Is it really possible to retire a millionaire by investing just $35 a week?
Money management expert and financial author, Dave Ramsey, seems to think so. He claims that it is possible even for those of us who don’t have an abundance of disposable income. While we may find it hard to save for retirement, it doesn’t mean that we can’t develop a healthy nest egg.
The key to saving money for your retirement is creating and sticking to a retirement plan that helps you reach your unique goals.
In order to retire comfortably, Ramsey suggests contributing 15% of your household income into tax-advantaged retirement accounts. That 15% amount looks a little different for everyone, depending on their salary. However, this idea becomes rather easy to grasp when you break it down into numbers that everyone can relate to.
If you make $12,000 a year, then 15% of your annual salary would be about $35. (This is $3,000 less than what you would make if you worked 40 hours a week at a job that paid the federal minimum wage.) If you invested just $35 a week in good growth stock mutual funds, here is what your financial future could look like:
• You could retire with $110,000 to $150,000 in 20 years.
• You could retire with $330,000 to $490,000 in 30 years.
• You could retire with $890,000 to $1.5 million in 40 years.
As you continue to work hard for your money, you will eventually get raises. The more you get paid, the more you can contribute to your nest egg and grow your retirement income.
There are many circumstances that might cause a person to wait on contributing to their retirement investments. If you don’t have 40 years to invest, consider the following strategies for “catching up” on your retirement savings:
If you double the amount that you contribute every week, you can save more for retirement at a faster pace.
You do not have to retire at 65. Working just a few extra years can help you catch up on your retirement savings.
Ramsey says that it is vital for you to pay off your mortgage because your money can go much further when you don’t have a mortgage looming overhead.
Before you start investing, it is important to work on becoming debt-free. Then, be sure to choose your investments wisely. Ramsey recommends investing evenly in four categories: growth, growth and income, aggressive growth, and international. Once you choose the right investments, stick with the plan to see real results, and don’t let a temporary downturn in the market influence a decision that might hurt you in the long run.
Are you ready to become a millionaire in retirement? The Budgeter in the NewRetirement Planner enables you to predict expenses by category and vary your expenditure over time.
