Tag Archives: Retire Rich

How to Feel Richer in Retirement 

Feel Richer in RetirementMany couples have no idea if they will have enough money when they retire. They worry and want to feel richer in retirement, but do not know what to do. They have not taken the time to assess their situation in terms of income, expenses and savings to really know if they will be comfortable or not. This is really the only way to know if you have saved sufficiently and will have enough pension income. Once they set up a budget and assess their financial situation, they can stop worrying. But there are always ways to feel richer in retirement no matter what your income is. Here are a few steps to take.

How to Feel Richer in Retirement

Always ask for discounts – there is nothing wrong in asking for discounts. Many places offer 10% off for seniors or even as much as half price. That’s a pretty good deal when two people can eat for the price of one.

Stay healthy – and avoid expensive medication, trips to the doctor and worse. Exercise, eat well and not only will you feel better, there will be more money in your pocket.

Look for supplemental income – if you are short of money, get a part time job. Many seniors work a couple of days a week. They like the extra income as well as the social aspect of being around people.

Work longer – once you have completed your assessment, you may find that you need to work longer. That’s ok for many people. Again they enjoy the social aspect and they can build their savings even further.

Save early – start as soon as you get your first job. Set aside 10%, invest it well and forget about it. Amazingly you will have sufficient savings and income by the time your 50 to retire or do something different than your current career. It will be your choice.

Invest well – forget the quick rich schemes. Most people lose money. Focus on blue chip stocks that not only pay dividends, but increase them on a regular basis as well. You will be amazed at how fast your savings will grow.

How to Retire Rich

How to Retire RichKnowledge is everything and as it turns out it is true when it comes to retirement. Having enough money to meet your goals and objectives during retirement is critical on how to retire rich. One study confirmed that if you could answer questions about interest rates, inflation etc, you stood a much better chance of having enough money to retire.  Most people cannot answer these questions and have to live unknowingly with less money than they should be. It affects their quality of life during retirement which is when we should all be enjoying our lives.

In fact over your working life you could end up with 25% more savings if you understand and can answer the following three questions.

Three Important Questions

  1. Interest Rate: Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? Answer choices: More than $110, Exactly $110, Less than $110.

The answer is More than $110, assuming that you reinvested the interest income each year. At the end of the first year you would have $102. At the end of the second year you would have $104.04 An additional four cents is not much in this example, but it adds up quickly when you are talking thousands of dollars.

  1. Inflation: Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account? Answer choices: More than today, Exactly the same, Less than today.)

The answer is less than today. Your savings account would have $101 dollars in it at the end of the year. With two percent inflation your original $100 would only purchase $98, add your $1 income and you have a total of $99 in purchasing power at the end of the year. If you had to pay income tax on this income, then you will have even less to spend.

  1. Risk: Is this statement True or False? Buying a single company’s stock usually provides a safer return than a stock mutual fund.

Diversity is incredibly important to avoid losing everything when you invest on one company and it goes bankrupt. Mutual funds go up and down. But at least you are protected because you are invested in many companies in stocks and bonds as well as cash. Remember that regardless of how you invest, spread your investments across good quality mutual funds or stocks.

Save

Characteristics of a Retirement Savings Millionaire

Retirement Savings MillionaireHow much do you need to save every week or month to become a retirement savings millionaire? Most people cannot even dream of saving this much money or ever having a million dollars, yet many consumers do it all of the time because they have focused on managing their money in such a way that they are able to deal with all of their expenses and still save money. In this post we will do a few calculations to show you just how easy it is to become a retirement millionaire and also the major advantage of starting early in life to save for retirement.

Retirement Savings Millionaire – Saving Money

The chart below demonstrates several fundamental rules. The earlier you start saving and the longer you save, the more money you will have for retirement. For example if start at age 20 and save $150 a week, you can easily have one million saved by the time you are 55. Wait until 65 and you have doubled your savings in 10 years. If you wait until you are older, you will have to save more each month in order to match the same numbers e.g. at age 40 you need to save $3500 a month to make that one million mark by the time  you are 55. And if you wait until age 50, can you really save $15,000 a month?

We have assumed a 7% return on average over the life of these savings. The stock market has returned this rate for many years. Although there has been a lot of volatility in that period with some years much higher and some years much lower. But people who consistently save their money and do not touch until retirement can easily meet this goal of one million dollars by the time they are 55 simply by saving $600 a month and becoming a retirement savings millionaire.

Age to Start Savings Amount to Save Each Month Avg Interest Rate Save to 55, then Retire Save to 65 Then Retire
 20  $100  7%  $176,560

 $363,901

 20  $600  7%  $1,005,982  $2,079,397
 40  $3500  7%  $1,058,177  $2,661,887
 50  $15,000  7%  $1,036,535 $4,525,982