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7 Moves to Ensure You're a Retirement Multimillionaire

By Christy Bieber - Apr 26, 2021 at 6:03AM

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When having $1 million isn't enough, you need to get really serious about retirement savings.

Becoming a millionaire isn't enough to make you wealthy anymore, according to most Americans. In fact, you now need to be a multimillionaire to be considered rich. 

Of course, saving more than $1 million can be a major challenge. But if you've set that goal for your retirement, it may be doable if you're disciplined. These seven steps could be the ticket to making it happen. 

Happy older couple on boat.

Image source: Getty Images.

1. Avoid debt

Taking on a lot of high-interest debt can rob you of your chance to hit multimillionaire status; too much of your monthly income will go to your creditors.

Interest can either work for you, if you've invested, or against you if you're the person paying it. You need to be on the right side of this equation and not wasting your hard-earned cash making creditors richer. 

2. Live on a budget 

Living below your means is crucial to amassing millions of dollars. A budget makes it a lot easier.

Decide in advance how to spend your money and allocate a good amount of it to savings to make sure you're on track to hit your targets. 

3. Start saving as early as possible

If you give yourself a short time to save for retirement, you'd have to invest tens of thousands of dollars every month to save even $1 million.

Say you start saving at 55 and want to become a millionaire by 65. With just a decade to invest, you'd have to save more than $72,000 per year just to end up with $1 million (assuming a 7% average annual rate of return on investments). Even this would probably be out of reach, never mind ending up with multiple millions. By contrast, someone who started saving at 25 would have to make an annual investment of around $10,000 to end up with $2 million. 

Saving early is an effective way to becoming a multimillionaire because you can reinvest your returns and grow your account balance effortlessly. 

4. Work on increasing your income

The more money you make, the easier it is to save the kind of money you need to become a multimillionaire. You can only cut spending so much before you can't afford the necessities. But the only limit on how much you can earn is your time and talent. 

You can increase your income by negotiating for raises, pursuing new job opportunities, working side gigs, or developing new job skills. As your salary goes up, invest more for your future. 

5. Invest more than average for retirement

The average American doesn't end up with millions in the bank at retirement. So you can't be average if saving millions is your goal.

The specific amount you'll need to save is going to depend on when you start. But it will almost definitely be a lot more than 10% of your income -- which many experts traditionally advised was a good amount to save for retirement. 

6. Take advantage of free retirement money

You can't pass up any help that's available if you want to be a multimillionaire retiree, so take full advantage of any employer 401(k) match offered to you.

You should also invest in tax-advantaged retirement accounts so the government can subsidize your savings. IRAs, 401(k)s, and HSAs are all good accounts to consider, as the tax breaks you get for investing in them make it much easier to hit your targets. 

7. Choose your investments wisely

Lastly, it's important to note that most people can't save enough to become a multimillionaire unless they earn a reasonable rate of return on the money they've invested. To earn the returns you need, build a diversified portfolio of investments you believe have long-term potential. 

Depending on your interest in investing and your knowledge of it, you may be able to beat the market and earn better-than-average returns by picking individual stocks. That can help you become a retirement multimillionaire more easily. But if you aren't confident in your investing skills, index funds may be a better bet.

The important thing is to make sure an appropriate percentage of your portfolio is in the stock market, so you stand the best chance of earning a reasonable rate of return without taking too great a chance of outsize losses.

By following these seven steps, you can hopefully end up with several million dollars by retirement -- more than enough to enjoy the rest of your life once you've left the working world. 

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