A 2020 analysis showed that Georgians need to save an average of $187,186 to retire.
But what if you want to be a millionaire?
CNN Business has some tips on how you can save seven figures before you stop working full time.
Begin saving as early as you can
At 40, you can still be on track to have $1 million saved by retirement. According to The Balance, it’s legal for you to put away $19,500 in a 401(k) retirement plan. If you’re 50 and over, the IRS puts the limit at $26,000 for the 2020 and 2021 tax years. If there is a 7% rate of return, you’ll have a $1 million 401(k) balance in 22 years and 10 months if you annually contribute the maximum amount. You’d save over $1 million by 63.
Choose how much to save base on your age
If you begin saving at 40, you should try to save $1,444 monthly for retirement to have $1 million saved by 65. If you start saving at 50, the goal should be to save $3,439 monthly to become a 65-year-old millionaire. This assumes a 6% return, compounded monthly.
Invest what you save
Rather than keeping your savings in a bank savings account, you can invest them. You can also invest outside a 401(k).
According to Investopedia, you can use brokerage accounts to can invest in stocks, bonds and mutual funds among others.
Traditional individual retirement accounts and Roth IRAs are also options. Traditional IRAs allow you to deduct contributions the year you make them. Once you take the money out in retirement, they’re taxed as normal income. Roth IRAs give you a tax break when you add money. Withdrawals made after age 59½ and at least five years since the initial Roth contribution are tax-free.
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