How to save millions of dollars for retirement
Want to know the secret of how to make a million dollars? Well, it’s really no secret but if you start early in life it can be the easiest money you could ever make. No, I’m not going to tell you one of those get rich quick schemes, this is the real deal. Everyone hopes they can live long enough to see retirement age; however, many of us don’t plan for retirement or don’t save enough to live comfortably after retirement. That’s why today you see thousands of retirement age people still working everyday in order to make ends meet.
Saving for retirement can be a simple painless process if you start early. Let’s firstÂ look atÂ anÂ example of someone starting early in life for retirement investing aÂ modest amount of money.Â Starting at the age of 21 while havingÂ a part time job in college. You open a mutual fund account with your first $100 when you turn 21. Every month until you areÂ 65 years old you will continue to put $100 per month into the account.Â That’s not a lot of money especially after you get your first “real job” and start making “real money”. By the time you areÂ 65 years old you will have invested $52,800 of your own money. With an average rate of return of 10% on your investment you will have earned over $350,000! Compound interest is a great thing and you need to use it to your advantage! Of course that won’t be enough money to retire but you only invested $52,000 of your own money.
Some of you might be thinking that a 10% return on your investment is a little high, but over the years good mutual funds have proven to be at least this rate or higher. My current 401k has averaged 14% in the past 5 years and it’s been a horrible investing market.Â If you put the same $100 into the mutual fund and average a 14% return you will have earned over $1,300,000!
Now, let’s get a little more ambitious and assume you start saving at 21 and for 2 years you invest the 100 per month and then after getting a real job you put 10% of your income into a company matched 401k program.Â The company matches 100% of what you put in up to 3% of your contribution. Also lets assume you average $40,000 per year throughout your lifetime at the company.Â So each year you deposit $4,000 and the company gives you an additional 3%, so $1,200 for a total of $5,200. At 65 years old with a 14% return on investment you would have over $4,900,000!!!
If you start your life debt free putting 10% of your income into retirement isn’t that much of a challenge. Saving a small amount when you are young will make a MILLION DOLLARS worth of difference at retirement! Don’t delay your savings, start TODAY!