By Money Talks News…
Retiring comfortably – never mind wealthy – may seem out of reach to many people, given current savings rates. Consider that median savings accumulated by workers ages 51 through 60 years is $49,000, while the number for people ages 30 through 40 is $30,000, according to professional services firm Towers Watson.
Don’t let the statistics scare you. With a little advance planning and self-discipline, you can have a golden nest egg at retirement. Here’s how:
Rule 1: Spend less than you earn
The formula for retiring rich starts with you actually putting money in the bank. Social Security alone isn’t enough to have you living the good life during your golden years.
Money Talks News founder Stacy Johnson recommends you spend only 90 percent of the money you make and sock away the remaining 10 percent.
If you have zero savings right now, concentrate on building up an emergency fund in a savings account first. Once your rainy-day fund is full, put that 10 percent you’re not spending into a dedicated retirement fund.
If you’re currently spending more than 90 percent of your income each month, you may want to read about how to save $1,000 by summer.
Rule 2: Start saving early
Thanks to the power of compounding interest, a little money saved now can go a long way at retirement time. But to get the most benefit, you’ll want to start saving as early as possible.
Let’s say you’re 20 years old and can manage to put away only $100 a month into your retirement fund. Assuming you average 8 percent returns, you’ll be closing in on having half a million dollars – $463,806 to be exact – by age 65. Even better, over that 45-year period, you’ll only have invested $54,000 of your money to get all that cash in return.
If you wait until you’re 40 to start saving $100 a month, and get that same rate of return, you’ll put in $30,000 of your money and get $87,727 in return by age 65. Not bad, but wouldn’t you rather have half a million?
Rule 3: If you start late, make up for lost time
Maybe you’re 55 and think you’ve missed your window of opportunity to retire rich. Don’t wave the white flag just yet!
The government allows those 50 or older at the end of the year to make catch-up contributions to their retirement funds. You can contribute an extra $6,000 to your workplace retirement program, such as a 401(k), for a total annual contribution of $24,000. IRA catch-up contributions are $1,000 for a total allowable contribution of $6,500 each year.
You might think there’s no way you’d ever have $6,500, let alone $23,000, to invest in a single year, but you could be surprised at when and how you come into extra cash. You may benefit from a loved one’s estate, downsize your home or sell a boat or other large toy that no …read more
Read more here: 10 Guaranteed Ways to Retire Rich
Category: bugeting, retirement, savings