Easy Steps to Retire Rich!
You must be rich!
At least that’s what the Federal Reserve thinks.
The Federal Reserve reported that household wealth in the U.S. hit a new all-time high of $108.6 trillion in the first quarter of this year.
The collective wealth of American households jumped by $4.7 trillion, or 4.5%, in the first quarter. In fact, the increase in household wealth was the largest 90-day increase ever recorded!
Most of that wealth increase was driven by the rebounding stock market. Through last Monday, the S&P 500 is up by more than 25% and the Nasdaq is up by 31% since bottoming on Christmas Eve 2018.
In terms of dollars, the value of stocks owned by Americans increased $3.23 trillion in just the first 90 days of this year.
Shhhh! Don’t Tell Bernie Sanders!
Don’t feel bad if you don’t feel wealthy, because 84% of all stocks are owned by just 10% of Americans, according to New York University economist Edward N. Wolff.
Worse yet, more than 50% of U.S. households don’t own any stocks at all.
That includes 401(k)s, pension plans, IRAs, mutual funds and college savings plans!
The reality is that a rising stock market has little to no effect on their personal wealth.
You know what does have a meaningful impact? Rising real estate prices, which increased by a collective $387 billion in the first quarter.
What can you learn from these numbers?
First, if you don’t own a home yet, you need to make homeownership a top priority, and second, you darn well need to sock away as much money as you can into your 401(k) or IRA.
By the way, the average American saved at an annualized rate of 6.7% in the first quarter.
But YOU should strive to be better than average.
Step 1 + Step 2 = A Wealthy Retirement
At an absolute minimum, you need to allocate 6% of your salary into your 401(k). Why 6%?
Most (not all) companies will contribute 50 cents for every dollar that you do, up to 6%.
Your 6% plus the company match of 3% will put you on the path of joining the Americans who increased their net worth by a collective $3.2 trillion in the first quarter.
How should you invest those 401(k) dollars?
There isn’t a one-size-fits-all answer, but I can tell you that anybody in their 20s, 30s, 40s or 50s should put most, if not all, of their retirement dollars into stocks…
Getting rich isn’t easy and it doesn’t happen overnight.
But if you have any ambitions of retiring wealthy, you need to get with the program above.
My simple two-step wealth-accumulation program (buying a home and using your 401(k) to save like a squirrel) will put you on the fast track to a rich and fulfilling retirement.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch