Millionaires secrets for retirement planning
Post on: 16 Март, 2015 No Comment
It is certainly not an easy feat. Only a tiny fraction of American workers have been able to amass $1 million or more in their 401(k)s and employer-sponsored retirement plans, according to the Employee Benefits Research Institute.
The average 401(k) account balance is just shy of $59,000. Yet whether you have saved $50,000 or $5 million, some secrets of the rich can be very instructive when it comes to building your own retirement fund.
Fidelity, the nation’s largest retirement plan provider, surveyed wealthy investors whose assets totaled more than $5 million on average, including at least $2 million from employer-sponsored retirement plans. Here are some common trends:
- Millionaires have a diversified financial plan and stick to it. That plan includes contributing the maximum amount to their 401(k) or employer-sponsored accounts every year.
There is often another simple strategy at work too: Don’t spend more than you can afford.
Most millionaires accumulate their wealth because they didn’t spend it, said certified financial planner Barry Glassman, founder and president of Glassman Wealth Services in McLean, Va. Given the fact that they’re able to plan, think longer-term and live within the means—and that’s the most important thing—they’re able to accumulate more wealth over time.
There are some differences, though, between older millionaires and younger generations.
Jason York | E+ | Getty Images
Fidelity found boomer millionaires, who are 49 years old and older, are more likely to stick with the same old investment strategy. Four out of 10 boomer millionaires did not add any asset classes in the past year. Meanwhile Gen X and Gen Y millionaires, who are 48 years old and younger, are more willing to make changes and add more complex investments, such as foreign currency, international individual securities, venture capital and derivatives, to their portfolios.
Still, careful planning comes first. It is an essential building block at any age.
—By CNBC’s Sharon Epperson. Follow her on Twitter @sharon_epperson. See more Money News from The TODAY Show at ourFacebook and Twitter pages.
