What Wealthy People Think and Do for Retirement
Updated: Aug 20, 2021
What are your retirement dreams? Do you dream of living on an island, in your dream home, or traveling the world? Big dreams require plenty of wealth, something that anyone can achieve with the right steps.
Even if retirement seems like it’s a long way off, the best time to save for it is now, whether you are young or old – it’s never too late to set yourself up for retirement.
If your retirement includes expensive dreams, use these steps to build wealth fast.
Stay out of Debt
If you’ve gotten yourself into debt – get out. Use the debt snowball or debt avalanche method and pay off your debt as fast as possible. The high-interest rates you pay are an opportunity cost because you could do many other things with that money, including save for retirement.
Once you get out of debt, don’t get back into it. Put yourself on a budget and swear off credit cards. Only buy what you can afford, and learn how to save for larger purchases.
Be Prepared for Emergencies (Financially)
An emergency can knock even the wealthiest person to their knees if they aren’t prepared. Save enough money so you have at last 3 to 6 months of expenses set aside. Only use this money if you lose your job or fall ill and can’t work.
Live Below your Means
Have you ever heard of the lifestyle creep? We’re all guilty of it. If you increase your lifestyle as your income increases, your living beyond your means. Instead, live below what you can afford. You don’t need the most expensive car or the nicest house. Buy what you need to care for you and your family, but keep your expenses below what you can afford, so you can save the rest and build your wealth.
Max out your Retirement Fund
In your younger years, invest at least as much as your employer will contribute to your 401K. As you age, increase your contributions. In 2020, you can contribute up to $19,500 to your 401K. Contribute as much of that as you can and let your funds grow.
Pay your Mortgage off Early
If you can afford it, make extra payments toward your mortgage. The earlier you pay it off, the less money you’ll pay in interest. You’ll also have a large amount of equity in your home, especially if you own it free and clear.
If you take on a new mortgage, make sure it doesn’t take up more than 25 percent of your monthly income. This should leave you plenty of money to put aside for retirement, and help you achieve financial wealth.
Achieving wealth is possible with the right steps. It requires you to be aware of your spending, to live below your means, and to consciously put money away for retirement as often as possible. Max out all possibilities of retirement savings including a 401K, IRA, and taxable investments. Sacrificing now will help you build the wealth you desire when it matters the most – during your golden years.