3 ways to turn $100,000 into $1 million for retirement savings

People are often misled into believing that it is possible to retire comfortably on social security alone. In reality, these benefits probably pay less generously than you think.

Additionally, Social Security may have to cut benefits if lawmakers can’t find a way to address the program’s looming solvency issues. If this happens, older people will become even more dependent on outside sources of income to maintain a decent lifestyle.

That’s why it’s best to assume from the outset that you’ll need a good level of savings to retire comfortably. But one thing you don’t need is to contribute millions out of pocket to your IRA or 401(k) plan. In fact, even if you only manage to pump a total of $100,000 into your retirement plan throughout your career, you can still grow that to $1 million or more – if you follow these three tips.

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1. Live below your means

To carve out some money for your savings, you will have to get into the habit of living below your means. And the sooner you do, the easier it will be to inject money into your retirement plan on a regular basis.

A good way to ensure that you manage to get money into your IRA or 401(k) is to set up a budget that makes you spend less than your total salary. In fact, you should create a line item in your budget for pension plan contributions to stay on track.

2. Start investing at a young age

The sooner you start investing your money, the more opportunity you have to enjoy compounding returns. As your portfolio increases in value year after year, you will have the flexibility to reinvest those gains for further growth in your IRA or 401(k). It is therefore advantageous to start financing your savings at the earliest possible age.

Of course, many new workers can’t save for retirement because they’re busy paying off student debt and building up emergency funds. But once you’re in a more financially sound place, it certainly pays to make IRA or 401(k) contributions a priority.

3. Be aggressive when the clock is on your side

Investing in stocks involves risk. But the same goes for overly conservative investments.

If you go the latter route, you may find that your nest egg is insufficient and you will find yourself strapped for cash in retirement. But if you stock up on stocks when you’re relatively young, then you can enjoy a good level of growth in your portfolio and turn to safer investments as you approach retirement.

To be clear, when we talk about investing in stocks, it doesn’t necessarily mean having to choose individual companies on your own. If this falls outside your comfort zone, you can always load broad index funds instead.

think big

You should expect to rely more on your own savings than on Social Security to maintain a comfortable lifestyle in retirement. If you live below your means, start saving at an early age, and invest heavily in stocks, you’ll put yourself in a great position to retire with enough nest egg to meet your retirement goals.

The $18,984 Social Security premium that most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help boost your retirement income. For example: a simple trick could earn you up to $18,984 more…every year! Once you learn how to maximize your Social Security benefits, we believe you can retire confidently with the peace of mind we all seek. Just click here to find out how to learn more about these strategies.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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