FI SCAL FI TN ESS continued from page 12 The most important part is the actual saving and investing. A qualified Financial Advisor should be invaluable to helping you assess your risk and develop a plan to follow through your saving and investing years and the retirement years. So let’s talk about that saving part… Half of Americans think $1 million is enough to retire on, according to personal finance site NerdWallet. Depending on when you stop working and what you want your lifestyle to look like in your golden years, you may need more or less. But if you’re aiming for $1 million, here’s the breakdown of exactly how much to save per month to reach that goal by age 67.
NECESSARY SAVINGS PER MONTH Age 20: $319 per month Age 25: $440 per month Age 30: $613 per month Age 35: $864 per month Age 40: $1,240 per month Age 45: $1,831 per month Age 50: $2,831 per month Assumes 6% average annual investment return, monthly compounding and a retirement age of 67. Numbers are rounded in some cases. Retirement needs vary by income and cost of living –– $1 million isn’t an adequate goal for every saver.
As the chart shows, the amount you have to save depends a lot on how early you start. If you begin setting aside money at age 20, you have to save $319 per month to reach $1 million. If you start at age 30, though, that number nearly doubles: You need to save $613 per month.
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If you haven’t already started investing, the simplest way to start is to contribute to your employer’s retirement plan, a taxadvantaged retirement savings account, or other retirement savings accounts, such as a Roth IRA or traditional IRA. Supplement those with savings in outside accounts and remember to diversify. From the stocks, bonds and funds in your bank or brokerage accounts to real estate, collectibles, your business and even commodities and precious metals, use your money to make money. Compounding interest on investments is a very powerful tool. A million dollar account with a 6% rate of return is making $60,000. In twelve years that one million turns into two million with no additional investments! Diversify, assess your risk and rebalance on a regular basis. Talk to your financial advisor to help with your specific needs, goals and risk tolerance.
Michael J. Donnellan is President of King Financial, Inc. specializing in stock selection and retirement planning. Feel free to contact him with any questions or comments at the M3 Wealth Management office at 17601 W. 130th Street – Suite 1 in North Royalton, Ohio. Phone number (440) 652-6370 Email: donnellan@m3wealthmanagement.com Securities & advisory services offered through L.M. Kohn & Company Registered Broker/Dealer Member FINRA/SIPC/MSRB 10151 Carver Rd. Suite 100 – Cincinnati, Ohio 45242 (800) 478-0788