Four Habits of Retired Millionaires

A million dollars in your retirement is a significant accomplishment. But, let's be honest, it's all relative. A million today is different from a million 10 years ago. Nevertheless, many are striving for a number to provide the retirement lifestyle they have worked hard to achieve.

Whatever your number, here are four habits we can learn from those who have navigated their retirement journey to accomplish their goal.

1. Start Early

• Compounding interest is often a misunderstood concept. It's basically interest on interest. It will multiply your money at an accelerated rate, and the greater the number of compounding periods, the greater the compound interest will be.
• Studies show that those who successfully navigated their retirement savings typically started early to take advantage of those compounding years.

2. Maximize Your 401K Contributions

• In 2024 employees can contribute a maximum of $23,000 to their 401K accounts, not counting an employer match. Depending on your income and expenses, maxing out your contribution may feel challenging, but studies have shown that the average 401K millionaire contributed a minimum of 10 – 15% of their income year after year.
• Also, make sure you at least take advantage of the minimum amount necessary to earn your employer's match. Recent studies show that 28% of contributions in the average account of 401K millionaires came from their employers.

3. Choose the right asset allocation

• Not all investments are treated equally. And not all investors should apply the same strategy. Asset allocation helps balance the risk and reward by allocating your assets according to your goals, risk tolerance, and retirement timeframe. So…finding the right recipe for equities, fixed-income, and cash or cash equivalents is critical.
• And…a set-it-and-forget strategy typically doesn't serve today's investor well. On the other hand, changing too often and trying to time the markets can be a losing game.
• As a financial advisor, my role is to work with you to find the right allocation and help manage and adjust along the way.

4. Avoid Cashing Out Early

• Most successful 401K millionaires have understood one basic principle. Saving for retirement is a marathon, not a sprint. Resist the urge to cash out early. Early withdrawals come with tax consequences and other penalties. And… don't be tempted to abandon your investment strategy in turbulent market conditions. Many investors who cash out in a market downturn miss part or all of a subsequent recovery.

Steward Partners Investment Solutions, LLC (“Steward Partners”), its affiliates and Steward Partners Wealth Managers do not provide tax or legal advice. You should consult with your tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters.

The case study presented is provided for illustrative purposes only. Past performance is no guarantee of future results. The information has been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. These strategies do not guarantee a profit or protect against loss and may not be suitable for all investors. Each customer’s specific situation, goals, and results, may differ. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

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