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7 Ways To Retire Rich and On Time

by Laura Adams

Planning for retirement can be more of an art than a science. That’s because you have to make lots of educated guesses about variables like:

  • how long you’ll be healthy enough to work
  • how long you’ll live
  • how much you’ll spend each year during retirement
  • what the inflation rate will be decades from now
  • how much (if any) Social Security income you’ll receive
  • what investment returns you’ll get before and after you retire

As much as these details can fry your brain when all you really want to know is how much to invest each month, don’t let them bog you down. I’m going to give you seven easy ways to make sure that you retire rich and on time without having to do any number crunching.

But first, I want to share a pointer that I learned when I was taking golf lessons. The pro told me a secret to making more putts. He said to imagine the hole as the center of a larger target—like the bull’s-eye on a dart board. He encouraged me not to focus too intently on the hole, but to visualize a two or three-foot-wide circle around the hole as a broader target. It’s amazing how that one tip takes the pressure off and transforms the way I putt. Even though I don’t play enough to improve my golf game, that tip definitely helps me when I do play.

retire rich and on timeInvesting for retirement is very similar. Yes, there’s a retirement savings “number” that each of us should figure out and shoot for as a bull’s-eye goal—whether it’s $500,000 or $5 million (I’ll tell you an easy way to come up with that number in one of the following tips). But in the decades that precede retirement, your job isn’t to obsess about the “number” as much as it is to keep the general target of financial security top of mind and to keep a positive attitude about accomplishing that goal.

Seven tips to make sure that you retire rich and on time:

1.      Start an investing routine as early as possible. It might surprise you to know that the most important factor for investing success isn’t the investments you choose—it’s time. The more time you have to make contributions, even if it’s just $50 a month, the faster your retirement account will grow. Compounding interest is a powerful force that can make even the most inexperienced investor rich. So if you’re not in the retirement investing game yet, you’re burning valuable time!

2.      Choose diversified investments. Having a mix of investments lowers your risk because it’s not likely they could all go bust at the same time. For example, you need enough cash for emergencies, bonds for steady income, and stocks to fuel your investment growth. Read chapter six of my new book, Money Girl’s Smart Moves to Grow Rich, to find out what percentages of the different asset classes you should own.

3.      Wipe out your expensive debts. Paying high interest for loans or credit cards is like running the heat during the winter with all your doors and windows wide open—extremely inefficient! Make a plan to get rid of your expensive debts and free up money that you can contribute to a retirement fund instead.

4.      Increase your savings rate each year. When you make a conscious decision to cut back expenses and to save and invest more money, you’re buying one of the greatest gifts you can give yourself—a secure and happy financial future. You might be able to retire early or to start a second career with your financial freedom.

5.      Don’t withdraw money from a retirement account. Your investments can’t work for you if they’re not invested! Plus, in most cases, you lose money by having to pay taxes and early withdrawal penalties. Find out more about the consequences of taking a withdrawal or a loan from a retirement account in a previous article I wrote.

6.      Never fall for a scam. Before you invest, make sure you fully understand a company’s business model, products or services, and legitimacy. Being an educated investor is your best defense against falling prey to fraud.

7.      Use a retirement planning calculator. Visit AARP.org or choosetosave.org and enter your information in a retirement calculator to find out how much you should invest each month in order to accumulate a nest egg that’s big enough for your dream retirement.


Published or updated January 18, 2013.
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{ 5 comments… read them below or add one }

1 Karl

These points are simply perfect. I would like to add a few lines to the first point. When you are investing for retirement, high-risk investments should be avoided. Start with a proper asset allocation process and invest in the safest products that will give you guaranteed results when you plant to retire.

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2 20 and Engaged

I want to retire early and just have a good time. I also don’t want to eliminate income altogether besides my savings. I want to continue to make money well into my retirement.

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3 K.C.

The general target idea is a good concept. Rosa and I had just such a target. We overshot by 50%. Not a good thing in golf, but it allowed us to retire early. We did it by saving as much as we could whenever we could. It looks like we’ll need every bit of it, too. Lower interest rates due to the anemic economic recovery prompted us to continue to save while in retirement. We’ll need that money, too, I expect. But that’s it. We’re spending any extra money starting in June. We’ll do a little more traveling.

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4 krantcents

All good ideas! Unfortunately, most 20 year old’s do not think about retirement at their age. At age 31, I decided I wanted to be financially independent before 40. I “retired” at 38 years old. I returned to work at age 45, partially because I was bored. I am more prepared for retirement now and plan on retiring for the second time in 6.5 years.

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5 brokeprofessionals

I think another problem is that people are so overeducated today, that many people do not even have their first full time job until their mid or late twenties. I know that was the case for me. And now I have to way saving for retirement with paying back my graduate/professional school loans. I guess there is never really a perfect time to save, so you just have to go ahead and do it the best you can no matter what.
Can’t wait to try that golf tip although I am definitely beyond help.

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