Do you have any idea how much money you’re going to need to retire? If you’ve never stopped to think about it before, you’ll probably be shocked to learn that even $1 million probably isn’t going to cut it. That sounds like an impossible goal, but for millennials, time is on our side. Here are 4 things millennials should start doing right now in order to retire rich.
- Start saving now. No matter how small your paycheck is at whatever crap job you managed to find right out of high school or college, you should be saving 15-20% of it. Then focus on paying your bills on time (you can probably cut some excess here, honestly), and anything that’s left over is yours to have fun with.
- Save the right way. Having a savings account at your bank with 0.25% interest isn’t going to get you to $1 million by age 65. If you’re lucky enough to work at a company with a 401k plan, start contributing to it ASAP, especially if the company makes matching contributions. That’s free money, literally a 100% return on investment, and you’d be foolish not to take advantage. Otherwise, consider an IRA, which will get you to your retirement goals a lot faster with an average stock market return of 11% over the long-term.
- Be patient. This isn’t going to happen overnight – investments for wealth building need to be for the long haul.
- Stay out of debt. Some debt is a smart investment, if done correctly. Student loans might help you earn more money later in life, and mortgages make home buying possible so that you can benefit from the home’s equity. But as a general rule, debt is just throwing money away. Credit card interest at 20%? From the same bank that’s only giving you 0.25% on your savings account? Um, thanks but no thanks.
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