“If I had a million dollars” is a popular song by the group Barenaked Ladies. For most people it’s simply a dream. Becoming a millionaire remains an “if” forever. But what if you could really become a millionaire? Is it really out of the realm of possibility? The fact is, according to a report from United Income, one out of every six retired people is a millionaire. That’s almost 17 percent of all retires that are enjoying the good life after hanging up their boots. While 17 percent might not sound like a huge number, the odds aren’t that bad. So what does it take to retire as a millionaire? What do you need to do now to become that one person in six?
A Million Dollars Doesn’t Go as Far as it used to
First off, the truth is a million dollars isn’t what it used to be. These days, people are living longer and the cost of living in retirement has gone up. That means most retirees need to have more money to last them through the golden years. Unfortunately, many retirees end up depending solely on their monthly Social Security benefits to live. So what does it take to save up a million dollars for retirement? Let’s take a look.
Save, Save, and Save Some More
The first step is to simply start saving. Save as much money as you can. This is the number one factor in having enough in retirement income. As a general rule, you should try to save at least 10-20 percent of your income to have a comfortable retirement. One of the best ways to save for any account is to set up automatic deposits for those accounts.
Invest in the Market
You should also put money into the stock market. This can be a huge source of retirement income. It’s important to invest in a variety of options. This helps diversify and balance your portfolio, which is generally a safe way to play the market. You should also have a long-term vision in your investments. Over time,the market generally rises. Trying to beat the market by buying and selling quickly is very risky.
In addition to your regular savings, you should also create an emergency savings fund. This fund can help cover those unexpected expenses that could occur at any time. For example, having to repair a vehicle, or purchase a new one, or pay for unexpected medical bills due to illness, are common things that can happen to anyone. An emergency savings fund can help you protect your regular savings and your retirement accounts.
Maximize Your Retirement Accounts
Not only should you be storing money away in your savings account, but you should also be contributing to a retirement account. If you don’t need the money now then do yourself a favor and contribute the maximum amount, or at least enough to receive the full employer contribution match. This lowers your immediate tax bill, increases your retirement savings, and allows you to receive the highest amount possible from your employer. That is free money that will be waiting for you in retirement.