15 Signs You Are on Track to Be a Rich Retiree

Retiring with plenty of money in the bank can enable you to enjoy your later years. But to do that, you'll need to make some smart financial decisions throughout your life.

Not sure if you're on the right track? Be on the lookout for these 15 signs that you're likely going to end up a wealthy senior.

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If you start to save money at a young age, you won't need to invest as much over time to retire rich. The money you have will earn returns that can be reinvested.

This is called compound growth, and it enables you to grow your wealth without as much effort on your part -- especially if you start investing when you're very young and have many years for compounding to work for you.

ALSO READ: Compound Interest and Compounding Growth: A Comprehensive Guide

If you make retirement account contributions automatic, you're more likely to end up with plenty of money as a senior. That's because the status quo will be investing for retirement and you aren't likely to change things once you have your contributions set up.

It's much easier to make the right decision once and then have your savings on autopilot rather than to continually force yourself to be responsible and invest every month.

If you know what your savings goal is, you are much more likely to achieve your objective.

Knowing how much you want in the bank by the time you retire enables you to calculate what amount you must set aside each month. You can also monitor whether you're on track and can change course if you aren't.

ALSO READ: 2 Easy Ways to Set Retirement Savings Goals

Traditionally, most experts said you'd be on track for retirement if you saved 10% of your income. But this may no longer be the case due to several factors including the fact people are living longer.

However, if you regularly invest more than 10% -- like 15% or 20% or an even higher amount -- this is a good sign. It suggests you're likely putting aside enough to build the nest egg you need to be a wealthy retiree.

Often, future retirees make a mistake when estimating how much they need saved for retirement. They see an amount that seems big, like $1 million, and think that will be enough.

The problem is, they forget to take inflation into account. A million dollars 20 or 30 years from now won't buy nearly what it would today. It would not be enough to make you wealthy if you're retiring far in the future.

If you want to make sure you're on track to be rich in your later years, you need to think about inflation when deciding how much to invest.

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If your employer offers a 401(k) match, you want to contribute enough to earn every dollar.

A 401(k) match is free money that helps your nest egg to grow. Maxing out your match is one of the easiest ways to set yourself up to become a wealthy retiree, since doing so enables your company to help as much as possible in saving for your future.

ALSO READ: How to Get the Most Out of Your 401(k) Company Match

The government helps you save for retirement by providing tax advantages for retirement investing. If you're on track to become rich as a senior, you're likely taking advantage of these opportunities.

You should be doing all you can to max out your 401(k), IRA, and health savings account if you are eligible to make contributions to these accounts. If you can qualify, you should also claim the full Saver's Credit each year.

You likely are not going to become a wealthy retiree if you are just saving your money. You need to invest it so you can earn the type of returns necessary for the money to grow.

You should make sure to spread your money around a mix of different kinds of investments to reduce your risk and maximize the chances of earning a good return on investment that will set you up for riches in your later years.

ALSO READ: Understanding Portfolio Diversification

If you've considered your risk tolerance, that's a good sign that you're likely going to end up with plenty of money by retirement age. Thinking about how much risk you should be exposed to, given your age and investing timeline, will help you to make smart decisions about where to put your retirement funds.

Healthcare costs can drain the nest egg of most retirees very quickly -- even if they think they have plenty of money in the bank. That's because Medicare does not cover everything many seniors expect it to and out-of-pocket costs can add up to tens of thousands of dollars.

If you want to be rich, and stay rich, as a senior, you'll need dedicated savings for healthcare and will need to make a plan to find the right type of comprehensive insurance coverage.

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Debt can make it harder for you to end up rich as a senior. Every dollar you are paying in interest is a dollar that you can't devote to retirement savings. Bringing debt with you into retirement can also chip away at your income.

This doesn't mean you should never borrow. Some types of loans, such as mortgages, can help you grow your net worth. But you need to be smart about when you take out loans and how much interest you pay over your lifetime.

ALSO READ: I Have a Lot of Debt: Can I Still Retire on Time?

If you are spending more than you earn, you can't get rich no matter how much money you make.

But if you are frugal and you end up with a lot of money left over after covering your costs, this can help you to become rich as a senior. You can pocket the extra money you have after covering the essentials (and fun spending) and use it to grow your retirement account balance.

If you plan to retire at a very young age, it's going to be harder for you to be rich as a senior. You'll have so many years for your savings to support you, even a large savings account balance will dwindle if you aren't careful about your spending.

On the other hand, if you assume you'll have time to save because you'll be working until you are 70, you could get hit hard if you're forced to retire early.

Setting a realistic target will enable you to save enough to be ready when you have to stop working -- and to actually feel wealthy since you'll be able to spend plenty if you aren't trying to make your nest egg last for many decades.

ALSO READ: 15% of Seniors Regret Retiring Too Early -- Here Are 3 of Their Top Reasons Why

If you think Social Security is going to be a key part of your retirement strategy, this is a red flag that suggests you are not going to be wealthy. That's because Social Security only replaces 40% of pre-retirement income and thus leaves you little to live on.

But if you have a realistic idea of the role Social Security will play in retirement and are saving plenty to supplement it, this is a good sign your plans will leave you rich as a retiree.

Finally, if you are leaving your retirement money alone until you need it as a senior, that's a great sign you are on the path to financial success.

Borrowing against your 401(k), cashing in your 401(k) or IRA, or selling investments regularly and day trading in your retirement plan can all be recipes for disaster. Avoiding these undesirable behaviors gives your money the chance to grow and make you rich.

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Now you know 15 signs that suggest you're on track to be a rich retiree. If you spot most of them, then you're on the right path. If you don't, it may be time to take another look at how you're preparing for your future.

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