How to Save $1 Million for Retirement: Tips from Experts

Did you know that even fast-food workers can retire as millionaires? It's all about saving and investing a portion of your income consistently. Brad Klontz, a financial psychologist, explains that every dollar you earn can be a step towards your "financial freedom. " Karen Wallace, a certified financial planner, adds that saving $1 million might not be as hard as it seems. For instance, a 30-year-old earning $60, 000 a year could save $500 monthly and reach $1 million by age 70, assuming a 7% market return. This doesn't include extra savings from bonuses, raises, or company 401(k) matches. Timing is crucial. Starting early can make a big difference. Winnie Sun, a financial advisor, suggests beginning with a low-cost index fund, like one tracking the S&P 500. She emphasizes that even a year's delay can significantly impact reaching your $1 million goal. Avoiding debt and keeping expenses in check are also key. But is $1 million enough? The 4% rule suggests a $1 million nest egg can provide $40, 000 annually, adjusted for inflation. Fidelity recommends aiming for 10 times your annual salary by age 67. Ideally, you should save 15% to 20% of your income, advises Sun. Some people save up to 90% of their income, like those in the FIRE (Financial Independence, Retire Early) movement. They do this by minimizing expenses and maximizing savings. However, there's a balance. Enjoying life today while saving for tomorrow is important. Sun stresses the need for a good quality of life. It's about finding that happy medium.