If you’re very careful and take full advantage of the retirement account concept, you really can retire as a millionaire
If you’re a savvy consumer (or any consumer at all, really), I doubt there’s a more rhetorical question than, “Do you want to retire as a millionaire?” Of course you do! Imagine never having to worry about money during your golden years!
That doesn’t mean you have to stop being frugal even then; as many an heiress has proven, it’s possible to run through $1,000,000 remarkably quickly if you’re wasteful. But that doesn’t describe the savvy consumer, now does it?
Frugality will get you into the millionaire bracket, and it’ll keep you there.
Needless to say, you’ll need to put aside every dollar you can in order to reach your retirement goals, which is why the money-saving tips we offer every week are so important. But beyond that, you should take advantage of any 401(k) program your company offers.
Once you’ve signed up, divert as much pay into your 401(k) as possible, and take full advantage of the matching funds your employer provides. Let’s say you put in $100 per month, and your employer matches it. If you start at age 25, at 8% interest you’ll pile up $650,000 from your 401(k) alone by age 65.
Imagine how much you could put aside if you upped the ante and managed a higher interest rate.
One of the great things about a 401(k) is that you never see the money: it’s automatically deducted from your paycheck. Well, you can do something similar with your checking account.
These days, most banks offer both checking and saving accounts when you sign up, and some will let you arrange things so that a certain amount of money goes from checking to savings every month. Even $50 a month can build up over time, especially if you skim it off occasionally and invest it.
Uncle Sam and Such
These days, most families average annual tax returns of about $2,000. Well, instead of letting Uncle Sam hold onto that money as an interest-free loan, cut your W-4 contributions to the bone and put the extra money into your savings or investments, so you can start building interest immediately.
If you do decide to wait until the government pays you back, don’t just spend that return! Invest it. Ditto for any sudden windfall you get — an inheritance, a gift, a bonus, the sale of your rare coin collection, whatever.
Put it away and never touch a cent. Just pretend you never got it.
The Bottom Line
If you want to ensure a comfortable retirement, it’s as simple–and as difficult– as socking money away for a few decades. Do it religiously, and you really are likely to retire as a millionaire!