How Long Will It Take You to Build a $1 Million Retirement?

How Long Will It Take You to Build a $1 Million Retirement?

Original Blog Post From DaveRamsey.com Successful retirement investing is a long-term business. You can’t time the market, so you must spend time in the market to save a sizeable nest egg. But even with the proper long-term perspective, it’s not unusual for investors to end up disappointed—even concerned that their retirement plans are failing them—when after several years of investing, they’ve barely saved enough to replace one year’s income! Slow and Steady Really Means Slow and Steady For example, an investor with an annual salary of $50,000 invests 15% of his income, $7,500, each year for retirement. At a 10% growth rate, it will take our investor five years for his retirement savings to reach the $50,000 mark. But things soon pick up steam. Just five years later, his savings has more than doubled and now exceeds $130,000. That’s just the beginning of what compound interest will do for our investor. The amount of money his money earns will continue to grow, and finally, 22 years after he first began investing for retirement, he’ll reach his tipping point. That’s the year his investments earn more than $53,000—more money than our investor earns for a whole year of work! Coasting to the Finish Line That’s the moment you know you’ve done this retirement investing thing right. That you’re going to be able to retire with dignity and even leave a legacy for your family. Dave Ramsey compares it to that feeling you got as a kid when, on a hot summer day, you rode your bike to the top of a hill, sweating and swerving with every last bit of energy...
5 Mistakes Millennials Are Making With Retirement

5 Mistakes Millennials Are Making With Retirement

from daveramsey.com on 12 Jun 2012 When you’re 25, the last thing on your mind is retirement. Who knows what life will be like when you’re 65, right? But no matter what happens when you reach your 60s, I can promise you this: you’re going to need a big nest egg for retirement. You absolutely need a fund that you’re regularly investing in. Even when millennials get it, they don’t seem to get it right. They might understand how important retirement investing is, and they might even be actively saving, but a lot of them are still making some mistakes. 1. They save in low-interest accounts. You need to have a 401(k) or a Roth IRA set up for retirement. There’s a growing trend among millennials to simply stash money away in a basic savings account or simple CD. While it’s awesome they realize the need to save, they’re totally missing out on the benefits of compound interest and the stock market growth over the last several years. They’re probably concerned over seeing their parents’ savings dwindle during the Great Recession, and I can understand that. But the stock market is pretty resilient. A basic savings account won’t even keep up with inflation! For short-term stuff, savings accounts are great. But when it comes to retirement, put your money in a retirement account. 2. They’re crippled by student loan debt. We’re right in the middle of a student loan crisis, and millennials are feeling it more than anyone. When you’ve got $30,000 in student loan debt, it’s hard to even imagine being out of debt, much less putting away...
The Truth About Retirement in America

The Truth About Retirement in America

Blog Post Originally From DaveRamsey.com According to the Federal Reserve, 40% of workers aged 55 to 64 have no retirement savings accounts at all. Of those who do have retirement accounts, the median balance is $100,000—not enough for most people to maintain their standard of living over decades of retirement. For people who are already retired, 20% of married retirees and half of single retirees rely on Social Security for the bulk of their income, according to the Social Security Administration. The average monthly income for a 62-year-old is $1,992 this year. What happened to the comfortable American retirement? Why are things so different from a generation ago? Say Goodbye to the Good Old Days To find the answer, we must look back about 50 years to when our country began a quiet retirement transition. No one paid much attention since, at the time, most retirees left the workforce with pensions that were guaranteed for life. Those pensions, plus a boost from Social Security, meant yesterday’s retirees could enjoy a comfortable retirement even if they didn’t save much on their own. Today, traditional pensions are almost unheard of. Employer retirement plans like 401(k)s have replaced them, putting much of the responsibility for building a retirement nest egg on workers themselves. It’s becoming clear now that this transition will not be smooth. The numbers show that it will actually be painful for many workers nearing retirement who are not financially prepared to support themselves. Debt Sticking Around Longer Another hurdle today’s retirees must overcome is their own debt load. Studies show that workers aged 55 to 64 are spending 22%...
6 Reasons People Stay In Debt

6 Reasons People Stay In Debt

Blog Post Originally From DaveRamsey.com Do you remember the moment you decided to get out of debt? You were sick and tired of being sick and tired. You might have even gotten angry at being in debt. Eventually, the burden and the stress of the constant bills and piling debt broke you down. Something inside you “clicked,” and you decided it was time to make a fresh start. But what keeps people from getting out of debt? Why would someone want to stay in chains instead of living in freedom? Sadly, there are all sorts of reasons people choose MasterCard over being free from debt. Here are just a few: 1. They want to keep up appearances. This is the dreaded “keeping up with the Joneses” mentality. But little do you know, the Joneses have a leased BMW, an underwater mortgage, and an unwelcome visitor named Sallie Mae living in their basement. The Joneses are the most broke people in your neighborhood. And if you’re trying to follow their example, you’ll be following them into bankruptcy if you’re not careful. 2. They are unwilling to sacrifice. How can you possibly give up eating out three nights a week? Or what would your life look like without cable? You’ll never know until you’re willing to give those things up in order to build a legacy for your future. If you’re in a lot of debt, something in your lifestyle has to change. It’s about priorities. Here’s the question: What are you willing to give up? 3. They fear change. Debt can be comfortable, kind of like slowly cooking in a...