Retirement looks different to everybody. Maybe it’s a cabin by a lake where fishing will be on the agenda every day. Maybe it’s a golf course condo in Florida or a trip around the world or hours of volunteer work or visits with the grandkids.
Whatever vision of retirement you’re putting together, you’re going to need money.
With rising housing costs, inflation, and interest rates – you’re going to need a lot of money.
Fortunately, it’s easier than ever to gather a fortune. All you need is a personal finance plan that helps you save, strategize, and support yourself into those retirement years.
Looking for some help? Here’s how to retire as a millionaire by age 65.
Contribute To Your Retirement Plan – And Don’t Leave Money On The Table
If you want to reach a million dollars by age 65, start saving for retirement early. Max out your contributions when you can, and if your company matches what you contribute, make sure you’re taking every dollar.
In 2020, more than 25 percent of workers with access to a retirement plan such as a 401(k) were not using it. That’s alarming. When you have a plan available like a 401(k) or a 403(b), you want to contribute as much of your income as you can.
The deductions are automatic, and made before your paycheck even hits your bank account. This reduces your taxable income and it also sets you up for some great long-term growth. The compound interest you earn over time accumulates, and the longer you’re in the plan, the more you earn.
When your company matches even three percent or five percent of what you contribute, make sure you’re putting aside at least that much so you take everything your employer is offering. This is free money towards your million-dollar retirement goals.
Build Your Own Investment Portfolio
Not everyone works for a company with a robust retirement savings plan. That leaves you on your own to plan a savings strategy that maximizes earnings while managing risk. Even if you’re contributing to an employee-sponsored plan, you want to think about what else you could be saving and where you should be saving it.
Open an Individual Retirement Account (IRA), and you can contribute up to $6,000 a year.If you’re 50 years of age or older, you can contribute even more. There are traditional IRAs and Roth IRAs, each with their own unique tax advantages. This is an easy way to start your own retirement savings account or increase what you’re already saving through an employer-sponsored plan.
There’s more freedom for you in an IRA. You can build a diverse portfolio with stocks, bonds, mutual funds, and other assets.
Eliminate and Avoid High Interest Debt
To retire as a millionaire by age 65, you need to focus on earnings and savings.
You also have to think about your spending.
According to the Federal Reserve, household debt rose to $14.6 trillion dollars in 2021. The average American has around $90,000 in debt.
It’s not easy to work towards a million-dollar retirement when you’re saddled with debt.
Pay off the high-interest credit cards and don’t take on more debt than you can reasonably pay off. This is easier said than done, but if you’re focused on retiring as a millionaire, the sacrifices necessary to avoid debt will be easier to make.
When you’re choosing credit cards, look for low-interest offers. Keep your credit score high so you can qualify for the best financing when it comes to cars, homes, and loans. When you’re not trapped making high monthly payments and paying down debt that has snowballed over time, you can put that extra income into your retirement accounts.
Consider Investing In Real Estate
Any financial expert will tell you that diversifying your investment portfolio is critical to managing risk and scaling what you can earn. One of the most obvious ways that investors diversify is by acquiring real estate.
Unlike stocks, bonds, and mutual funds, real estate is a tangible asset. If you buy a property when you’re young, you can rent it out to tenants until it’s paid off. Then, the money you earn in rent is pure cash flow. And, if you are thinking ahead and you invest in a rental property in an area that you might like to retire in, you will have a retirement home waiting for you when you’re ready.
Real estate is a desirable investment because it provides short and long term income. When you begin to leverage the real estate assets you already own, you can potentially earn your million dollars by age 65 just with investment property alone.
If you’re wondering how to retire as a millionaire by age 65, these are some great starting points. Start early, save often, and watch what you spend.