Live Like a College Student and Retire a Millionaire?

Bigstock-Become-A-Millionaire-99838559Retiring as a millionaire might seem like a lofty goal for millennials, but if having financial security in your future is important, it is a good benchmark to work towards in your twenties and thirties. It also isn't impossible. With some thriftiness, smart planning and the benefit of time, having a million in retirement accounts is more than possible , even if you aren't earning a million a year. In a study in 2014, Fidelity Investments looked at the habits of 1,000 clients who had more than $1 million in their Fidelity-managed 401(k)s—and earned less than $150,000. With the advice of two other personal finance experts, here are nine ways to become a retirement millionaire.

Forbes' recent article "Nine Ways To Be A Millionaire In Retirement," says that the one thing all 401(k) millionaires have in common is that they save at a higher amount. So start early in your career path, whatever you're making.

While millennials often have a competing priority with paying student loan debt, it's still important to make sure some of your money is going into retirement.

Live like a college student. Even if you are making very little, you should "mind the gap" – that is, the gap between what you spend and what you earn. Make sure there is a gap and keep your expenses low. Try to live like a college student when you're earning your first salary. Maybe have Ramen noodles and hot dogs on at least some evenings.

Track and evaluate. If saving seems like a task that is impossible to fathom, just look where your money is going. Take a three-month period and track all of your spending. You can use a tool like Quickbooks, Quicken, Mint, or, just use a debit card for all expenditures during that time so that your finances are automatically tracked. Keep track of where you spend your money, with that data, categorize things.

Slowly bump up your contribution rate. By the age of 25, you should be contributing at least of 10-15% (including your employer match) to your 401(k) savings plan. In order to ramp up to that contribution amount, start small (such as 6% if possible), then increase that percentage every six months.

Match…no, but really. Contributing enough to your 401(k) to take advantage of your employer's full match is one of the most effective personal finance tactics.

Check your "vest." If you've been taking advantage of your employer's 401(k) match, take a look at your company's vesting schedule. All of the money you put into your retirement account is yours, but you have to be fully vested to keep all of your employer's contributions.

Talk to an expert. It always helps to talk to an expert. Estate planning attorneys are always ready to assist you.

The most important thing is to start saving early.

For more information about estate planning, please visit my estate planning website.

Reference: Forbes (October 9, 2015) "Nine Ways To Be A Millionaire In Retirement"


A Lesson to Our Younger Selves: Start Saving Now

The-Future-is-now-lMillennials. You've grown up in an ever-changing world of technology, pop culture and reality TV. Ask any other generation, and their list of career options wouldn't include professional blogger, mobile app creator or YouTube star. You've seen the stock market fall apart in 2009, and as a result you are competing with older candidates who have 10 times the amount of work experience than you. It's a jungle out there. Where there is a con, there is always a pro. What you do have is easy access to mounds of information at your fingertips. You can learn from the past in ways that weren't available even a few years ago. You can turn money mishaps that your parents might have made into money victories for yourself. But first, you've got to get money smart.

A recent The Huffington Post article, titled ”4 Things I Wish I Knew About Money in my 20s,” emphasizes that the most important thing a millennial can do today to improve his or her financial future is to start saving. Although the Fall 2014 Merrill Edge Report showed that 80 percent of millennials think about their long-term finances when they are paying bills; nonetheless, they also need to pay themselves. It's important for millennials to find a balance between paying off any debt and saving for their future goals and retirement.

Making retirement a priority among many competing financial needs can be a challenge. The original article recommends that millennials go through their employer-sponsored retirement plan, such as a 401(k) or 403(b) account, or set up an automatic transfer from their bank or brokerage account into their personal IRA, Simplified Employee Pension (SEP-IRA) or SIMPLE IRA.

Along with retirement planning, a budget must be your top priority. While creating a budget might be the very last item on your to-do list, it’s essential to maintaining a solid financial foundation. Budgets are essential to estimate your monthly income and expenses, and at the end of each month, you should look at how your actual spending stacks up against your budget and make adjustments. Budgets also help to make sure you live within your means, and help you plan for day-to-day spending.

For more information about estate planning, please visit my estate planning website.

Reference: Huffington Post (February 2, 2015)”4 Things I Wish I Knew About Money in my 20s

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