15 Steps Toward Saving $1 Million Before You Retire

Want to hit millionaire status before retirement? You don't have to win the lottery to do it. You just need to make smart financial decisions throughout your working life when it comes to spending, saving, and investing.

Not sure how to start? Just follow these 15 steps.

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If you want to save $1 million exactly, you can set that as your goal. But it can make more sense to look at your personal financial situation and determine the amount you'll need in your later years.

The easiest way to do this would be to estimate your final salary and assume you'll need to save 10 times it. You may find you don't need quite $1 million or may discover you need more. What's most important, though, is that you decide early on what your savings target is so you can take the necessary steps to hit your goal.

When making your plans to become a retirement millionaire, it's also important you don't set yourself up for failure.

If you're five years away from retirement with nothing saved and you're earning an average salary, becoming a millionaire retiree won't be possible. But if you're just starting your career, you should be able to grow a seven-figure nest egg even with an average salary.

ALSO READ: Can You Actually Become a Millionaire on an Average Salary?

After you've decided you want to save $1 million (or whatever your target amount is), the next step is to determine how much to invest each month to get there.

Breaking your big goal down into smaller incremental ones makes achieving it more manageable and also helps you figure out what you need to do today to get and stay on track.

Calculators at Investor.gov can help you assess how much you need to save.

Amassing $1 million is easy if you have a lot of time for your money to grow. Unfortunately, the shorter your timeline, the harder it is to achieve your objective of amassing a seven-figure nest egg.

In fact, if you start investing at 30 and want to become a millionaire by 62, you'd be able to do it by investing just over $500 per month -- but if you wait until age 55 you'd need to save well over $5,000 every month.

Start investing right now if you haven't already so you can get compound interest working to help you grow your wealth.

ALSO READ: 4 Tried and True Ways to Save $1 Million for Retirement

If you want to amass a $1 million nest egg, you're almost assuredly going to have to live on a budget to make sure you're doing the right things with your money.

And when you make that budget, saving should be a priority over spending on any nonnecessities. If you've determined you'll have to invest $500 per month to become a millionaire retiree, you should budget for that along with your mortgage and other required bills.

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If you're driving an expensive car or living in a lavish mansion, chances are good you'll spend so much of your income on these monthly expenses that it'll be hard to invest enough to hit a $1 million target.

Unless you have a really high income and are sure you'll continue to throughout your working life, don't make huge financial commitments that could compromise your ability to invest. Keep your routine living costs as low as you comfortably can so you have more money to invest for the future.

Few things will destroy your chances of becoming a millionaire faster than taking on a whole lot of high-interest consumer debt. In fact, as soon as you borrow, you make it that much harder for yourself to invest since you're committing future income to creditors.

It can make sense to take on debt if doing so could help increase your net worth. A mortgage or a business loan to start a company are good examples of debt that could help you grow your wealth over time. But putting vacations or luxury purchases on a credit card isn't a smart move if you hope to become a millionaire retiree.

Investing in a 401(k) or IRA can help you hit your $1 million goal since the government will subsidize your saving efforts.

In any years when it's possible, contribute the maximum you can so you can get as much help as possible. If you can't max out these accounts, aim to invest as much as possible each year in them.

ALSO READ: The 401(k) and IRA Maximum Contribution Limits for 2021

If the company offers a 401(k) match, it's imperative to claim every dollar of the free money to help you hit your $1 million savings goal. Find out how much works and do everything possible to save enough to earn the full amount.

This should be your top financial priority, after paying essential bills, as you don't have many chances to earn a guaranteed 100% return on investment.

One of the best ways to make sure you don't miss a month of retirement investing is to automate the process so you don't have to handle it manually.

It's easy to do this if you have a 401(k) as you can just sign up to have contributions taken out of your paycheck. But it's also a good idea to set up automatic investments in an IRA as well. Most brokerages allow you to do this, or your bank might if your broker doesn't.

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You don't want to be too conservative or too aggressive with your investments or you risk not hitting your million-dollar target goal. Make sure you're putting the appropriate percentage of your money in the stock market, as well as in safer investments. And remember that the "right" percentage changes as you age.

If you don't want to rebalance your portfolio yourself, investing in a target date fund or using a robo-advisor could be your best bet. But you'll often do better by actively managing your investments and keeping a careful watch to make sure you have the right mix.

When you're trying to save $1 million, you need to make sure you're not wasting money. Unfortunately, picking investments with high fees could eat into your returns and make saving a seven-figure nest egg much harder.

Check into the costs of any investments carefully to avoid paying higher investing costs than your assets justify.

Chasing short-term profits often means you end up with no profits at all. To build a retirement nest egg that's worth a million or more, you're better off following the tried-and-true path to success. That involves building a solid portfolio of investments you're happy to hold onto through ups and downs.

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Putting all your eggs in one basket could be a big mistake when you're trying to amass $1 million. If the company or industry you focused on performs poorly, you won't get the returns you need.

Diversifying into different investments reduces risk and helps you maximize the chances your money will grow into a seven-figure nest egg.

ALSO READ: Di-Worsification: Why Investors Should Avoid Over-Diversifying Their Portfolios

If you want to become a millionaire retiree, don't even consider taking a 401(k) loan or an early withdrawal from any of your retirement accounts.

Doing so could cost you not just the penalties that can follow an early withdrawal but also cause you to lose the returns your money would've earned had you left it invested. You can't afford to have that happen if you hope to save $1 million.

ALSO READ: How One Big Mistake Could Cut Your Retirement Investment Accounts in Half

If you want to become a retirement millionaire, these 15 steps should get you there. The sooner you start following them, the easier it will be to hit your target and enjoy the financial freedom that comes with having a seven-figure nest egg.

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