If the considered having enough money to really retire keeps you up at night or gives you pause, you will not be alone. A recent survey by BankRate found that 45% of American employees don’t think they’ll have the opportunity to avoid wasting enough to achieve at the least $1 million in retirement savings. Further, 56% think they’re behind where they needs to be on the road to retirement.

In case your goal is to retire with $1 million, it’s achievable, however it takes some long-term planning. Listed here are three easy strategies to hit that million-dollar mark and retire comfortably.

1. Start early; time is in your side

The only biggest consider reaching your retirement goal is time. The rationale time out there is so vital is compounding. Compounding is the straightforward concept of your earnings generating more earnings, and it’s a strong force.

Consider the numbers. When you are 25 years old and contribute $100 monthly to your investments, and also you earn a median of 10% per yr, you’d have $1 million by age 65. When you are 30 and have a 35-year window, you’d only have $620,000 with the identical inputs.

That’s an almost $400,000 difference in only five years. The declines are starker because the windows get shorter. When you are 35 and have a 30-year window, you’d have about $380,000 and if you happen to are 45 and have a 20-year window, you’d have about $140,000 saved by age 65.

This illustrates the impact of compounding, so the sooner you begin, the higher. Even if you happen to are 45 and have little saved, it could seem unimaginable, however it is probably not if you happen to start now.

2. Get the total company match or more

When you haven’t began investing already, the most effective place to start out is in your employer’s 401(k) plan. The rationale these are so essential is that they supply an organization match, which amounts to free money as much as a certain percentage. Most corporations have a 4% company match, but some might need 2% or 3% or have a 50% match as much as a certain percentage. Whatever it’s, take full advantage of it.

Let’s take a look at the difference between contributing 2% and 4% of your salary to your 401(k) at an organization that provides a 4% match. When you are 35 years old, make $50,000 per yr, get a 3% annual raise, earn 8% per yr in your investments, and contribute 4% to your 401(k), you’d have about $635,000 by the point you retire at age 65. About $95,000 of that will come out of your employer through the match. When you only contributed 2%, you’ll have about $317,000 after 30 years, and only $45,000 out of your employer.

When you are older and wish to play catch-up, it might behoove you to extend your contributions, say to 10%, even if you happen to are only getting a 4% match. You could also want to take a position more aggressively in an effort to spice up your long-term returns. When you are 45 and making $65,000 a yr (assuming a 3% annual raise), and contribute 10% to your plan and earn a ten% average return, you’d have about $540,000 at age 65.

Contributing 10% will surely take an even bigger chunk out of your paycheck: about $250 per paycheck if you happen to receives a commission biweekly, assuming the $65,000 annual salary. Nonetheless, it helps to have the mindset that you just are literally paying yourself, and it’s non-negotiable, just as paying your other bills aren’t. If times are tight and there are other more pressing priorities in the current, it would help to create a budget to see where you’ll be able to save $100 per week or so to afford to pay yourself.

3. Complement your savings with an ETF

As discussed, if you happen to start investing early enough, you need to not have a significant problem reaching that $1 million plateau, so long as you might be committed to it. When you start later or are behind, the very first thing to do is start now, and the first vehicle needs to be your organization plan. Nonetheless, your secondary vehicle needs to be an investment portfolio outside of your retirement plan.

If constructing a portfolio of stocks that generates solid returns sounds too daunting, simply put money into a single, broad exchange-traded fund (ETF). One which tracks the S&P 500 provides you with access to all the stocks within the S&P 500 in a single fund, and that benchmark has returned 10% per yr on average over the past 10 years and seven.6% per yr over the past 20 years.

An ETF that tracks the Nasdaq 100 provides you with access to all the stocks in that index. The Nasdaq 100 has averaged a 17% annual return over the past 10 years and 13% over the past 20 years.

A $5,000 initial investment in an S&P 500 ETF would grow to about $105,000 after 20 years and almost $300,000 after 30 years, assuming a $25-per-week investment and a ten% annual return.

The mix of this supplemental ETF investment, your 401(k), and Social Security should have the opportunity to get you up around that $1-million mark by retirement age.