Is $1 million a realistic financial goal? If you plan to retire at some point, then it’ll likely need to be. That is, if you want to retire with $1 million or more, it’ll take some leg work, but it’s achievable for many people.
In fact, you may need more than $1 million to fund your lifestyle after retirement. While there isn’t a single figure that’s right for everybody, you need to think about how much you plan to spend every year that you are retired. The AARP, for instance, estimates that $1 million will allow you to live on $40,000 per year.
So, while saving up $1 million before you retire sounds far-fetched, it doesn’t have to be – as long as you do what you should be doing and use time to your advantage. Here are a few things to do and keep in mind as you strive to hit that seven-figure net worth!
Start contributing to a retirement account
The most important thing that you have on your side is time. Well, time, and tax-advantaged retirement accounts!
As such, if you have a retirement account – either a 401(k) through your employer, or an IRA – now is the time to start contributing if you haven’t already. Investing your money early and often (see below) is a key way to build wealth, and perhaps the easiest way to do so is to start stashing money in your retirement account.
Seriously – see if you have access to a 401(k), and if not, see what options are out there for opening an IRA!
Invest early and often – even if the market’s down
As mentioned, the way to build wealth is to invest early and often. And you should keep investing no matter what is going on in the economy, or in the markets. Economies are cyclical – we’ll experience times of expansion and recession – and the markets go up and down as well. But they do tend to go up over time, and that’s the key.
If you invest during a down market or recession, you can think of buying assets like stocks at a discount. Odds are, their values will go back up over time, and probably far exceed their previous highs. That’s been true for the entire history of the market.
So, get on a schedule of investing regularly, and ignore the news cycle! Well, to a degree.
Be smart with your saving and spending
Your day-to-day saving and spending habits can’t be overlooked, either. You will need to stick to a budget, make sure you’re saving and investing enough to hit your goals, and not blowing too much money on everything else. Of course, make sure that your rent is paid and that you have groceries, but after that, look to see where you can trim expenditures and try to sock even more money away in a savings or investing account.
Over time, it’ll make a big difference. Before you know it, you’ll be well on your way to accumulating $1 million for retirement, and perhaps even more.
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