If you’re over 50 and don’t have anywhere near $1 million saved for retirement, you’re probably feeling anxious.
But with discipline, consistency, and education, you still have a chance to get closer to that $1 million goal before you quit your job.
Here are some steps you can take this year to get closer to your retirement goals.
A recent survey found that most Americans believe they need $1.46 million to retire comfortably. Northwestern Mutual Survey If you’re over 50 and nowhere near that amount, you’re probably feeling anxious, but with discipline, consistency, and education, you still have a chance to get close to that million-dollar mark before you quit your job.
Below I’ve jotted down some steps you can take this year to get closer to your retirement goals.
Do you really need $1 million to retire? No, not even close, says this economist, and here’s why:
Start where you are
Before you start transferring money to different accounts, it’s important to evaluate your current financial situation. This will help you get a better idea of your financial situation and identify habits that may be hindering your financial plan. Here are some steps to consider:
Calculate your net worth : Write down all your assets, including savings accounts, fixed deposits, retirement accounts, etc. Then subtract all your liabilities, like credit card debt and personal loans, from your assets to get your net worth. This will give you an idea of your current financial situation.Check your income and expenses : Tally up all the income you earn from different sources and track your monthly expenses to see where your money is going. If you want to earn more, consider using your expertise to start a profitable side hustle.Build up your emergency fund : in Black Rock CEO In Larry Fink’s annual letter to investors, he emergency Savings 70% more likely to save for retirement Do whatever you can to help you save more money for retirement.
Make the most of your workplace benefits
Once you understand the numbers, it’s time to look into workplace benefits. Many employers offer retirement plans, such as: 401(k) We help you save tax-advantaged: In 2024, you can contribute up to $30,500 to your 401(k) with a $7,500 tax deduction. Catch-up contributions For employees age 50 and over. Annual contribution of $30,500. Past 10% returns It could make you a millionaire in about 15 years.
If you are thinking of retiring early, you can still achieve your goal by taking advantage of the increased contribution limits and putting your money in other accounts. 401(k) match , Employee Stock Purchase Plan (ESPP), Restricted Stock Units You can build assets at work through your Retirement Shared Units (RSUs) and other benefits, and if you’re self-employed, you might also want to consider other types of accounts. Simplified Employee Pension (SEP) IRA .
Getting the most out of your individual retirement account
If you want to boost your retirement savings, Individual Retirement Accounts In addition to a 401(k) or other employer-sponsored retirement plan, you can also consider an IRA. An IRA gives you more flexibility because your employer doesn’t manage the account. Because you open and manage an IRA yourself, you have more investment options, including:
By 2024, savers aged 50 and over will Donate up to $8,000 Investing in an IRA, e.g. Loss or Traditional Let’s say you want to have $500,000 in a 401(k) and at least $250,000 in an IRA. If you invest $8,000 this year, contribute the maximum each year as the limits increase, and earn an average 10% return, you could reach your IRA goal in under 15 years. Self-Directed IRA If you want a wider range of investment options.
Invest in a taxable brokerage account
If your retirement account balance has reached its limit or you’re looking for an investment option to grow your savings, you may want to consider a taxable brokerage account. Unlike retirement accounts, taxable brokerage accounts Securities Account There are no contribution limits, so you can invest as much as you want. You also have more flexibility, as you can access your funds at any time without penalty. Plus, you can take advantage of tax deductions to reduce your taxes.
It might be closer than you think
The more money you put into your retirement accounts now, the easier it will be to reach your goal. Saving money in an employer-sponsored retirement plan, an IRA, or a taxable brokerage account can increase your chances of reaching your $1 million goal even after you’re 50. Remember, stock market returns are not guaranteed, so it’s hard to gauge exactly how long it will take you to reach your goal. Start by assessing your current numbers and creating a game plan for this year to get started on your path to retiring as a millionaire.
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