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4 Habits of Retired Millionaires

August 10, 2023

A million dollars in your retirement is a big accomplishment. But, let’s be honest, it’s all relative. A million today is not the same as a million 10 years ago. Nevertheless, it seems that many are striving for a number that will provide the retirement lifestyle they have worked so hard to achieve.

Whatever your number, here are 5 habits we can learn from those who have navigated their retirement journey to help 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 can 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 2023 employees can contribute a maximum of $22,500 to their 401K accounts, not counting an employer match. Depending on your income and expenses, maxing out your contribution may feel challenging, but we would encourage you to consider contributing a minimum of 10-15% of your income year after year.
  • Also, make sure you at least take advantage of the minimum amount necessary to earn your employer’s match.

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 timeframe to reach retirement. 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 the 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.

If you want to talk more about incorporating these habits from successful 401K millionaires into your retirement planning, send us an email and let’s schedule a time to talk.

401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty.

RMD's are generally subject to federal income tax and may be subject to state taxes. Consult your tax advisor to assess your situation.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Stonegate Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Any opinions are those of Stonegate Financial and not necessarily those of Raymond James.  Expressions of opinion are as of this date and are subject to change without notice.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.