David Lerner Associates: How to Retire a Millionaire

The goal of retiring as a millionaire might seem impossible, but with good planning and determination, it can be achieved. The sooner you start, the better your chances are. A recent study looked at the habits of people with over a million dollars in their retirement accounts and discovered that there are some factors in common: [0]

1. Set the goal: Unless you are determined to achieve this goal, it won’t happen. Use the millionaire calculator to find out how much you need to save each month to reach the goal when you retire. [1]
2. Start early: The longer you have to save, the more likely you are to reach this goal. Compound interest is a major factor, and the more time you have to let this interest work, the more you have at the end. The later you start, the higher your monthly contribution will have to be. [2]
3. Work with a retirement specialist: Find someone who can help you create the plan, and stay on track. Find out which investment vehicles would work for you, and how much you would have to put away each month. Take into account, that as you progress in your career, you’ll earn more and could increase the contributions to the fund.
4. Save more than the average person: Create a savings plan based on a percentage of your salary. That way as your salary increases, so does your saving. Build up the amount you put away each month over time. Keep your eye on the prize of retiring a millionaire, and work diligently towards achieving that goal.
5. Live frugally: You don’t have to forego all pleasures and comforts, but it does pay to stick to your plan. Strive to keep a growing gap between your income and expenditure, and invest the surplus in your retirement fund.
6. Keep track of your spending habits: It’s very easy to find that your money has run out before the end of the month arrives. Keep a notebook, or use one of the online services like Mint.com to keep a close check on everything you spend. Break down the categories into more specific sections – instead of lumping everything food related into the “Food” category, list eating out, snacks, entertainment, and groceries separately. After three months, you’ll see patterns emerge and be able to find ways to save more.
7. Employer matching contributions: If you are employed, find out how much you need to contribute to qualify for a fully-matched employer contribution. This could make a huge difference to your fund.

It’s not impossible to retire with a million dollars in your retirement fund. What it does take is a plan and the discipline to consistently stick to that plan.

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.