You hear it all the time, “All you have to do is save $1 million dollars by the time you retire and you will be able to live quite comfortably for many, many years.” Sure, but in reality, how many people are actually able to save an entire $1 million? Not many. Which is too bad because as people are living longer, their meek savings and social security benefits are not allowing them to live their retirement years the way they had imagined. If you want to maintain your standard of living and be able to pay for unexpected health care costs, aiming to save $1 million is your best bet.
Here are five tips to help you save $1 million by the time you retire.
For many people in this country, retirement and signing up for social security aren’t at all what they expected. They expected to retire, fill out a simple form, check a box, and wait for the big benefit checks to come rolling in while they spend their days playing golf and gardening. But, sadly, it’s not quite as simple as that. In fact, there are many layers and aspects to making social security decisions. And you want to make the right ones, because these decisions have long-lasting consequences that will greatly impact the quality of your retirement life.
In order to help you make the best decisions, here are 5 facts you must know about social security:
For many people the only real nest egg they have for retirement is their 401K plan, and though 401Ks won’t always give you the retirement income you desire, you need to make the absolute most of your account because some savings is better than no savings. The true value of your 401K account depends on a few different things – how much you earn a year, how much of your earnings you save, how many years before you actually retire and how well the stock market performs during that time.
Here are 7 simple strategies for growing your 401K account so you can have as much retirement income as possible.
1. Set Up a Roth 401(k) Account if You Can
The contributions you make to a traditional 401K plan are tax deductible, but the money you invest into a Roth 401K isn’t. So, when you do finally retire and withdraw from your Roth account, none of those withdrawals will be taxed, not even the money you have earned from capital gains, interest and dividends.
Many people make the mistake of not thinking about their retirement nest egg until it’s too late. Or worse, they assume they will simply live off of their social security payments and all will be well. Sadly, many seniors who are currently trying to live off of their social security payments are struggling and barely able to make ends meet. On top of this already dismal news, there is constant talk from both sides of the political aisle of cutting social security benefits even farther. The bottom line is, you can’t depend on these payments to get you through your Golden Years. You’ve got to be proactive now to make sure you have enough income set aside.
Here are 5 ways you can avoid running out of money during retirement.
If you’ve been saving for your retirement for any amount of time now, you know it can be difficult. And you may have even found yourself discouraged at some point when you realized exactly how much you would need to save in order to live comfortably in your Golden years. If you wish to receive $40,000 of income each year in retirement, then you would have to accumulate $1 million into your retirement account. And that’s assuming you use the 4% safe withdrawal rate through retirement.
For most people, saving $1 million is simply out of their reach. But there are other ways to increase your retirement income.
Increase Your Social Security Benefit
The average Social Security benefit is modest but you can increase your payments simply by working longer and earning more during your working years. You can also delay claiming your SS payments until you’re a bit older, this will increase your monthly payments. For each year you delay, the payment will increase by 8% per year until you reach the age of 70.
You’ve spent the last 20 years or so daydreaming about retirement and part of that daydream included moving to a warm state where you’ll never have to shovel snow again, or maybe even just moving closer to your kids and grandkids. And while you deserve to move where you’d like – after all – you’ve been working your butt off and it’s your time to do what you want, you should be aware that some states are friendlier to retired people than others. When you relocate, you should look beyond climate and consider if the state has high taxes, a high cost of living, is safe, and has a strong health care system.
With these considerations in mind, here are the absolute worst 10 states for retirement.
You’d think Oregon would be a great place to retire, after all it’s considered one of the happiest states in the nation, and it’s easy to see why that would be. With the ocean and rugged shore line, beautiful dense forest and numerous craft beer breweries, it seems like paradise. But Oregon has the seventh-highest cost of living in the nation, making it hard for those on a fixed income. The state also has high taxes, above the national average, and weather-wise, if you like the sun, you won’t love Oregon.