‘Automatic Millionaire’ David Bach: 7 Retirement Planning Tips He Swears By

May 2, 2024 DINARRECAPS8

Kristopher Kane Tue, April 30, 2024

Planning for retirement can be challenging and even a little scary. It’s an issue that raises some serious questions that need serious answers. Many of us put off retirement planning because it seems too far away or we’re having difficulty making ends meet with our current earnings.

How much should you save? What are the best methods for growing your nest egg? Where should you invest? David Bach, financial expert and author of 10 New York Times bestsellers, has some advice that might help make answering these questions easier.

Keep reading for a look at seven of Bach’s best tips for retirement, including how much you should try to save, what to do with those savings and how to make the most of your retirement fund.

Tip No. 1: Set Aside an Hour of Earnings Each Day

Bach’s first piece of advice is his trademark go-to phrase: Pay yourself first.

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He says, “You’re going to work about 2,000 hours this year, assuming you have a job.”

He goes on to say that most Americans will work around 90,000 hours over the course of their careers, from their first day on the job until retirement. Bach has long maintained that “pay yourself first” means you should keep the first hour of your pay and dedicate it to long-term savings.

For most of us, that 2,000 hours will be over a year of 40-hour work weeks, or around 260 working days per year. This means your goal would be to set aside around 260 times your hourly rate of pay.

For the sake of demonstration, let’s work with a round number and say you make $100 an hour (the actual average hourly wage is considerably less — between $34 and $35). At the end of the year, you will want to have saved a minimum of $26,000, or 260 times the amount you earned for the first hour of every working day that year.

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Tip No. 2: Put Your Savings in a Retirement Account

It’s not enough to “pay yourself first” if you don’t make good use of that money. Bach recommends that “you move the money into a 401(k), 403(b) or IRA account. If you don’t have one of those retirement accounts then get an IRA account today and get it set up automatically. Ask your employer if you can have the money automatically moved from your paycheck to your IRA account.”

Bach says most employers should be able to offer this kind of automatic diversion of funds, but if not, you may be able to make arrangements with your bank.

“If they won’t do it, then have your paycheck automatically deposited, and then set up your bank account to automatically move the money into your IRA account before you can touch it.”

Tip No. 3: Manage Your Retirement Savings Wisely

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