The idea of saving up $3 million for retirement sounds like a daunting task that would take me a lifetime to achieve. I recently read a Daily Worth article about 6 millionaire myths. The author pointed out a person needs $1 million for every $40,000 they want to replicate in retirement. Since my husband and I want to have an income of $120,000 in retirement, we need to a $3 million nest egg in another 25 years. Our plan is for me to save $1 million and for my husband, who earns more, to save $2 million. Some people have the misconception that millionaires live extravagant lifestyles. The author of “The Eventual Millionaire,” points out that many millionaires live below their means. He discovered the same thing that the authors of “The Millionaire Next Door,” discovered when interviewing millionaires. They tend to be a frugal bunch. For those of us who don’t earn a high paycheck or run a successful business, the only way to save up for a 6-figure retirement income is by being frugal.
Taking luck out of the equation
According to the Daily Worth article, successful millionaires are persistent. They follow the old saying: “The harder I work; the luckier I get.” It reminds me of a fortune cookie I received the other day that said, “It’s better to have bread today than cake tomorrow.” I hope to have cake when I retire, but for now I need to work hard to just put bread on the table. My husband and I invest in the stock market, hoping that our investments will grow due to double-digit gains each year. We aren’t going to invest in speculative stocks, but plan for a range of possible results from investing with a diversified portfolio.
Depending on equity, not inheritances
Some people assume millionaires inherited their wealth. In actuality, 86 percent of millionaires created their own wealth, according to a Fidelity Investments study cited by the Daily Worth article. I don’t figure in any kind of inheritance or chance lottery winning when planning for my retirement. What I do include in my retirement planning is the cost of my housing. I have been working a plan to pay off my mortgage, which will leave us with only property taxes and homeowner’s insurance if desired when retired.
Getting rich slowly
Not everyone who becomes a millionaire worked in a high-paying career. Even teachers can become millionaires. Interestingly, Andrew Hallam wrote a book called “Millionaire Teacher,” that discusses how he saved $1 million with index funds all on a teacher’s salary. As a writer, I actually make less money than many teachers in my area. I’m just as confident about my ability to save my share of our $3 million couple’s retirement. While my husband invests in mutual funds through his 401(k), I invest in exchange-traded funds and individual stocks in my Rollover IRA and Roth IRA plan.
Ever since I began investing, I felt more empowered and less stressed about my future. I’m willing to delay gratification now in order to have a more comfortable retirement later. If I have to work until I die because of unforeseen situations, I will be strong enough to handle the problems. I think so many people have the attitude that they are entitled to play golf and relax by the pool simply because they made it to age 62. They forget that they are fortunate to live in a time and place in history when some people can enjoy a privileged lifestyle. I’m aware of the fact that anyone can lose all they have in an instant even though it takes a lifetime to acquire it. But it’s not going to stop me from preparing for the future.
More from this contributor:
6-Figure Income with a $1,000 Emergency Fund
My Gen-X Plan to Survive Forced Retirement
I Regret Over-Saving for Retirement