Retirement Savings 101

There’s one secret to earning up to 4x your retirement savings, or more.

It all comes down to making one simple change to your savings plan. Below I show you what that is.


Compounding: Your Late-Stage Retirement Savior

Too many investors I talk to these days worry about when or if they’ll ever be able to retire comfortably.

The fear is: I’ll have to keep working well into my 60s or even 70s. And regrettably, the numbers clearly show that most Americans simply haven’t prepared and saved enough to enjoy a leisurely retirement.

Only 20% of American workers have more than $250,000 saved for retirement, according to the latest data from the Employee Benefit Research Institute (EBRI).

Meanwhile, several studies show that retirees will need three–four times that amount (or $750,000-$1 million) to comfortably cover their needs during retirement.

Worse yet, EBRI data show only 62% of current retirees have a nest egg of $250,000 or more in place.

That’s simply not enough, especially with the skyrocketing costs of health care and long-term care.

If you want to avoid working as a Walmart greeter at the ripe old age of 70, here’s the good news: There’s an excellent way for you to play catch-up with your game plan and build up your investment account to assure yourself a prosperous retirement.

The catch is you have to jump on this right away.

How?

Dividend-paying high-quality stocks are the ticket you’ll need to build up a generous, reliable income stream. They are the simplest way to achieve market-beating investment results to help you enjoy many golden years in retirement.

Now, before you dismiss dividend stock investing as too old-fashioned, consider the proof.

Over the past 45 years, stocks that pay dividends have returned 9.25% annually, beating the returns on nondividend-paying stocks (2.61%) by a very wide margin. And historically, nearly half of the S&P 500’s total return comes from cash dividends alone, and when you reinvest those dividends, your returns compound much more.

graph

Source: HartfordFunds.com

Consider this…

A modest sum of $1,000 invested in the S&P index in 1960 would be worth over $46,000 today counting price appreciation alone. But when you factor in dividends, the profit potential goes parabolic.

If you diligently reinvest your dividends over all those years, your total gains balloon to $258,000. That’s over an extra $200,000 just from dividends and the magic of compounding them over time.

Granted, that’s a long time period — nearly 60 years, to be exact — and many soon-to-retire investors don’t have that much time. But the magic of compounding is more powerful than you might think, even in shorter time frames.

Let’s do the math.

If you only have 10 more years to prepare yourself financially for retirement, every $5,000 you’re able to sock away in your investment account each year (saving an extra $100 a week) between now and then should grow to more than $75,000 by the time you retire. Even if you have only five years left to save, put $5,000 away over each of the next five years and your account balance should grow to more than $30,000 by then!

Bottom line: There’s still plenty of time for the magic of dividend compounding to work in your favor, as long as you get started today.

In my next article I’ll show you an actual case study showing just how much you could have earned over the past 10 years in one of Warren Buffett’s favorite stocks. All thanks to the magic of dividend reinvestment.

Plus, I’ll reveal three more blue chips I’m eyeing with great compound dividend potential.

Stay tuned.

Here’s to growing your wealth,

Mike Burnick

Mike Burnick
Chief Income Expert, Mike Burnick’s Wealth Watch

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Mike Burnick

Mike Burnick is the editor of Mike Burnick’s Wealth Watch, Infinite Income, Amplified Income and Millionaire Moments. Mike has been bringing his trading strategies to the masses for over 30 years. He has been with Seven Figure Publishing since 2017. In 2018, the average return of Infinite Income beat the...

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