We would all like to retire comfortably, with enough wealth to enjoy ourselves, take care of our family and maybe even travel. However, most of us get bogged down by the daily expenses we encounter and don’t spend time focused on saving for the future.
The truth is the biggest difference between people who retire with wealth and those who don’t isn’t the type of job they had, or whether or not they won the lottery. The biggest distinguishing factor between people who build wealth for retirement and people who don’t is how early they started to focus on retirement planning and how much they learned about money management.
If you start saving young, you really don’t have to put much money aside in order to retire with wealth. If you start saving money by the age of 25 you can just set aside 15% of your paycheck, investing it in a 401K or Roth IRA. Your 401K is the best strategy if the company you work for will match investments, if they don’t match investments you should invest in a Roth IRA instead. A Roth IRA has tax benefits later in life. See here for more on this.
If you are starting to invest for retirement after the age of 30 you will want to try to save a larger percent of your income. If you can find a way to save 25% of your salary, you will be well on your way to building wealth for retirement. It is really a question of priorities. Can you put off immediate gratification for your future? This is the pathway building wealth over time. Unnecessary spending can be what keeps you from retiring a millionaire.
Those little splurges you indulge in now simply aren’t worth it compared to being able to enjoy your retirement years. If you’re finding it hard to stay focused, learn more about money management. Knowledge really is power when it comes to building wealth, and once you see how quickly a little savings adds up with compound interest, it will be easier to say no to another pair of shoes or a fancy dinner out. It is easier if you can start early, but making it a habit and priority will deliver results.