Do you believe you can save one million dollars for retirement?
Many people have done it. You won’t be the only one. This may be an uneasy topic. We don’t blame or want to discourage you. There’s a daunting task already in your mind when thinking of this number. It’s probably a big number compared to your salary.
You don’t have to compare it to your current savings either. But we do encourage you to take a better perspective for the reach. You can reach it. It’s right in front of you.
From the numbers we’ll share with you today, you’ll come to a quick conclusion. It’s very do-able!
There are simple, clear indicators that show that just about any person with a job can save one million dollars for retirement. Your first step is in telling yourself that you can. It is possible. VERY possible. The typical financial calculator will shed light onto how effective a little saved can go.
Calculate How You Can Save One Million Dollars For Retirement
A 30 year plan can yield you $1 million if you find ways to get a 6 percent return on investments. Think about it. When economic times are good, banks even offer a 5 percent return on traditional Certificates of Deposit or CDs. These are simple investments you can start with a few thousand dollars.
Here’s the best part: starting as early at 18–25 means you can begin with roughly $3 to $4 saved everyday. And that comes up to $90 or $124 saved each month. The factor here is that this savings starts early.
Yet with a compound of 6 percent yearly, this person would have $1 million dollars by 67 or later in retirement. It’s not a bad bet for anyone.
We hope this helps you better understand how easy reaching your retirement goals can be. It begins once you start. A little bit at a time is all it takes. When you can do more, the better.
Honor Your Matching Program in a 401(k)
Employees often overlook the effectiveness of a 401(k) plan. The term sounds generic and unoriginal. You, you want to be in with the “cool.” And that’s alright, but don’t miss out on a great opportunity. You see, it’s not that you put money into a 401(k) that makes it a great option. There’s something else involved.
Think of the advantage in your 401(k) with what we mentioned in our prior example of 6 percent gains. This is one extra step to get small amounts saved and compounded into larger sums. And yes, there’s a clear compounded advantage within each 401(k) plan. None of them are unique in this regard. It’s why those who contribute at least 15 percent or more see roughly $1,000,000 by retirement.
So what happens when you increase it even more?
You get more money.
You can do it by honoring your employer’s matching program. Though this match stops at certain amounts, you will likely double your money for the most part. Here’s a simple example. At the end of the year, you save $2,000. Because of your salary grade, your employer will match that completely.
Meaning you actually saved $4,000 that year.
These options sound great up to this point. They’re clear and concise. Here’s where we suggest that you practice a little discipline. The compounded interest you gain on your money will look attractive. If you have a disposition of needing emergency cash, hold tight. Your savings is not to be meddle with.
This is how you’re going to reach $1 million. Every little piece you take from it could be years worth of more work. Even more, every piece you take creates a problem. A habit to be exact. If it’s your 401(k), the penalties are risky. Penalties on this account can exceed the amount you saved by retirement.
Do not withdraw.
Boost Your Savings Contribution When Possible
This requires a little discipline also, but the rewards are more encouraging. Adding more and more into your default savings amount yields immediate results. It’s inspiring to say the least. When you can see a rapid rise. This is especially true when you know that your compounded interest will also play a role.
You may have heard that 10 to 15 percent is the saving standard. Put away this much yearly and nothing less. As you grow in income and savings, a saving increase ensures your path to $1 million. With a 6 percent yearly growth rate, you already know how easy this can be.
Start today while you still can.
And be sure to stop back here often.