Dreaming of retiring a millionaire? It isn’t as farfetched as it may seem. With a strategic planning, saving and investing, you can be well on your way to achieving (and even exceeding) this goal.
We all like to dream about retiring wealthy. While retirement is meant to be enjoyed, it is of course costly. Many Americans believe retiring a millionaire isn’t achievable, but the reality is the average worker expects to need around $2 million in savings to retire comfortably, according to a survey last year from Charles Schwab.
To obtain the type of financial independence you’ve been dreaming about all your life, you must learn to develop a “millionaire mindset”. This doesn’t mean a get-rich-quick approach, nor wait for inheritance payouts; To retire with at least $1 million in savings, you’ll need to be strategic about how you save. If you’re young, time is on your side, and retiring a millionaire is somewhat “easier”. But no matter what stage you’re at in life, it is still achievable.
How do you go about developing that millionaire mindset? Try following these simple steps:
Unfortunately, people have a habit of spending their hard-earned cash on goods and services that they don’t need. Even relatively small expenses can really add up and decrease your saving potential. And of course, larger expenses on luxury items also prevent many people from putting money into savings each month.
It’s important to realize that it’s usually not just one item or one habit that must be cut out in order to accumulate sizable wealth (although it may be). Usually, in order to become wealthy, one must adopt a disciplined lifestyle and budget. This means that people who are looking to build their savings need to make sacrifices somewhere; which could involve cutting back on extra, unnecessary expenses.
This doesn’t mean that you shouldn’t go out and have fun, after all, life is for living, but you should try to do things in moderation and set a budget (and stick to it). Fortunately, particularly if you start young, saving up a sizable amount only requires a few minor adjustments to your spending habits.
Sometimes, individuals think that doing their own taxes will save them money. In some cases, they might be correct. However, in other cases, it may actually end up costing them because they fail to take advantage of the many deductions available to them.
Try to learn more about what types of items are deductible. You should also understand when it makes sense to move away from the standard deduction and start itemizing your return. However, if you’re not willing or able to become educated about filing your own income taxes, it may actually pay to hire some help, particularly if you are self-employed, own a business, or have other circumstances that complicate your tax return.
Investments in tax-deferred options means that your funds have the potential to compound interest for years, allowing it to compile interest at a quicker rate. However, tax-deferred options are generally constructed for long term goals, and there may be restrictions on when money can be taken out without fees.
The rigor of navigating them all on your own can lead to frustration and, ultimately, mistakes if you’re not careful.
It’s best to seek the advice of a financial advisor with experience in designing tax-efficient wealth-management plans. To learn more about tax-efficient strategies and what options may be the best for you, contact CKS Summit Group today.
When people earn money, their first responsibility is to pay current expenses such as rent or mortgage, food, and other necessities. Once these expenses have been covered, the next step should be to fund a retirement plan or some other tax-advantaged vehicle.
Unfortunately, retirement planning is an afterthought for many. Here’s why it shouldn’t be: funding a 401(k) and/or an IRA early on in life means you can contribute less money overall and actually end up with significantly more in the end than someone who put in much more money but started later.
The pandemic has also highlighted the need for financial planning in terms of retirement and emergency savings, as well as strategies you can implement for better protection.
If you put a pause on your retirement savings, you may be looking for ways to close the gap left by the absence of new contributions. Though not ideal, one way to accomplish this is by dealing your retirement date to give yourself more time to build up savings. Extending your working years not only gives you more time to bulk up your retirement savings, but it can also help you delay taking Social Security. The longer you wait to take your Social Security, the bigger the monthly check will be. So while can’t go back in time to start saving earlier, but it’s better to start a plan now, no matter your age, than to put it off.
When it comes to your retirement portfolio, remember that your overarching goal is to create a mix of investments that work together to preserve capital, generate income and grow.
There’s no need to obsess over every movement of the Dow Jones Industrial Average. Instead, check your portfolio once a year and re-balance your asset allocation to keep on track with your plan.
However, managing your own portfolio comes with risks. Taxes, estate planning, rules around gifting to relatives, timing of withdrawals from retirement accounts and other issues can be immensely complex and are getting more so. This is where a retirement income advisor can help.
Experienced retirement planning professionals get to know your individual situation and consider your goals to create a plan designed specifically to help you reach the future you want. If your situation requires a pro’s help, make sure you get someone who is reliable and trustworthy.
Fortunately, with enough time, a decent income, and a solid plan, you can get to your $1+ Million goal entering retirement.
Achieving financial independence as the result of developing million dollar habits is a great goal in itself. Ready to get started? Great! Set your sights on that millionaire status and connect with a financial advisor who can help you plan for your retirement future (and keep you laser focused along the way).
