wealth by reading reviews at Good Reads.
Other books by Floyd Saunders include Family Financial Freedom and Figuring Out Wall Street.
Book cover design by Ashley Dameron
Floyd's bio: Floyd Saunders has more than 35 years of experience in the financial services industry. Floyd’s diverse background includes experience in retail banking, investment banking, insurance, investments, annuities, financial planning, and tax preparation. He has authored the following books: Figuring Out Wall Street, Family Financial Freedom and Five Paths To Wealth.
He has been an adjunct faculty member for Baker University, St. Mary’s College, Moraga, California, and Community Colleges in California, teaching courses in personal money management, managerial finance, money and banking, and principles of banking.
He has worked for Bank of America, JP Morgan and JPMorgan Chase, TransAmerica, Wells Fargo, Citibank, WoltersKluwer/CCH, H.R. Block and as a consultant in the financial services industry. He has prior experience as a registered representative and has published several articles on personal financial planning, investing and personal money management.