A sizable nest egg might be yours with this strategy.
Retirement planning used to be defined by having a $1 million nest egg, but circumstances have changed. Many people now anticipate paying more like $200,000 or even $300,000.
You may believe it’s impossible to save that much money, but it may actually be easier than you think. There is, in fact, a way to get there for just $358 a month.
Find out how you can increase your monthly income from $358 to $2 million.
For most people, saving $2 million for retirement on their own is a near-impossible goal, therefore investing is essential. Even if you just make a few cents a year in interest from a savings account, you may see your money grow by over 30% if you invest it.
You could, of course, suffer a financial setback. Stocks, on the other hand, tend to fare well in the long run. The S&P 500 index has averaged an annual return of 9.4% during the past 50 years. This is a much better way to grow your money than a traditional savings account.
The amount of money you’d need to put in each month to attain your $2 million objectives at a 10-percent yearly average return might be as low as $358. You may not be able to save money this way, though.
For starters, there is no assurance that you will receive an annual return of 10%. People choose a 5 percent or 6 percent annual rate of return while preparing for retirement because of this. Their retirement plans will not be affected if their money increases at a slower rate.
Another issue with living on $358 a month is that you may not have 40 years till retirement if you follow this plan. It will take you longer to attain your goal if you have a shorter time frame in which to save.
The only way to determine if you’re saving enough for retirement is to design a personal retirement strategy that takes into account your spending patterns and financial goals.
How much money do you really need to put aside for your golden years?
Consider how you will spend your retirement as the first step in figuring out how much money you’ll need in retirement. Your current spending can serve as a foundation, but you should expect to spend more in some areas and less in others as you get older. Be prepared for any large-scale purchases you might make in your golden years.
You can calculate your total retirement expenses once you have an approximate idea of your annual retirement expenses and an idea of how long you plan to live. Inflation is something to keep in mind.
Generally speaking, a 3% yearly inflation rate is a decent benchmark. You can figure out how much you need to save each month and for the long term with the help of a retirement calculator.
In order to determine how much you need to save on your own, you must first subtract any money you plan to receive from other sources, such as Social Security, a pension, or a 401(k). You should be able to get information about your 401(k) match or pension from your employer.
Creating a Social Security account allows you to estimate your Social Security benefit at various ages.
Getting back to square one may be necessary if you find yourself unable to save the required amount each month. A few months or years of postponing retirement could make a big difference. You might also seek methods to cut back on your current spending in order to free up more money to put away for the future.
Make automatic payments to your retirement fund once you have a plan in place that works for you. If you’re eligible for a 401(k), your company should allow you to contribute a certain amount or percentage of your salary to your 401(k) each pay period. You should be able to set up automatic transfers from a bank account to your IRA if you have one.
You should revisit your retirement plan every few years to ensure that everything is on track. If your investment returns aren’t what you expected, or if your retirement goals shift, you may have to make adjustments to your savings approach in the future.