Nearly half of Americans have absolutely nothing saved for retirement. You could literally contribute a handful of change to a retirement fund and already be above the average.
Are YOU one of these people who has zero savings?
Perhaps, you’ve spent years tailoring your income towards impulsive purchases or other financial obligations, but have finally decided to make retirement a priority and remove it from the back burner.
If so, I’m here to guide you along the way and reveal the simple secret to building a million dollar retirement fund.
Even after coming to the realization that your retirement date may arrive sooner than you think, many people get discouraged or feel overwhelmed because they believe they’ve waited too long to start travelling along this path.
Obviously the sooner you begin to prepare for retirement the better, but it’s never too late to start.
Without getting too bogged down with all of the factors that go into it, just know that the key to reaching your retirement goal is made up of smart financial decisions and time.
So, first things first…
Apart from putting forth an effort to actually save, the most important financial decision you can make is to create a dedicated retirement account that you can put money into.
Luckily, the majority of employers do half the work for you by providing a 401(k).
A 401(k) is one of the most popular tools for retirement; however, many individuals fail to take complete advantage of it, which results in them missing out on THOUSANDS of dollars in the process.
It’s simple. These employees aren’t maximizing the full employer match.
But what exactly is a full employer match in terms of a 401(k)?
In short, it’s basically when your employer agrees to contribute the same amount to your retirement savings plan based on what you’ve contributed yourself.
For example: if you were to contribute 3% of your annual income to your 401(k), then your employer would have to contribute an additional 3% as well.
Makes sense, right?
The thing is, studies show that this is the biggest mistake that people make in their 401(k) retirement plans and about 1 out of every 5 workers are doing it.
On average, this cost comes out to be about $1,336 per year. This is FREE money that’s being thrown out the window!
Here’s the catch… it takes time.
While this may not seem like a significant amount of cash in the grand scheme of things, after 45-years of work, this number adds up to more than $60,000!
Just imagine what you could do with that kind of money, let alone the interest it would build if invested properly.
Depositing this $1,336 into your 401(k) with an average retain rate of 10% per year would result in close to $1 MILLION ($960,000 to be exact), assuming you work from the age of 22 and retire at 67-years-old.
Let’s say that this was all that you set aside for retirement. Withdrawing the average annual amount of 4% would grant you somewhere around $38,400 every year!
Now, add that amount to whatever Social Security you would have rolling in around this time.
If you ask me, the two equal out to a comfortable retirement.
There’s no reason to settle for the bare minimum, but it’s motivating to see how feasible attaining a million dollar retirement really is.
If you’re currently invested in an employer provided 401(k), make sure you’re utilizing the FULL employer match option.
You may have not received the head-start you wanted, but there’s no point in delaying your plan for retirement any longer.