More than 50% of Americans age 35 to 54 have less than $10,000 saved for retirement, according to Time.
How we got to this point over the last 15 years is hardly surprising.
Many investors watched helplessly as their 401(k)s became "201(k)s" during the financial crisis… for the second time in a decade.
Generation Xers were particularly hard hit, losing roughly 45% of their average net worth during the Great Recession, according to the Financial Times.
If you find yourself in this group, let me start by reminding you of a few things.
First, you are not alone. Millions of Americans are in the same situation.
Second, you have plenty of time to start building or rebuilding a retirement nest egg that'll put you on your way. No matter your age, there's runway ahead.
Third, you really can retire by 60. It'll take work and some diligent effort, but it is absolutely possible.
To catch up, you'll need to achieve steady, oversized gains to reach your goals. But you can't incur unnecessary risk.
You can get started with these immediate steps…
Step No. 1 – Maximize Your Retirement Benefits
This sounds so blatantly obvious that it's not worth mentioning but, in reality, that's exactly why I am bringing this to your attention.
The majority of Americans do not use their IRAs and 401(k) options at work, which means they are leaving a boatload of money on the table that could otherwise be in their pocket.
In 2017, you can put up to $18,000 into a 401(k) account. All of this money does not count toward your adjusted gross income (AGI) when you file your taxes each year. Also, many employers have matching contributions in which they will meet as much money as you put into your account up to a specific percentage.
Simply put, this is free money for your retirement, and it can reduce your taxes.
On the IRA side, you have two options if you work for an employer. You can open a traditional IRA or a Roth IRA (though the latter has income maximums to qualify). Conventional wisdom is that you put aside at least 10% to 20% of your income or more to an investment savings account, but I say put as much as you can afford to in.
Every dollar you put into retirement now is a dollar that works hard for you for the rest of your life – and that has the potential to maintain the standard of living you want.
If you currently live on $80,000 per year, for example, and want to maintain your standard of living, you will require roughly $2 million in assets by the time that you retire.
To reach this goal, you may want to start putting away 10% to 20% of your paycheck each month depending on where you are in your 40s.
If you have maxed out your 401(k) and IRA, you may also consider investing your money in another account, and consider investing in stocks and bonds that pay high yields.
That's not always easy to do, which is why I urge you to set up an automatic payroll transfer to shunt money directly into your retirement account before it hits your bank account and you spend it.
While you're at it, make sure to also put away additional raises and bonuses, too. Not only will doing these things help you pay less taxes, but they can help you rapidly build money for a time in your life when you're going to need it.
Don't forget about savings, either.
It's very easy to boost your savings over time if you are disciplined about it. Suppose you earn $50,000 and put away 10% in the first year, for example.
Each year you gradually boost your savings on that $50,000 by 1% through the decade.
By the end of 10 years, you would have saved $72,500 of the $500,000 you would have earned over the decade. Assuming a 6% return, that account would be worth $92,955.
After another 16 years, the money you saved in your 40s (at a 6% rate of return) will be worth $248,870. And that is assuming that you have earned no additional money during that time.
Step No. 2 – Cut Thousands of Dollars Over the Decade with This Debt Trick
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.