Say, for example, you want to retire at age 67 with $2 million. If you started saving at age 25, you’d need to save just over $300 per month, assuming you’re earning a 10% annual rate of return. But if you wait until age 40 to begin saving, you’d need to save a whopping $1,400 per month to reach your goal, all other factors remaining the same.
This isn’t to say that it’s impossible to retire a millionaire if you’re off to a late start. But starting sooner rather than later will make it much easier to reach your target.
3. Set up automatic contributions
Automatic retirement fund contributions can help you save consistently, which is key to retiring a millionaire. Once you know approximately how much you need to save each month, set up your 401(k) or IRA so that you’re saving a set amount each week or month.
Not only does this help keep your savings on track, but it also makes it easier to prioritize saving in your budget. When you treat saving for retirement like it’s another bill you have to pay each month, you’re more likely to stick to your saving plan.
4. Take advantage of matching 401(k) contributions
Employer matching 401(k) contributions can help supercharge your savings, so it’s smart to take full advantage of them.