It’s the coveted benchmark for retirement success – one million dollars. By starting early and saving consistently, you can be a millionaire by retirement age. But what if you haven’t started saving yet, or it’s been a haphazard effort? It’s still possible with discipline and creativity. Read on to learn how to save one million dollars by retirement age if you’re starting from scratch.
The best time to start was yesterday. The second best time is today. Start Now! If you don’t have a plan on how you’re going to reach a million dollars, it’s okay. You can iron out the details as you go.
If you’re behind in contributing to your retirement, it can be overwhelming and paralyzing when you think about it. It’s easy to procrastinate by thinking I’ve waited this long, another couple months won’t matter. But it will! Earmark an amount for retirement with your next check, even if it’s only $25.
Optimize your Employer Match
If your employer offers a 401(k) match, this is one of the best ways to get started. Employers typically offer to match a percentage of your salary into your 401(k). At a minimum, contribute at the amount required to obtain the maximum match the full match.
Even if you opt to invest your money in real estate, or outside of your employer benefits, make sure to take advantage of their matching program. Even better, opt for the Roth option if available.
Make a Plan
Be intentional with your money. Identify how much you need to contribute a month based on your current age and current savings amount. You can plug your information into this calculator to get you started.
Set a budget each month and include retirement savings as a line item. If you’re not able to contribute the minimum monthly amount required, look beyond your annual salary. In addition to your monthly budget, save more significant chunks of money, such as your tax refunds, yearly bonuses, gift money, or inheritances.
Think Outside the Box
Depending on your age, savings, income, and current liabilities, it may not be possible to contribute the minimum amount to reach one million dollars by the period you want to retire. If this is the case, you’ll need to think outside the box.
Start by looking at your standard of living. Can you downsize your home and pivot the dollars going to your mortgage to your retirement account? Other options include moving to a lower-cost country and spending your retirement years there. Do you have money saved for your children’s college, but they’ve decided against college? Consider repurposing that savings to boost your retirement savings.
Consider starting a side gig with intent to sell the company as you get close to retirement, or to supplement your retirement income. Additionally, you can delay your retirement or enter retirement in stages by slowly cutting back your working hours. After all, many folks find retirement isn’t everything they thought it would be.
Do you have a plan to save one million dollars by retirement age? Leave a comment – I’d love to hear more about your strategies.