$1 Million Dollars at Retirement

$1 Million Dollars at Retirement
by Scott Wallace

Could you be one of the many that are literally wasting your hard earned money through frivalous spending? Did you know that reducing this spending could ensure that you have $1 million dollars at retirement?

Believe it or not every single financial decision you make on a day by day basis directly impacts what your financial status will be upon retirement. I for one have known this fact but have been blinded by it until recently.

Imagine for a second that you are married and just turned thirty years old. Your wife decides she wants to take an extravagant vacation to Hawaii that will cost around $3000. You've never been to Hawaii and would love more than anything you to go. Now let us look at the true financial impact from a retirement standpoint.

Instead of taking that trip to Hawaii you invest this money into your Roth IRA account that sees a long term average return of ten percent each year. From just this one time investment of $3000 your compounded earnings will be around $84,000 by the time you reach the retirement age of sixty five. Even more incredible is that should you continue to make that paltry $3000 investment every year you will have almost $1 million dollars at retirement! And once again since it is in a Roth IRA all withdrawals are tax free!

Now maybe you are not thirty and have put off saving for retirement until you are forty. Unfortunately by skipping ten years of savings and therefore missing out on some compund interest you will have around $350,000 at the age of sixty five instead of around $1 million dollars at retirement. On the flip side of this if you are younger and say in your early twenties then the investing the same $3000 per year will have you sitting on a nest egg well over $2.5 million dollars at retirement!

For me this is still a probablity since based on the above calculations and the fact that the maximum contributions to the Roth IRA have increased and will be increasing again in the near future. Therefore with my increased savings it will allow me to "catch up" to where I would've been had I started saving four years ago and thus will still have $1 million dollars at retirement.