45 And Have No Savings? Did You Know You Could Still SAVE $1 Million For Your Retirement?

If this title appeals to you, it is because you want it to be true. Perhaps, you need it to be true. During the years spent working a main focus should be the conscience act of saving for retirement. While there are many ways to save for retirement, many workers do not take advantage of them and find themselves lacking resources in the future. If your retirement is about 20 years away there is still time to turn your future financial prospects around. It is still possible for you to save a million dollars for your retirement.

With projected inflation and continued financial fluctuations, it is expected that in 20 years the cost of living will be roughly double what it is today.  What this means, is that you will have to have saved at least a million dollars by the age of 65, in order to live comfortably for the remainder of your life. In order to save this amount of money, you will need to make a conscience choice to save that money. It will require focus and determination in order to reach that goal of a million dollars in twenty years.

Yes, You Can Do It!

Saving such an enormous amount of money is quite possible if you devise a plan of action and stick to it. When temptation strikes to deviate from the plan- imagine yourself financially secure and use that image to keep you motivated on the right track. So what exactly would you be sacrificing now- to be financially secure in the future?

If you have absolutely no savings to start with, you will need to save about $1,700 every month for about 20 years with some strategic investments.  This is a retirement plan projection that has $0 to start and 20 years or more to grow. If there is some savings the amounts come down significantly.

Perhaps, you were fortunate enough to be able to have some savings by the time you turned 45. If you had accumulated $50,000 then your investment each month would be $1,300 with investments. Let’s imagine that you received a windfall of or purely saved $100,000, and decided to invest it for retirement. In order to have that amount grow to a million you would then only need to save an additional $861 each month over the course of the next 20 years. Realistically, all of these amounts are feasible and you can very well be a millionaire when you retire.

The Trick Is To Start Early!

Now that you know that even being 45 with no savings does not rule out the possibility of being a millionaire when you retire- what are you going to do to make that your reality?  The most important step is to actually start saving today. Make it a point to have some savings before you turn 45 so that you will not be under such financial strains in order to just save for retirement. Here are some tips that can help you begin ensuring that you have money when you retire:

1.    Maximize your contribution to 401(k) – The maximum you should aim to contribute to your retirement plan is about $1,300 each month. This is much more effective if you are one of the lucky employees whose company offers to match contributions. Matching contributions allows you to get a 100% return on your investment immediately. Check with your company to get information on their retirement plan terms.

2.    Do Not Use Your Retirement Savings To Fund College Educations– No, this is not to say that you should not help your children fund their college educations, however, you must look at the long term goals and do what is best for everyone involved both now and in the future.  Using your savings to fund college educations will actually do more harm than good in the long run.

Keeping things in perspective, there are numerous ways to fund college educations- grants, loans, scholarships, work study programs, college specific savings plans and good old “paying for your own way”; however, there is only one way to pay for your retirement- you must actually save your own money.  Let’s say you do choose to use your retirement money for education expenses- then what? Who, then, supports you during your golden years? If your children must support you once you retire- what have you really done to help them? Ensuring that you are financially self-sufficient through the end of your life will be more of a financial relief for them, than if they simply had to repay a loan from their college education. Retirement saving will ensure that you can cover your living, medical and miscellaneous expenses instead of laying that burden on your children, who may have their own families to support and their own expenses to cover.

3.    Keep Your Assets In 80:20 Ratio of Stocks and Bonds – Stocks have a better return rate than bonds, although they are a little riskier. Ensure that your financial portfolio balances the risk across the stock investment as much as possible. Bonds, generally, are a better investment if there is 10 years or less before you wish to retire. Always consult with a financial professional before making decisions as to how to invest your retirement savings for the greatest returns with the least amount of risk.

With all the possibilities to earn money and invest those earnings, it is very possible to be a millionaire when you reach retirement age. Write out a plan with your goal and your projected plan for reaching that goal. When possible save money in a separate account that will be used for emergencies, so that you will not be tempted or forced to use your retirement savings in a crisis. Keep your plan within reach and always refer to it when making financial decisions. Ask yourself- Is this going to help me when saving for my future? Balance your financial decisions on the needs of the future with the wants of today.

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