You have probably read somewhere that you need $1 million in savings to retire. While that is not entirely true, we are here to tell you that it IS possible to have a million dollar retirement even if you haven’t started saving quite yet.
According to a recent GOBankingRates survey, 29% of adults age 55 and up have no retirement savings whatsoever and another 15% have less than $10,000 saved.
However, even if you are among the penniless, don’t despair! Follow these 3 easy steps for a million dollar retirement (or at least enough savings to be comfortable):
Step 1: Plan on Working until at Least Age 70
The longer you work, the longer you can save and the less you will actually need for retirement.
Working until age 70 may seem like an eternity. But, do you know what would be worse? Trying to live on too little money for 20-30 years of your life.
Step 2: Save More Money! Max Out Your IRA and/or 401k with Catch Up Contributions
For most of us, everything about retirement planning is simply a matter of trade offs.
If you spend less now and save it for retirement then you’ll have additional money later and be much more comfortable in your golden years.
You can save money however you like, but socking money into a 401k or IRA is usually the most efficient route to retirement savings (with the added benefit of major tax breaks). And, as a bonus, the contribution limits to these accounts go up when you are 50 or over so even more money can be saved with major tax advantages.
If you are 50 or over and have both an IRA and a 401k, you can save a total of $31,000 in these tax advantaged accounts:
- $24,500 to a 401k
- $6,500 to an IRA
These numbers can be doubled if you are married — each of you could be saving big into these accounts!
But, just how do you save more money? Most people feel like they are barely getting by. Think about it though, if you REALLY wanted to, you could probably save more. It’s kind of like saying “I am so busy and don’t have any time” when you spend some of that time mindlessly reading your phone or watching TV. You could probably be smarter about time management and it’s likely you can be smarter about money management.