Want $1 Million in Retirement? 11 Financial Moves You Need to Make

Any compound interest calculator like this one will tell you how to retire with $1 million. If you have 30 years and expect a 7% average annual return, for example, you'd invest $882 monthly to reach the goal. With the same assumptions and a 25-year timeline, your monthly contribution would be $1,317.

Knowing the math is the easy part, however. Sticking to your monthly contribution for the long term is much harder. That's where savvy management of your spending, saving, and investing becomes crucial. Position yourself for success with these 11 money moves that'll support your million-dollar retirement goal.

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To retire with $1 million, you must contribute a good chunk of your income to a retirement account, and for decades. Budgeting tells you how much you can contribute. It also helps you identify ways to increase your contributions.

There are other benefits to budgeting as well. A good working budget gets you in the habit of prioritizing what you spend and where. Honing the skill of prioritizing can dramatically improve your chances of meeting your retirement goals.

To start a budget, write down your income and your expenses. You'll have to review a few months of bank statements to capture everything. There are apps that can help with this, but you can also use paper or a manual spreadsheet. Once you've documented everything, set an aggressive retirement contribution. Then, set spending limits for other expenses to support that contribution.

ALSO READ: 5 Steps to Setting Up Your First Budget

A core principle of the Financial Independence, Retire Early (FIRE) movement is living below your means. FIRE believers save and invest 30% to 50% of their income, with the goal of retiring 15 or 20 years before the traditional age of 65. It's an extreme tactic, but it can work.

Living below your means puts you in command of your financial future. Sure, you and should can create a budget that supports your millionaire goal. But if that budget is tight and difficult to follow, any unexpected expense can upset the plan. On the other hand, habitually spending less than you make gives you more financial resilience.

Credit cards allow you to buy stuff you can't afford with cash. In the moment, that feels like a budget helper. Unfortunately, that dynamic reverses over time.

Rolled-over credit card balances accrue interest, and a lot of it. Specifically, a $2,000 balance with a 16% interest rate can rack up more than $1,200 in interest charges over time. This assumes a monthly payment of $40.

Long term, you can end up spending $3,200 on stuff that should only cost you $2,000. Logically, you know that's a bad deal. You also know that $1,200 in interest charges lowers your ability to make retirement contributions.

End that cycle by paying off the credit cards. Once the balances are zero, commit to paying the full balance each month. If that proves difficult, revisit your budget to identify what needs to change.

ALSO READ: 4 Ways to Pay Off Your Credit Cards Faster

401(k)s and IRAs have tax perks that expedite your retirement savings growth. For one, the money you contribute to your 401(k) and traditional IRA is pre-tax. This lowers your cost of saving.

Second, the earnings in these accounts are tax-deferred. So, you won't pay taxes on realized gains, interest, and dividends each year -- as you would in a taxable account. That allows all your earnings to stay invested and working for you over time.

If you don't have a 401(k) at work, open an IRA and max out your annual contributions. You'll still have to save in a taxable account also. But you might as well use the full tax advantages available to you in that IRA.

The lowest-risk way to make money investing is to ride on the coattails of the stock market's long-term growth. While the market goes up and down from year to year, the long-term average annual growth rate is about 7% after inflation.

A 7% average annual return can support your millionaire retirement goal. The trick to getting near that return rate is to buy quality stocks and stay invested.

Quality stocks are those that have staying power. You can research mature, successful companies on your own, or you can invest in the S&P 500 index. S&P 500 stocks are the largest, best-established public companies in the country.

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Your retirement plan may have a timeline that's 30 years or more. In that time, it's easy to get distracted. You may want to start a business, take a sabbatical, or spend time at home with family, for example. Any of those goals could encourage you to pause or lower your monthly retirement contributions.

If you do lower your retirement contributions for an extended time, know that you'll have to contribute more later. Catching up can be challenging, especially if you missed out on a growing market. This is because you must replace the missed contributions plus any past and future earnings on those contributions.

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Cash is an overlooked hero for retirement savers. When you have cash on hand, you're better at managing through hard times. You can cover insurance deductibles if you wreck your car, or fund your living expenses if you lose your job.

Without cash, your options for making ends meet aren't great. You might use a credit card or pull money from your retirement account. Either option can provide immediate relief, but ultimately undermines your financial health.

Commit to saving monthly to a cash account. Target a balance that's enough to cover three to six months of your living expenses. It's likely that having those funds available will someday be what keeps your retirement plan on track.

You have to live somewhere. Better to live inside an appreciating asset than a place you're renting -- even though you'll have to borrow money to do it.

Mortgage debt is what some experts call good debt. The rates are relatively low, and the structure is fixed. That means the principal and interest portion of your payment won't change. Fixing one of your largest monthly expenses can help you save more for retirement over time.

You can't say the same about rent, which rises with inflation. Specifically, rents can rise 3% to 4% annually. If you're paying $1,000 monthly this year, that could realistically double over the next 25 years. Each increase means there's less money to send to your retirement account.

ALSO READ: 4 Huge Benefits of Home Ownership

Cashing out your home equity can be tricky. Sometimes it's a smart financial decision, and sometimes it's not. The first rule is this: Proceed with caution if the refinance raises your payment substantially. A higher mortgage payment leaves less room in the budget for retirement contributions.

How you'll use the cash generated by the refinance is also important. Consider whether the use helps or hurts your progress to $1 million. Improving your home might help you reach the millionaire goal -- especially if you envision downsizing at some point. Starting a business or paying for your education can also help by raising your income potential. When you make more, you can save more to your retirement account.

Stock market volatility is a common reason retirement savers move in and out of their investments. The thinking is that if you can skip the down days of investing, you'll make more. Unfortunately, the plan often backfires.

Here's what happens. The market starts to falter. The value of your investments starts dropping. At some point, you decide to cut your losses and sell -- at lower-than-peak prices. You wait for the market to recover before you buy back in. By then, prices are higher than when you sold. You end up with fewer shares than you had before, which is counterproductive.

When the market gets rocky, first check your investments. If you're comfortable with their quality and resilience, do nothing. Waiting holds your share count intact and keeps you positioned to benefit from the recovery.

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As you near retirement age, it's smart to shift gradually into a more conservative investment style. You've probably amassed a lot of money at that point, and you'll need to protect it.

The general guideline is to reduce your stock exposure to 40% or 50% of your portfolio's value by the time you retire. The remaining 50% or 60% of your wealth should be in fixed-income funds, plus a small cash position.

The goal here is to insulate your wealth partially from the whims of the stock market as you approach retirement. You don't want to see your account balance drop by 30% just as you're about to start retirement distributions. That may push you to delay retirement or downgrade your lifestyle to protect your remaining wealth.

ALSO READ: 5 Things to Know About Asset Allocation

Retiring with $1 million takes your full commitment to spend less and invest more. You'll find that's easier to do when you have a budget, no credit card debt, an emergency cash fund, and a fixed mortgage payment. Put those measures in place and you can focus on investing for the long term and gradually reducing your investment risk over time.

Follow that program and you're on your way to the millionaire retirement you've always wanted.

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