Look at what it would take to save $1 million and follow your passion years early.
Your savings goal may be different depending on how early you plan to retire and the lifestyle you envision for yourself. But here’s what you’d need to contribute each month to reach the $1 million mark by the time you’re 55, based on your starting age.
Remember, investing 15% of your household income for retirement is always a good rule of thumb. Just be sure you’re out of debt with three to six months of expenses in your emergency fund first.
Here’s How to Up Your Chance of Success
- Pay off your mortgage. Let’s assume your mortgage takes up 25% of your budget. Knocking that sucker out slashes your household expenses by a quarter! Better yet, your home becomes a big asset you carry right into retirement.
- Invest in good growth stock mutual funds. Dave likes mutual funds for retirement investing because they allow you to invest in stocks without the risk that comes with single-stock investing. A good fund consistently outperforms others in the same category, covers multiple business sectors, and has an experienced manager at the helm.
- Don’t dip into your retirement fund until age 65. Your cool million could grow to more than $2.5 million by the time you hit 65 if you keep your hands off your nest egg until then. And that’s if you don’t add a penny more to your retirement fund after 55. Imagine the growth you’d see if you keep on investing!
Points in this post were cross-posted from daveramsey.com
Visit Dave Ramsey's blog (www.daveramsey.com/blog) if you have a question or need a financial pro to work with you according to your financial situation who can help you outline a solid plan based on your age, current investments and retirement goals.