Win Big in Your Retirement
We’ve all dreamed of winning the lottery and sailing off into the sunset footloose and fancy free!
In celebration of National Lottery Day, which just so happens to be today, we’ve put together a few steps to take to help make your dreams become reality.
But first, a little background on this holiday. National Lottery Day was introduced in 2018 B.M. (Before Masks) by the Massachusetts Lottery Commission to drum up some excitement for lotteries across the country. But did you know that the concept of lotteries has actually been around for thousands of years? As far back as the 15th century, lotteries were used to fund feeding and clothing the poor, defending villages, cannons for the revolutionary war and more recently to provide needed monies for communities to improve schools and roads.
Unfortunately, we all know that we have better odds of getting struck by lightning, while riding a dolphin in Colorado. So what if I told you that you can win the lottery…via a retirement plan?
The best way to create wealth within a 401(k), or similar retirement plan, is to start early. Early in our careers it seems like there’s no way to save money with rent, car, student loans and let’s not forget that social life. It’s easy to think, “What’s the big deal? I have plenty of time to save for retirement. I’ll start later.” But saving even a small amount can lead to great gains for your future if you just start early.
Here’s an example of how contributing early can help lead to a nice nest egg in your future:
Let’s say you have $200 per month to put into retirement. Assuming you have a 35-year career and have a 7% annual return, you will have saved more than $330,000 over time.
And that’s without ever increasing your contribution level over your career, even though you’ll most likely be making more money the longer you work. Starting early really pays off.
Now, we’ll look at what happens if you wait to save. You increase your contribution amount to $700 per month and save for 20 years. That only puts $11,000 more into your account than if you’d just started earlier with that $200 amount.
Now, here’s how you hit the lottery. If you start early and continue to increase your savings rate (or contribution) by a small amount each year of work (just 1/3 the amount of your annual raise) for those same 35 working years – millionaire status.
One last step. Your company may offer a company match. Take advantage. Think of this as free money that they add to the amount you’re already investing in yourself. Free money that could make you a Multi-Millionaire (aka Lottery Winner).
Of course, there are other moving parts and some risks involved with investing – but the benefits of investing in your retirement far outweigh the risk of waiting to hit the jackpot!
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