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Make a million bucks

By Barbara Whelehan ·
Saturday, February 16, 2013
Posted: 6 am ET

The other day, one of my 40-something colleagues asked me what he can do to better prepare for retirement. He said he contributes 5 percent of his pay to his 401(k). "Contribute 10 percent," I suggested. He replied that his budget is tight, and pointed out that with the company match, he's really investing 8 percent of his pay. "Contribute at least 2 percent more," I recommended.

Plenty of Americans in all age groups are in the same retirement planning predicament. They're not sure how to adequately prepare. All they know is that they need to save a truckload of money to get them through 20- or 30-plus years of retirement. A million bucks seems like a worthy goal.

There's hope for everyone who sets this intention, regardless of how old they are. In fact, the late Bill Fisher didn't seriously start amassing wealth until he was 72, as revealed in the self-published book, "The Boomer's Guide to Recovering Your Lost Retirement: The Bill Fisher Story," by Michael R. Burns. Burns wrote about his father-in-law's methods of accumulating wealth.  

Long story short, at 72 Fisher invested $50,000 in life insurance proceeds, as well as his pension and Social Security checks, and continued to work until age 84, when he finally retired. As an octogenarian, he was worth a million dollars.

5 steps to success

I asked Burns for the best advice to boomers who may have lost money in the recent financial crisis. In his words:

  • First, they have to balance their budget. They have to get more income coming in than they are spending each month.
  • Second, they must continue to work. We are all living longer. … If you are healthy, you should be able to work at least until 70. You can work from your home being a rep for a company or sell stuff on EBay.
  • You should wait to take out your Social Security until 70. In most cases, you can double your money.
  • You should contribute to an IRA and 401(k). In these tax-deferred retirement accounts, you can build wealth quickly.
  • With your leftover money, you should invest in high-dividend stocks, dividend reinvestment programs, or DRIPs, municipal bonds and residential real estate.

"Baby boomers should create multiple sources of income," Burns says.  "They can live off their salary and invest everything else. Bill Fisher did this and he lived a very active life, traveling overseas, going to the country club and still built a net worth of $1 million when he was in his 80s."

Get a head start

While Fisher's accomplishments are inspiring, it's better to start saving at a younger age and make it a goal to amass a million bucks or more long before you turn 70.

Of course, unlike Fisher, whose house was paid off and whose children no longer depended on him, younger folks face more financial obstacles. They need to negotiate the purchase of a home and car, pay off student loan debt, save for their own children's college education, put money in an emergency fund and invest for retirement -- all while juggling monthly bills for current living expenses.

But the younger you are when you start saving for retirement, the better your chances of amassing a million bucks or more because of the power of compounding. Start by deferring 10 percent of your pay to your company retirement plan. You won't miss it if it goes directly into investments instead of your checking account.

And if your company doesn't offer a retirement plan, open an individual retirement account and set up automatic transfers from your savings or checking account. That's the easiest way to accumulate wealth -- maybe a million bucks or more.

The bottom line: While it's never too late to start saving for retirement, it's always better to start early.


Follow me on Twitter: BWhelehan.

Barbara Whelehan is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It is available at Amazon, Barnes & Noble, iBookstore and other e-book retailers.

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February 24, 2013 at 8:53 pm

Hi Rick2Rio...
that would be 'punctuate'
hope that helped you learn something

February 24, 2013 at 4:53 pm

Doesn't anyone on this site know how to spell and punctate? Correct English lends credence to comments that I might learn from.

February 24, 2013 at 2:13 pm

I am 66 and recently retired. I am retired because my company cut back the workforce. Moreover, I don't think there was just a few people my age left in the company. As a result, I think anyone that is 70 years old and still has a job is extremely lucky. Don't wait to save for retirement-the odds of still having a job later in life are slim and none. Companies think that older workers 65 and up are too expensive, regardless of age discrimination laws.

February 24, 2013 at 1:25 pm

Mr. Fisher--You work to age 84 and you have one milion $$$ CONGRATULATION!!!!.And now after 84 years of labor you will start enjoing by spending big $$$-If not- you will give to Charity,or to your familly...You have worked over 60 years of your healthy life and now what is left??? maybe few years if???-NOW--Who is more happy you,or goverment with all money they took from you!!!-Some people love to work--and enjoy this way--Not me!!!For me--every day is "SATURDAY"--and I don't have no more alarm-clocks-.When i was 62 i was thinking to start collecting-S.S.-Well-i was told that i get $1200.00 and no benefits--i check with my wife HMO--and was told $600.00 premium-so-i decided to work to 66-and no more-Life is to short--If you have saved some extra $$$-start early to at least 63 1/2 this way you get cobra to cover your health benefits-until medicare starts up.Enjoy - rest of your healthy life and have fun....

robert novak
February 24, 2013 at 1:24 pm

why bother saving anymore i made the most money in my carrer last week. yes they took out 200 for my benifits,6% for my 401, and 96dollares for a loan. i made 2900dollars and brought home 1495 dolllars. the goverments making more money out in deductions then i do. SO THANK U U.S.A. GOVERNENT

Sir Charles
February 24, 2013 at 12:56 pm

Enjoy life every day.Your time on earth is short.

February 24, 2013 at 12:31 pm

My wife and I both retired at 55. Our secret was to "save first, and save early". That is, we would pre-plan our level of savings off the top and then spend out of what was left. We used credit cards only as a convenience over cash or checks, but always paid them off immediately without the interest payments. We typically bought new cars and drove them until they dropped - never leased. We also owned modest sized houses and took modest vacations. We always participated in the Company 401K Plan so that we never missed a match! We used our savings to payoff the mortgage early. We also increased our 401K participation gradually from 6% in our 30's to 10% in our 40's to 15% in our 50's. When we got a raise, we took half and used the other half to increase the amount to 401K. We also took Social Security early at age 62. Our attitude was to work very hard while you are young, live life modestly, retire early, and enjoy your retirement in your 60's, 70's! If you work through your 60's and 70's you might have a bunch of money, but you also might be too old and feeble to enjoy what you saved!

February 24, 2013 at 11:32 am

This article is based on incorrect data. Overall life expectancy increased due to declining infant mortality. Average life expectancy for people who have reached the age of 65 has not increased much at all.

Ludas Laci
February 24, 2013 at 10:24 am

1.So, if I have to work until I'll be 84, what the hell for is retirement fund ? (How long one live ?)
2. What is the life expentancy in US ?
3. What is is the procentage of people who CAN work at 70 ?
4. What is the benefit to have a million at age 84 ?
So on, so on .....
Thanks for the enlightment though !

February 24, 2013 at 10:06 am

i waited until 64 and a half to take ssi. since i,m still working part time, collecting a small pension, i don,t need the money. instead, it,s put into a retirement account. that way, it,s there if and when i need it.don,t wait until you,re too old to enjoy life by working for too long!! the average male life span is only into the low 70,s