When you earn money, the first person you pay is your own self and it is crucial for a perfect, comfortable retirement. For retirement, daydreaming is easy taking an action for it, requires time and effort. It is something a lot of people struggle with people because they think that saving for retirement is not possible with bills and other priorities eating up the earning.
Set Aside A Portion Of Money For The Future:
According to a self-made billionaire Tony Robbins, whenever you earn money, you should set aside a portion for your future self by placing it in the retirement account. It will grow over time regardless of the size of the salary. In order to prove his point, he gave example Theodore Johnson, a former UPS employee, who retired in 1952. He was advised by his mentor to save 2 per cent of his income during the course of his career and it will increase overtime. Johnson wasn’t convinced that he would be able to live on the rest 80 per cent of his income but his mentor assured him that he would. But he learned to live with the rest of the income as time passed and saving became his habit. After his retirement, he ended up saving $71 million as the New York Times reported in 1991.
But just saving didn’t make Johnson grow his income, he made really smart investments during the time period. He bought as much of the company’s stock as he could. He worked his way up at UPS to the Vice President for industrial relation and earned a final salary of $14,000 that today, would be worth $130,000.
Put Your Money To Work:
According to Tony Robbins, no matter how much your salary is, you must put aside money and put it to work. Then work up your way to saving 10-20 per cent of your income in a tax-advantage retirement account. Once you have contributions automatically taken out of your paycheck to be sent straight to your retirement account, it will seem much easier.
For example, if you earn $50,000 a year, setting aside 10 per cent would mean $5,000 saving per year. When you have to pay yourself first, you don’t wait and send 10 per cent directly to the retirement account and invest it before even seeing it.
For this purpose of saving more, NerdWallet created a chart that shows percentages of each twice-a-month paycheck that you need to set aside in order to have $2 million saved up by the time you turn 67 years old. This is when you start saving at 22 and 33 years of age.
Be Smart By Adapting Investment Strategies:
In order to end up rich, you need to be really smart in your investment strategies. Get the inspiration by looking at some of the greatest athletes, actors, and actresses who spent more than you can imagine. The size of your income does no matter, you only need to be consistent in your savings and build gradually.
You can watch the full video on CNBC