4 Rules to Secure a Rich Retirement
One of my best friends says he is going to buy a motorhome and visit all 50 states when he retires.
Another friend dreams about spending his retirement on the golf course.
Regardless of what your retirement dreams are, you won’t be able to do any of them unless you save enough money to finance those dreams.
And No, Social Security Is NOT Enough
The average Social Security check today is only $1,461 a month, or $17,532 a year: woefully inadequate for anything other than watching TV and eating rice and beans.
In short, you need to save money, lots of money, to finance a comfortable, independent retirement. How much?
According to a new Vanguard study, How America Saves 2019, the average 401(k) balance for Americans age 65 and older is $196,907.
Not bad, but averages can be misleading.
The median 401(k) balance is only $58,035, which means that many of us are saving a lot of money but an equal number of us are saving very little.
Not only are many Americans not saving enough, but a huge number aren’t saving anything at all. According to the Investment Company Institute, 51 million American workers are contributing to a 401(k). However, 51 million is roughly half the U.S. workforce eligible for a 401(k), which means that another 51 million Americans aren’t saving anything!
Securing a rich retirement isn’t easy, but the rules to achieve it are actually quite simple. If you follow these four rules, you will not only live like a king in retirement, but also be able to retire early.
Four Rules to Secure a Rich Retirement
Rule #1: Start Young. If you start saving $200 a month at age 25, you will accumulate $1.2 million by age 65. However, if you wait until you are 35 years old, you will need to save $500 a month.
Rule #2: Missing the Match. Most companies contribute 50 cents for every dollar you put into your 401(k), up to 6% of your salary. Your 6% turns into 9% with the company match.
Rule #3: Getting Scared out of the Stock Market. Everybody loves watching their 401(k) balance go up, but the reality is that you will see several bear markets during your lifetime. Those bear markets will chop your 401(k) down by 20%, 30%, 40% or more. Instead of getting discouraged, remember that you are now buying cheap shares at bargain-basement prices. For the long-term 401(k) contributor, bear markets are your opportunity to buy at the bottom.
Rule #4: Slow and Steady Wins the Race. Stay away from fad investing, IPOs and swing-for-the-fences types of stocks. My advice is to load up on established blue chip companies that have a long history of paying dividends. Those are exactly the type of stocks that I recommend in my Infinite Income service and are ideal for retirement savings.
Whether you plan on traveling the world, drinking piña coladas on the beach, golfing your way around America, diving deep into your passionate hobby, volunteering your time or buying a second home, it is up to you to make it happen.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch