Yahoo Finance 5 Steps To Retiring a Millionaire in the Next 10 Years
As you close in on retiring, you may realize that you haven’t put in enough time planning for it. Maybe your savings aren’t enough to fully fund a secure retirement. If you intend to live off your savings or just want a more lavish lifestyle in your golden years, you’re going to need a lot of money — maybe even a million dollars.
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Can you retire as a millionaire in 10 years? It won’t be easy by any means, but it’s absolutely achievable. Finance experts gave us five steps that might just get you to a million bucks over the next decade.
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Take Stock
If you’re going to take on a goal this ambitious, you need to have a clear understanding of where you’re starting from. Figure out how much you can expect to earn in income over the next decade. Quantify your net worth by identifying all of your assets and liabilities.
Know exactly how much you are spending every month and exactly what you are spending it on. Calculate the expected future value in 10 years for all of your existing investment or retirement accounts.
Once you have the full picture of your finances, take a long, hard look at whether retiring a millionaire is a realistic goal. It’s not going to be for everybody, and that is what it is. It’s better to figure that out now than in nine years. Having said that, don’t just assume that you can’t do it, even if it seems hard to imagine. You’d be surprised at just how much you can accomplish in 10 years.
More: Here’s How To Become Rich If You’re Earning an Average Salary, According to Grant Cardone
Slash Your Spending
For most people, retiring as a millionaire is not going to happen without some sacrifice. The simplest way to maximize your ability to save and build wealth is by reducing your current spending.
“Trim the fat ruthlessly from your budget — every dollar saved is a crucial step towards your million-dollar goal,” said Jeff Rose, CFP and founder of Good Financial Cents. “This is about smart financial discipline. Look at every expense and ask yourself if it’s essential. Yes, this includes Netflix. Nothing is off limits! Find ways to get the same value for less and focus on what you truly need. This approach is about prioritizing your future million-dollar retirement.”
Increase Your Income
Maybe you already live a frugal lifestyle, or maybe you’ve cut everything you can stand and you still don’t think you’ll be able to hit a million dollars. The other variable in the saving equation is your income, and finding ways to increase it — without letting lifestyle creep eat away at it — also will increase your odds of achieving millionaire status.
The first thing to do is look at your current job and decide whether you’re getting paid what you’re worth. Negotiating a raise isn’t easy; but, if it works, it can be a massive help. Look into any certifications or continuing education opportunities that could help you make the case for a pay bump.
If making more at your job doesn’t work, start finding ways to earn on the side. Find a part-time job or a side hustle like delivering food. If you’re crafty or handy enough, monetize your hobbies by selling on Etsy or eBay.
You can even find apps that will pay you for doing things such as taking surveys or trying out apps. It won’t be much, but remember: Every dollar you get your hands on will get you closer to a million.
Max Out Your Savings
It’s obvious, but this one is the most important. Once you’ve gone through all the work of min-maxing your spending and income, don’t just let that money sit there. Cash actually loses value over time due to inflation, so start socking it away in an interest-bearing account or an investment that you can get a return on. As your returns are reinvested, they will start getting a return. Now you’re earning interest on your interest and can benefit from the power of compounding.
“To retire with $1 million in 10 years, you need to go all in,” Rose said. “Max out your retirement accounts. We’re talking $23,000 in your 401(k) and $7,000 in an IRA annually, plus catch-up contributions if you’re over 50. Whatever savings you have left can be invested in a taxable account once you’ve maxed out on your tax-advantaged accounts.”
Don’t Invest Too Conservatively
Everyone is probably familiar with the concept of higher risk and higher rewards. There’s really no way around it: To get the kind of returns you are almost certainly going to need to reach a million dollars, you will have to accept a fair amount of risk. That doesn’t mean wild speculating or risking your entire nest egg on a meme stock or sports betting, but it does mean that very safe investments like a money market account or bonds are not going to cut it.
Investing in stocks is a great choice. Over the last 30 years, the S&P 500 has returned nearly 10% a year on average. That’s not your only option though. Investing in real estate or even a small business is also a way to build wealth.
“Investing in businesses and real estate are great assets in an overall portfolio,” said Avis Berg, chief investment officer of Berg Capital. “If you find private equity opportunities to invest in a good business, hire a business advisor to evaluate the decision and pull the trigger. Folks [with] under $5 million in assets, from my experience, do well when split between three major assets: real estate, securities and business ownership — private equity within privately held enterprises.”
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This article originally appeared on GOBankingRates.com: 5 Steps To Retiring a Millionaire in the Next 10 Years
