To retire comfortably, most Americans will need to accumulate between $1 million and $2 million. That appears to be a tall assignment, especially for people on a low income. It is, however, achievable with the appropriate savings approach. Here’s how you can save more than $2 million on a $50,000-per-year salary.
Save a proportion of your salary
Retirement planning can be frightening at any age, but it’s especially so early in your career. With so many conflicting demands in the present, it’s challenging to plan for retirement when it seems so far away. Still, it’s essential to make steady progress toward saving.
Saving enough money for retirement might be difficult, but starting early and making regular payments can make it much more manageable. For example, if you earn $50,000 per year and put 15% of your earnings, or $625 per month, into a retirement account that generates a 10% annual rate of return, you’ll have about $1.3 million after 30 years. And if you keep saving for another five years, you’ll have more than $2.1 million, The Motley Fool posted.
Because you’re getting a 10% yearly return on a considerably more significant sum, your nest egg can increase so quickly in the last five years. You save $7,500 in the first year and only earn $750, bringing your total to $8,250. However, the following year, you gain a 10% return on your $8,250 balance, plus the $7,500 in contributions you make.
Look for alternatives
According to Nasdaq, it is not always simple to set aside 15% of your salary, but it may not be essential, especially for those who start saving early. If it isn’t doable, you’ll have to think beyond the box. You could reconsider your plans and postpone retiring for a few years. It allows you to save for a more extended period while also minimizing the length and cost of your retirement.
If that doesn’t appeal to you, you can start looking for ways to make more money right now. It’s always possible to look for a new job or ask for a raise. If neither of these options works out, consider starting a side business.
Set up regular retirement account contributions and check in with yourself at least once a year if you’ve established some strategy. Check to see if you’re ahead of or behind schedule, and make any necessary changes to your plan. Keeping such a close eye on your savings will make it easier to recognize possible difficulties and give you more confidence that you’re on the right track.
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