Thursday, September 06, 2018

By Barbara Pronin Who wants to be a millionaire, asks the popular TV game show – and the answer is, we all do! But the sad fact, according to Northwestern Mutual’s 2018 Planning and Progress Study, is that a shocking 21 percent of Americans have nothing saved for the future at all, and another 10 percent have managed to tuck away less than $5,000.

That means about two thirds of the population does have a shot at millionaire status – if they started saving early enough and continue to step up their stash.

Statistics tell us if you start at age 23, and put away $14 a day, you’ll reach a million by the time you’re 67 (assuming a six percent average annual investment return.) If you don’t start saving until you are 35, you’d have to sock away $30 a day to hit that seven-figure mark.

That’s not encouraging for the non-savers, especially in a time when monthly expenses seem to going up and up, and there’s never much left over out of your paycheck. But therein lies the secret, financial experts say; don’t try to save what’s left over. Pay yourself first instead.

Here are three strategies that work:

Start ASAP. The longer you wait, the less chance you have of securing a comfortable retirement. Deposit 10 percent of every paycheck into a savings account before you pay your bills. The experts say you won’t miss it, but if you think you can’t manage it, start with five percent – or even one percent.  

Automate. If part of your paycheck is sent directly to a retirement account, such as a 401 (k) or an IRA, see if you can set up ‘auto-increase,’ which allows you to choose the percentage you want to raise your contributions by and how often. This way, you won't forget to up your contributions or talk yourself out of setting aside a larger chunk when the time comes.

Bank every dollar you can. Chuck your change into a piggy bank at night. Recycle – or find another source of secondary income – and save the extra cash. Bank that birthday check instead of spending it. Every dollar counts. Start now.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com