$1 million for your retirement is not a dream, start saving now
We all know it’s important to save for retirement. And yet I’ve talked to many people who don’t have enough saved for 40 years in their retirement, Why? A lot of them tell me they just don’t know how to save for retirement or where to start.
But wishing without action is just a pipe dream. You have to do something different if you want your habits and your future to change! And the truth is, saving for retirement is easier than you think.
Let’s get started!
Invest 15% Of Your Income Into Tax efficient offshore Accounts
A helpful rule of thumb as you begin to journey and plan for your retirement I would suggest saving anywhere between 10% and 15% of your gross salary. To make the process easier (and less expensive), you’ll need to get started early or earn a substantial salary later on.
Below is the calculated amount you need to earn annually in order to save $1 million by 65 by putting 15% of your earnings into investments.
If you start at age 25:
? 4% rate of return, you need to earn $67,459 per year and save $843.24 per month
? 6% rate of return, you need to earn $39,971 per year and save $499.64 per month
? 8% rate of return, you need to earn $22,764 per year and save $284.55 per month
If you start at age 30:
? 4% rate of return, you need to earn $87,262 per year and save $1,090.78 per month
? 6% rate of return, you need to earn $55,872 per year and save $698.41 per month
? 8% rate of return, you need to earn $34,644 per year and save $433.96 per month
If you start at age 40:
? 4% rate of return, you need to earn $155,086 per year and save $1,938.57 per month
? 6% rate of return, you need to earn $114,867 per year and save $1,435.83 per month
? 8% rate of return, you need to earn $83,563 per year and save $1,044.53 per month
For context, the average American’s plan grew at a compound annual average rate of 14.2% between 2010 and 2016, according to a study of more than 6 million accounts by the Employee Benefit Research Institute, a non-profit based in Washington, D.C. Of course, there’s no guarantee of similar growth in the future.
Keep in mind that these numbers don’t take into account the many ups and downs you may experience over your lifetime, including periods of unemployment or sudden financial windfalls or losses.
It’s also important to consider how pay increases will affect your savings over time. If you consistently put away 15% of your income, the actual amount you contribute each month will grow as your salary rises, which can help you build up your retirement fund more quickly.
And while it may be difficult to save 15% of your earnings when you only make around $30,000 or $40,000 a year, remember that you can work your way up. Save what you can now and increase your contributions as your salary rises. That may mean eventually putting away more than 15% of your salary later to make up for lost time.
Who we are
Established in 1998, Holborn Assets is a leading, award winning, global financial services company that provides quality financial advice and wealth management solutions to the discerning international expatriate.
As a British, family-owned and run company we pride ourselves on delivering a superior experience to our circa 20,000 clients, via our 11 international offices, all supported by over 450 personnel who have only YOU, the client, in mind.
Any thoughts for discussion or questions are welcome, do let me know! Let me help you to achieve your financial goal.