Who Wants to Retire as a Millionaire?

Slow and steady wins the race. That’s the lesson from The Tortoise and the Hare, and it applies to financial planning, too. People begin saving for retirement at all different ages. But which idea sounds more appealing: Working extra hard later in life, and hoping you’ve saved enough to retire when the time comes? Or setting aside a little money for many years, which you’ll barely even notice, and retiring as a full-on millionaire? Millionaires aren’t just people who are lucky in business or inherit a family fortune. They’re also average people with modest incomes who decide at a young age that saving money is the best gift they could ever give to themselves. The younger you start the saving habit, the wealthier you’ll be when you finally retire. And if you’re really disciplined, retirement could even come early.   It’s Never Too Early to Start Setting Money Aside When kids are old enough to earn an allowance, they’re old enough to learn the value of saving. It’s easy to spend every dime from Grandma on a new toy or activity. But a jingle in the piggy bank is money for another day – money that came from discipline and looking out for yourself. That’s an important lesson at any age, learning to take control over money instead of letting it slip through your fingers. Even if only half an allowance or gift is saved, there’s money available for another day. And eventually, another day will be retirement. Now think about saving the same percentage from a “grown-up” job. Saving money from an average job can yield millionaire results in time, as long as you’re consistent. That First Job is an Opportunity to Save Regularly Kids take on part-time and odd jobs to earn money, especially during summertime. When there’s a reasonably dependable source of income, however modest, there’s a way to save for the future. That’s a real learning point for kids. The future doesn’t mean when gray hair settles in. The future is tomorrow and every day after that. Saving early lets you see firsthand that you’re in control over whether you have money to do or buy the things that you want. Opening a bank account is a good next step. It’s more official than a piggy bank, and monthly statements let you learn how to keep track of your spending. Spending money is the arch nemesis of saving. And saving is what turns ordinary people into millionaires. Investing isn’t Just for Adults with Portfolios Saving money is great, but that’s the hardest way to become a millionaire. Investing is the easier way. While it’s risky to invest in the short term, long-term investing in mutual funds has proven to be both wise and relatively safe. Even accounting for the times throughout the 20th and 21st centuries when the stock market has bottomed out, there is still a measurable growth of about 9.4 percent, according to Gail Marks Jarvis for the Chicago Tribune. If you managed, beginning at age 16, to save $2,000 every year for only six years, and if you left that money alone to do its thing, you’d be among the millionaires of the world when you retire. That’s $12,000 invested in mutual funds while you’re very young, which transforms into a very respectable sum when you’re ready to leave the workforce. Of course every state has an age restriction on investing. But with the help of a parent or a broker’s custodial account, you can still invest before you’re 18 or 21. Saving money has a bad rap with a lot of people. It seems like denying yourself the very thing that you’ve worked so hard to get. But when you look at it from another angle, it all begins to make sense. When you’re spending money as fast as you get it, your future becomes more and more difficult. Social Security is by no means something to count on for retirement income. While it might be available when you retire, your standard of living will be so much better if you commit to saving money on your own. That is something you can control, and all it takes is good habits learned as early as possible. New Retirement has a wealth of information to help anyone learn more about retiring comfortably. It’s never too soon to learn about saving money. Share these ideas with your kids and with friends who have young children. For everyone who begins saving at a young age, there’s one more person on their way to a happier and more secure retirement.