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13 Ways to Earn $1 Million Before Retirement

Author: Maurie Backman | May 06, 2021

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$1 million is within your reach

Is your goal to retire a millionaire? It may seem like a lofty one, but actually, if you play your cards right, you might manage to amass a very respectable pile of cash in time to kick off your senior years. Here are a few steps you can take to wind up a millionaire retiree.

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1. Start saving from a young age

When it comes to saving for retirement, time is your greatest weapon. If you begin funding a retirement plan from the moment you start earning a steady paycheck, you'll make it easier for your savings to grow.

ALSO READ: Saving This Much Each Year Could Make You a Millionaire

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2. Bank your raise every year

Ideally, your wages will go up year after year, or at least most years. If you make a point to always stick that extra cash directly into savings, it'll fuel your retirement plan's growth.

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3. Take advantage of employer 401(k) contributions

If you have access to a 401(k) plan through work, you may be entitled to free money in that account by contributing funds from your own paycheck. Find out what your company match looks like and what you need to do to snag it so you don't leave free money on the table.

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4. Make catch-up contributions once you're eligible

Once you turn 50, you'll get to save even more money annually in an IRA or 401(k). Aim to take advantage of those catch-up contributions, because they'll get you closer to your ultimate savings goal.

ALSO READ: How to Retire With $2 Million on a $60,000 Salary

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5. Invest heavily in stocks

The money you keep saving for retirement shouldn't just sit in cash -- it won't grow much that way. Instead, you'll need to invest it, and stocks are a good bet, because they typically deliver substantially higher returns than safer investments like bonds.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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6. Keep your investment fees to a minimum

When it comes to investing your retirement savings, you have choices. Sticking to lower-cost index funds will help you avoid racking up hefty fees that eat away at your returns. Actively managed mutual funds, by contrast, will cost you a lot more -- but they don't necessarily deliver a better performance than index funds.

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7. Steer clear of unhealthy debt

The more money you waste on interest, the less you'll have available to sock away for retirement. Avoid racking up credit card balances and other such unhealthy debt that only costs you over time.

ALSO READ: Want to Retire With $2 Million? Here's How Much You Need to Invest

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8. Don't take on too much house

Though mortgage debt is generally considered a healthy type of debt, you still don't want to go overboard. If you do, you'll limit the amount of money you can free up for retirement savings each month. Instead, buy a home that isn't at the very top of your budget.

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9. Drive modest cars

A fancy car may be fun to drive, but remember, automobiles lose value the moment you drive them off the lot. If you pay too much for a car, you'll have less money left over to save for retirement -- but you'll also end up with a depreciated asset at the end of the day.

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10. Follow a budget

If you don't pay attention to where your money goes, you'll be likely to spend more of it than you should -- and that means you'll have less on hand to save and invest for the future. Set up a budget that accounts for your various expenses and make yourself stick to it so you stay on track with your savings goals.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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11. Live below your means

In order to save for retirement, you'll need to not spend your entire paycheck, so get into the habit of doing so from as young an age as possible. Maybe you can technically afford a $10,000 vacation each year, but if you spend $5,000 instead, you'll have that much more money to add to your nest egg.

ALSO READ: 3 Ways to Grow $100,000 Into $1 Million for Retirement Savings

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12. Don't waste money on services you don't use

A lot of us throw away money on things we don't even get good use out of, like gym memberships or subscription services. Make a point to avoid these needless expenses -- the money you spend on them could otherwise find a nice home in your IRA or 401(k).

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13. Save your windfalls

You may come into extra money from time to time, whether it's a tax refund or a bonus from work. Pump all of that cash into your retirement plan, and over time, it'll get you even closer to where you want to end up.

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Push for $1 million and don't stop

Retiring with $1 million isn't unreasonable -- not if you work hard at it and commit to that goal. Of course, you may decide that you don't need $1 million to enjoy your senior years, but in that case, you can still use these tips to save as much as you can -- and enjoy retirement to the fullest.

The Motley Fool has a disclosure policy.

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