From Real Deal Retirement
By Walter Updegrave
Obviously, you would have a much better chance of accumulating $1
million or more in savings had you begun saving and planning for
retirement 20 or more years ago. But assuming you do actually get
started now—as opposed to merely planning to start—you still have
plenty time to dramatically improve your retirement prospects.
As to whether you can realistically expect to accumulate a
seven-figure nest egg by the time you retire, well, that depends on
a number of factors, but mostly boils down to how diligently you
save and how long you’re willing to continue working. Even with very
optimistic assumptions, however, I’d say you’re most likely looking
at a long shot.
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For example, a 50-year old starting from scratch who earns $80,000 a
year, gets 2% annual raises and earns a 6% annual return on
investments would have to save 30% of salary each year for the next
20 years to crack the $1 million mark. Saving that large a
percentage of salary year in and year out would require a Herculean
effort under any circumstances. I think it’s fair to say it’s even
harder to go from saving nothing to 30% virtually overnight.
At the risk of sounding Pollyana-ish, however, I don’t think you
should feel discouraged. Granted, you’re probably going to have to
make some significant lifestyle changes if you want to ramp up your
retirement savings. But there are a number of ways you can put
yourself in a much better position to retire than you are now—and
certainly make yourself better off than had you done nothing at all.
Read the rest of the article at Real Deal Retirement