.11 Steps to Make $1 Million Last 30 Years in Retirement
11 Steps to Make $1 Million Last 30 Years in Retirement
Derek Silva, CEPF® | OCT 02, 2018
The average life expectancy in the U.S. has increased dramatically from about 70 in 1967 to about 80 in 2017. Those who reach age 65 also have a one in five chance of living into their 90s. A longer life is great news. It means you have time to check more off your bucket list.
At the same time, it means you need to plan for a longer retirement. If you retire at 65, a 30-year retirement is quite possible. Even if you save $1 million for your retirement, you have to make sure to budget it out so it lasts.
Here are 11 steps to set yourself up for a happy retirement without draining your savings too soon.
1. Maximize the Return on Your Savings
Imagine $28,243 more dollars in your bank account. It is doable. That is the interest income you would earn from generating an additional 1.0% in interest on on a $100,000 deposit over 25 years.
A very common mistake is to leave money in a checking account accruing no interest. People either think that interest rates are too low and it will not make a difference or the money will not be in your bank account so it will not make a difference. Fortunately that is just not true.
If you use a high-interest savings account you can earn up to 1.85% and still have unrestricted access to your savings. To put that into perspective the national average savings account rate is 0.23%.
By choosing an account that offers the highest rate of 1.85% you can earn a lot more. Here’s an example: If you have $250,000 in a savings account and save over 20 years in retirement, you would generate extra interest income of $110,712.
Recommended Action: Open a high-yield savings account. This CIT Savings Builder Account offers 2.45% interest as long as you deposit at least $100/month or maintain a $25,000 balance.
2. Keep Investing Intelligently
To get an accurate picture of your expenses and retirement needs, we recommend speaking with a financial advisor that specializes in retirement planning.
Studies show consulting a financial advisor can help you earn up to an extra 4% return on your investments. Advisors are also skilled in identifying areas where you could be overpaying in taxes and fees, as well as how to best allocate your savings among your retirement accounts and investments.
A Voya Financial report found that 79% of people who use a financial advisor “know how to pursue achieving their retirement goals.” The study also found that 59% of those who use an advisor have calculated how much they need to retire, while 52% have a formal retirement investment plan in place.
Recommended Action: Find a financial advisor. We've simplified the process to get in touch with one by designing a tool to match you with the top financial advisors in your area.
Here's how it works:
Answer these few questions about your current financial situation.
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