A lump sum of $750,000 upon retirement is achievable. It might seem an impossible task but if a solid investment plan is put in place early enough, such a retirement figure (hopefully considerably more) is possible; however, an individual must begin saving as soon as they leave college and begin work – discipline is needed from the word go!
Step 1 – Make the most of a Roth IRA
The first step of the plan is to set up a Roth IRA making the maximum contributions each year. This is a specific retirement savings account. With a current contribution ceiling of $5500 per year this works out at $458.33 each month. Not everyone has that much spare cash but with a little careful budgeting it is achievable for many. A 7% return on savings over a period of 35 years could produce a final sum of more than $750,000. That could produce an annual income of $30,000 calculated at a safe withdrawal rate of 4%.
Anyone is allowed to open a Roth IRA as part of retirement planning. Contributions are not free of tax but withdrawals upon retirement are. If married or in legal partnerships both partners should save as much as possible into a Roth IRA – this will effectively double the retirement income.
Step 2 – Purchase a home as part of your Retirement Plan
The plan also includes purchasing a home just five years after graduating from college. This means that a mortgage taken out over 30 years will be paid off by the time the saver hits the age of 57. This ensures there will be more disposable income from the retirement fund without this large bill to pay.
Step 3 – Boost your Retirement Plan earnings with Social Security
Additional funds may be available from social security and this can top up the retirement fund. Funds are not guaranteed for all, but it is worth checking and claiming any benefits to make sure that retirement income is maximized.
It is not essential for an individual investor to have an in-depth knowledge of the stock market in order to create a sizeable nest egg for his or her retirement. The more that can be saved early in an individual’s working life the more financially comfortable retirement will be.
Continuing to steadily save as you go through life will help to ensure that retirement is something to be enjoyed rather than endured.
I am not sure if I necessarily agree with step 2 or 3, simply because you will pay way more in interest than your house is worth over a 3o year span… however if you paid it off in 8-10 years then I can see that, but I just don’t believe that a house to live in is a good investment.
I would say however that investing in real estate and rental properties is much more promising than buying a house to pay off in 30 years if you catch my drift?
And I don’t agree with step 3 simply because social security most likely won’t be available for my generation (since I am 20 years old) because of how our government spends our money and how much we are in debt as a nation.
But I do like your post, I am not trying to troll you guys at all, just my view. 🙂
Thanks for the post!