Even with the shaky economic times, we need to remember it is still possible to save for retirement. Financial advisors say thanks to inflation and better saving habits, you could still retire with $1 million in the bank.
So how much do you need to save now to get to a million later? Let’s break it down.
“The longer somebody lives, the greater the likelihood that they would run themselves out of money,” said Jerome Wall, a certified financial planner. That is why it is key to start saving early.
Let’s just break down how you can get to your first million:
First, plan to retire at age 70 with social security. Assume your 401-K grows 6% a year, and your company matches your contribution. If you’re 25 and earning $30,000 a year, all you need to contribute is $75 a pay period to your 401-K.
But if you wait until you are 40, making $55,000 a year, you’ll have to invest 14% of your income, with the same 6% 401-K match. That means you need to contribute $321 a pay period.
The moral of the story? The younger you start, the easier it is to retire a millionaire. But, the real lesson is it’s never too late to start.
Interestingly, though millennials are often labeled poor money managers, new data shows this generation is actually saving more for retirement than Gen X-ers did at the same age. And remember, your company match is 100% percent return on your contribution, so don’t pass this free money up.
