3 Steps to a Million Dollar Retirement (Even if You Haven’t Saved Anything Quite Yet)

You have probably read somewhere that you need $1 million in savings to retire.  While that is not entirely true, we are here to tell you that it IS possible to have a million dollar retirement even if you haven’t started saving quite yet.

million dollar retirement

According to a recent GOBankingRates survey, 29% of adults age 55 and up have no retirement savings whatsoever and another 15% have less than $10,000 saved.

However, even if you are among the penniless, don’t despair! Follow these 3 easy steps for a million dollar retirement (or at least enough savings to be comfortable):

Step 1: Plan on Working until at Least Age 70

The longer you work, the longer you can save and the less you will actually need for retirement.

Working until age 70 may seem like an eternity.  But, do you know what would be worse?  Trying to live on too little money for 20-30 years of your life.

Step 2: Save More Money!  Max Out Your IRA and/or 401k with Catch Up Contributions

For most of us, everything about retirement planning is simply a matter of trade offs.

If you spend less now and save it for retirement then you’ll have additional money later and be much more comfortable in your golden years.

You can save money however you like, but socking money into a 401k or IRA is usually the most efficient route to retirement savings (with the added benefit of major tax breaks).  And, as a bonus, the contribution limits to these accounts go up when you are 50 or over so even more money can be saved with major tax advantages.

If you are 50 or over and have both an IRA and a 401k, you can save a total of $31,000 in these tax advantaged accounts:

  • $24,500 to a 401k
  • $6,500 to an IRA

These numbers can be doubled if you are married — each of you could be saving big into these accounts!

But, just how do you save more money?  Most people feel like they are barely getting by. Think about it though, if you REALLY wanted to, you could probably save more.  It’s kind of like saying “I am so busy and don’t have any time” when you spend some of that time mindlessly reading your phone or watching TV.  You could probably be smarter about time management and it’s likely you can be smarter about money management.

Need more inspiration? Here are 3 articles that could help you figure out how and commit to saving more:

Small Ways to Boost Savings: Instead of looking for large chunks of money, think about ways to save that are a whole lot smaller.  Explore 11 Ways to Save More for Retirement.

Big Ways to Boost Savings: Downsizing and spending less on housing is a really powerful way to save a lot more for retirement.  Here are 8 other ways to save big.

Imagining a Secure Future: Visualizing your future retirement, is scientifically proven to help you make better decisions — like saving more — right now.

Step 3: Invest Smartly

Investing for retirement can be tricky but as you’ll see, this is how to grow your money into a million dollar retirement.

Your asset allocation should probably include some equities to allow for growth with the rest in asset classes like bonds and others that are not subject to as much volatility as the stock market.  So, you might be earning a 6-7% return on some of your money that is invested in stocks or a riskier vehicle, but a lower rate on other money that is invested in bonds — averaging perhaps around 4%.

If you could figure out a way to save $31,000 a year (growing those contributions to keep pace with inflation) and could earn a relatively modest 4% return on that money, it will add up quickly — very quickly (and even faster if your rate of return is higher):

  • If you start at age 50, you will have: $1.1 million at age 70.
  • Starting 5 years later at 55, you could accumulate $740,000 by age 70.
  • Even if you are already 60, you could still get to $430,000 by maxing out your contributions through to age 70.

Even saving half that amount — $15,500 a year ($12,250 to your 401k and $3,250 to an IRA) — and earning 4% could result in a sizable nest egg by age 70:

  • If you start at age 50, you will have $560,000
  • Starting at 55 will get you to $370,000
  • At 60, you could accumulate $210,000 in the 10 years to age 70

Explore these retirement investment resources to help you achieve a million dollar retirement:

You Probably Don’t Really Need a Million Dollar Retirement

As you can see, by scrimping and really saving, you can achieve a million dollar retirement, even if you don’t start saving until you are 50.

However, do you really need a million dollars to feel good about your retirement security? Frankly, the answer is probably not.

Here are a few ideas for making do with less (even MUCH less):

Retirement Spending: Your spending is the biggest driver of how much you will need for retirement.  It goes without saying — the less you spend, the less you need.  (And, if you cut down expenses to save more before you retire, you might discover how easy it can be to live on less.)

Social Security: The longer you wait to start Social Security, the greater your monthly benefit will be.  Think very carefully about when to start your benefits.  Use a Social Security break even calculator to figure out an optimal age for you to start.  And, if you are married, learn about the smartest Social Security decision you can make.

Work Longer: It doesn’t even need to be full time work, but any kind of work income for as long as possible can make a huge dent in your retirement savings needs.  Start a business, explore passive income ideas, find a job you really love (even if you are earning a bit less) or just grind it out in your current career.

Tap Home Equity: Can you downsize your home?  Depending on the value of your home equity, this could potentially get you hundreds of thousands of dollars for retirement.  If you want to stay where you are, a reverse mortgage can be one way to access your housing wealth and use it for retirement.

Watch Debt: The less you owe, the less you need to pay out.  Get rid of debt as early in your life as possible.

Get Creative: Retire abroad.  Rent out a room in your home.  Sell your car and walk. Get solar panels. Tell the kids to fund their own college tuition.  Be flexible about travel.  If you don’t want a million dollar retirement, you will probably need to be creative.

So, How Much Do YOU Really Need?

The real answer to this question is entirely dependent on all of the factors above — and more (inflation, how long you live, your health, unexpected costs, the global economy, etc…).

So, the only way to find out how much YOU really need is to work with a reputable financial advisor or to use a highly detailed retirement planning calculator.

The NewRetirement retirement planning tool has been named a best retirement calculator by the American Association of Individual Investor’s (AAII), Forbes Magazine, The Center for Retirement Research at Boston College, MoneyBoss, CanIRetireyet and many more.

The tool is ideal for planning an early retirement because it covers a comprehensive set of information relevant to retirement and lets you customize everything.

It is easy to create a fully personalized plan:

  • Start by documenting where you are right now — what you have and when you think you would like to retire
  • Then assess different strategies and scenarios– saving additional money each month, working longer, tapping home equity, paying off debt, earning a better rate of return and more
  • Keep playing with the numbers and mix and match opportunities until you figure out what trade offs you can be happy with that allow you to securely fund your retirement.

It can be really fun and rewarding to document a workable plan for a secure future!


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