There were many more 401k Millionaires last year, how to become one, and why you have to

I often write about the need to pay yourself first and the benefits of long term, saving, planning and investing. I don’t want anyone to think I was the first one to coin this phrase or to preach the need to plan and invest in order to have a secure future. Most of this knowledge is pretty well known. You can find several articles out there to help remind you what you need to do, and I continue to write about this to remind and educate people. Once is a while I like to share some of these articles written by others, with my readers, so that you are not only hearing from me. Today I am sharing two articles that I think go hand in hand.


The first is about what it takes to become a 401 (k) millionaire. You will see a very common theme in this article, my writing, and those of other financial planners. Start early, and contribute consistently and the math and the markets will do most of the work for you. The good news is, it is really quite easy to become a millionaire. The bad news is, without a pension, and questions about how viable social security will be, a million dollars is probably not  enough to retire on if you are young now and don’t have a pension.

This brings us to the second article, which is about the rising cost of healthcare in retirement.  This article points out that couples retiring this year will pay an average of $280,000 for out of pocket healthcare cost. That takes a serious chunk out of that million dollars you saved! It is important for you to note that amount is if you are retiring this year at age 65. If you are retiring at a younger age, or ten years from now that number could easily be twice as high!

I know several people that have done much better than most when it comes to saving and investing. Many of them think they are going to be on easy street when they retire. Unfortunately when we talk it is clear they do not have a plan for retirement and the most common underestimated expense is heath care cost, which is likely the largest and fastest rising expense they will face in retirement. Saving and investing is important, but you also need a plan for retirement. You need to carefully consider all the expenses you will incur in retirement and make sure you have a large enough income stream to cover those expenses.
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