It’s easy to feel a little envious of the huge retirement savings millionaire CEOs are stashing away. They just have more money, right? But it’s not just that. Wealthy CEOs aren’t just saving more because they make more — they’re doing more with the money they have.
The wealthy know that if they want to live well in retirement, they have to plan for it. Social Security won’t even begin to cover their expenses. While high-earning CEOs know that they have to find other ways to fund their retirement, many ordinary people still struggle to understand that they can’t rely on Social Security to provide them with a comfortable lifestyle. Here are some tips fon how to save like a millionaire and maybe even retire like one.
Tips from the Top
- Diversify your portfolio: The rich know that they shouldn’t put all their eggs in one basket. Keeping your retirement savings in one spot can be dangerous. Even if you see good returns now, you’re not protected from market fluctuations and swings. Keep your portfolio broad and diverse. Use different saving vehicles, such as 401(k)s, IRAs, mutual funds and exchange-traded funds (ETFs).
- Max out your retirement accounts: Traditional saving advice tells people to set aside 10% for retirement. But a loftier goal for many would be to max out their IRA and 401(k) accounts. That’s not including if your employer offers 401(k) matching. If you’re 50 or older, you can make catch-up contributions. You and your spouse are both eligible to make those contributions. Increase your allocations every year until you’re contributing the max
- Don’t drink the company Kool-Aid: Many large companies offer company stock at reduced prices to their employees. Although it’s tempting to use that as your retirement account, don’t. It’s a bad idea to rely on one entity for both your current and future livelihood.
- Find an objective expert: Your employer might have a 401(k) advisor on hand, but if you want practical and honest advice, you need to look outside. You can find a reputable fee-only financial advisor through the Financial Industry Regulatory Authority or the National Association of Personal Financial Advisors.
- Create an estate plan: The wealthy are known for planning ahead. If you’re hesitant to discuss end-of-life plans, know that passing money down is how the rich stay rich. Consult a lawyer specializing in estate planning to discuss what you want after you’re gone. They’ll help you mitigate taxes and find ways to take care of your family.
- Keep a cool head: CEOs know that when people are panicking, it’s even more important for them to stay calm. Getting caught up in the mayhem can lead to bad financial decisions. Be rational when it comes to your finances. Don’t sell stock just because others are, and don’t invest in the latest new thing because you see it on the news.
The Bottom Line
You may not be able to have a millionaire’s income, but you can have a millionaire’s saving strategy. Even with a small salary, you can do some great things if you have the right mindset. If you employ enough strategies and habits that millionaires use, you may find yourself becoming one someday. Consult a financial advisor who may be able to give more concrete advice on your specific situation.
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