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3 Steps to Retiring a Millionaire With Zero Effort

By Katie Brockman - Jun 25, 2021 at 6:15AM

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You may be able to save more than you think.

Retirement could be one of the most enjoyable periods of your life, but it could also be incredibly expensive. In fact, the average worker expects to need around $2 million in savings to retire comfortably, according to a survey last year from Charles Schwab.

Retiring a millionaire might seem like something reserved for only the wealthiest investors. But it's possible to retire rich even if you're only earning an average salary -- and it's easier than you might think.

To retire with at least $1 million in savings, you'll need to be strategic about how you save. By taking these three steps, you'll be on your way to millionaire status without lifting a finger.

Young person sitting at a desk looking at a computer

Image source: Getty Images.

1. Take advantage of employer matching contributions

Employer-matching 401(k) contributions are basically free money. All you have to do is invest money in your 401(k), and you'll earn a bonus amount from your employer.

Typically, employers will match workers' 401(k) contributions up to a percentage of their salary. Among 401(k) plans that do offer matching contributions, the average employer match is 3.5% of a worker's wages, according to the Bureau of Labor Statistics. That might not seem like much, but it can add up to more than you think.

Say, for instance, you're earning $50,000 a year and your employer will match 3.5% of your salary. That amounts to $1,750 per year in matching 401(k) contributions.

Let's also say that your investments are earning a 10% average annual return over time. At that rate, that $1,750 per year can amount to around $475,000 after 35 years. That's only the employer match, too; you'd have at least double that amount once you factor in your own 401(k) contributions as well.

2. Set up automatic retirement fund contributions

In order to retire a millionaire, you'll need to save as consistently as possible. Setting your savings on autopilot not only makes saving easier, but it can also help you save more.

With automatic contributions, you're setting up your retirement account so that you're automatically transferring a set amount of money each week, month, or paycheck. This helps you make saving a priority, stick to your financial plans, and build investing into your budget.

If you don't set up automatic contributions, it's easy to fall into the habit of saving whatever spare cash you have left at the end of the month. Or it could be more tempting to put off saving entirely and spend that extra money instead.

3. Start investing now

There's never a bad time to start preparing for retirement, and the earlier in life you begin investing, the easier it will be to build a million-dollar retirement fund.

Let's say you're 35 years old with no savings, and you want to save $1 million by 70. Assuming you're earning a modest 8% average annual return on your investments, you'd need to save around $500 per month to reach that goal.

On the other hand, suppose you put off saving for five years and don't start preparing until age 40. All other factors remaining the same, you'd now need to invest around $800 per month to achieve your goal.

You can't go back in time to start saving earlier, but it's better to start saving now, no matter your age, than to put it off.

Retiring a millionaire takes time, but it's not as daunting as it can seem. With these three strategies to boost your savings, you can reach millionaire status with as little effort as possible.

Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Katie Brockman has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.

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