4 Financial Habits That Quietly Build a Million-Dollar Retirement
Written by
Nicole B. Simpson, CFP
Edited by
Amen Oyiboke
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Retirement is an unspoken goal for most individuals the moment they secure their first full-time job. There’s something about exchanging time for wages that sparks thoughts of a future when working is no longer necessary.
Yet while the idea of retirement may surface early, the actual work required to prepare for it is often ignored, especially during the most optimal years. Without intentional planning, many people miss the opportunity to position themselves for long-term success, regardless of career path.
To achieve such a feat, one must recognize the steps a working individual should take so that the person can place themselves in a great financial position throughout their working years.Â
With that in mind, here are four financial habits that quietly help someone build a million-dollar retirement.
Take Advantage of Employer Benefits
A major company benefit offers incentives to its employees when they decide to save for retirement. People are encouraged to allocate a portion of their salary for their future, and the company can offer a company match up to a certain percentage. For example, if you decide to set aside 10% of your salary, you will reduce your tax liability in the current year, and your employer can match your savings up to a certain identified percentage.Â
One should at least begin to set the company match at a minimum. The benefits are twofold. You are deferring the payment of taxes until you eventually withdraw the money, and generally, your tax liability would be lower when you stop working. The second benefit is the additional money you can collect from your employer, increasing your total compensation.
Invest Systematically and Consistently
Systematic investing means regularly contributing small amounts to investments such as mutual funds or similar vehicles, typically monthly. This disciplined approach allows you to invest through all market conditions, reducing the temptation to time the market.
Starting early significantly improves your chances of reaching retirement goals because of compound growth. Your investments generate earnings, those earnings are reinvested, and over time, growth accelerates. Staying consistent, even during market downturns, allows your net worth to grow steadily and quietly over decades.
Own Assets That Appreciate Over Time
Building long-term wealth requires owning assets that increase in value. While securities such as stocks and funds are often the primary path to a million-dollar portfolio, diversification can strengthen your financial position.
Purchasing real estate, collecting items like art, rare coins, watches, trading cards and antiques are all pathways to success. The most important thing to note if you choose alternative pathways is the avenue that can help you appraise and potentially sell the items, so the money can be used to help you maintain your standard of living when you are no longer collecting a paycheck.
Manage Debt Responsibly
Many financial influencers claim that all debt is harmful, but this perspective can hinder those aiming to build wealth. The most prudent approach is to learn how to manage debt effectively. For instance, it’s often unrealistic for millennials to buy a home or car outright with cash. Loans can make these major purchases possible, helping individuals achieve important life goals and increase their mobility, which can lead to better job opportunities.
However, credit card debt can reduce your net worth if you don’t pay off the balance in full and end up paying high interest rates. Not all debt situations are the same. Some credit cards offer 0% interest if you pay within a specified period and may also provide perks, such as cash back.
Responsible debt management means understanding which financial tools help you obtain what you need at the lowest cost. If you need to buy an expensive item and your credit card offers six months at zero percent interest, you can handle that expense wisely without sacrificing your savings or long-term wealth goals
It cannot be overstated that two things remain true. The vocation you select does not eliminate you from accumulating a million-dollar retirement portfolio. However, squandering time can greatly impact your ability to achieve such an ideal goal. If you begin to practice these four financial habits, you will be well on your way to accumulating wealth.
More From GOBankingRates
