Want to Build a Millionaire’s Retirement? Consider These 7 Steps to Take in 2024.

Many surveys show that Americans believe they need more than $1 million to retire, including Northwestern Mutual’s latest 2024 Planning & Progress study, which found that Americans now believe they need $1.46 million to retire comfortably. That may seem like a lofty goal, especially considering that U.S. workers aged 65 and older had an average of just $232,710 saved in a 401(k) in 2022, according to a Vanguard analysis. But if you still want to try to reach $1 million—which isn’t impossible—we’ve outlined seven key steps you can take in 2024 to make sure you’re on track.

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1. Calculate your net worth

You probably track your paycheck every month, but if you want to make serious progress toward your financial goals, you need to calculate your net worth. Essentially, it’s the total of all your assets, such as your cash savings, retirement accounts, and regular investment accounts, minus your liabilities, such as your student loans or car loans. By checking your net worth frequently—ideally every month—you’ll get a better idea of ​​your financial health and how you can improve it.

2. Develop a budget

Total your income and write down all your expenses to see if you’re making enough money to cover your monthly expenses. If the numbers don’t look good, consider cutting back on your expenses, upskilling to increase your salary, or taking on a side hustle. Your budget will give you the freedom and flexibility to put more money toward retirement savings.

3. Create an emergency fund

It’s unlikely that you’ll be able to contribute as much as you want to to retirement if you don’t have a financial cushion. In fact, you need a contingency plan to keep you afloat when unexpected expenses arise, as they always do. Consider setting aside at least three to six months of expenses in a high-yield savings account for emergencies. A good way to start saving is to have money automatically transferred from a checking account to a savings account as soon as you get paid, so you don’t run out of money.

4. Say goodbye to bad debt

Determining what constitutes good debt or bad debt is somewhat subjective, but the key is to eliminate any debt that is weighing you down and keeping you in a financial bind. For example, in 2023, the average annual percentage rate for credit cards rose to 22.8%, the highest rate since the Federal Reserve began collecting this data in the 1990s. Depending on how much debt you have, you could be spending thousands of dollars just to cover the interest on your debt each year. Once you eliminate that debt, you can put more of that money toward your retirement savings.

5. Review the benefits offered by your workplace

You may be working primarily for a salary that will pay your bills, but don’t overlook the other benefits your job may offer. For example, your employer may offer a retirement plan such as a 401(k) or 403(b) with a company match. This can help you build your retirement savings and your overall net worth. Additionally, if you qualify, you may have access to a health savings account (HSA), which can be very helpful during retirement.

6. Contribute to an individual retirement account

You can set up a retirement plan beyond what you have at work by contributing to a traditional or Roth IRA, depending on your income and when you prefer to pay your taxes. In 2024, you can contribute up to $7,000 total to these accounts if you’re under 50, with an additional $1,000 catch-up contribution if you’re older. If you consistently invest $7,000 a year in an IRA and earn a 10% return, which is in line with historical averages, you could accumulate $1 million in your account in 30 years.

7. Open a regular brokerage account

You may not want to put all of your money into a retirement account because you could be penalized if you withdraw it early. So if you have some wiggle room in your budget, try to set aside at least $25 in a taxable brokerage account every time you get paid. There’s no limit to how much you can contribute, and you can withdraw money at any age without paying penalties, giving your portfolio unlimited growth potential.

While investment returns are not guaranteed, time can help you increase the returns you receive. The earlier you start, the more time you will have at your disposal. Commit to discipline and consistency, and you will be further along in your journey than you were last year.

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