Yahoo Finance 8 Signs You’ll Retire Wealthy
Many Americans dream of retiring wealthy, but few actually get there. The median retirement savings for people ages 55 to 64 is $134,000, according to Federal Reserve data cited by Synchrony Bank. The median for those 65 to 74 is $164,000. Both figures are well below the minimum of $700,000 to $800,000 many financial advisors recommend.
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Even $800,000 in retirement savings doesn’t necessarily mean you’re wealthy — it just means you’ll more likely have enough to retire comfortably for 25 to 30 years. According to some surveys, you need at least $2 million in net worth to be considered wealthy.
So how do you know if you’ll retire wealthy? Here are some signs.
Wealthy people know the best money secrets. Learn how to copy them.
1. You Make Your Savings Work for You
The journey to retiring wealthy begins long before retirement. People who manage to retire with some amount of wealth share some habits. One thing almost all of them have in common is that they always seek the best return on their money. And that includes finding savings accounts with the best rates. A lot of the best rates can be found at digital banks, so you’ll want to shop around before signing up.
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2. You’re Already Wealthy
This sounds obvious, but being rich as you head into retirement is about the surest sign you’ll retire wealthy. A lot depends on how much you earn and where you live. In states with low costs of living, such as Mississippi and West Virginia, you can be in the top 5% of earners if you make around $300,000 a year. But in more expensive states like California, Maryland, Massachusetts and New Jersey, you need an annual income of $500,000 or more.
Although being rich before you retire is a good sign that you’ll retire wealthy, it’s no guarantee. Rich people make financial mistakes like anyone else, and the wrong investment can drain your money in a hurry. The best strategy once you are wealthy is to reduce risks that could jeopardize your wealth.
3. You Have No Debt
Wealth isn’t just about having a large bank account and a bunch of valuable assets — you also need to keep your debt to a minimum. Having $10 million in cash and assets won’t do you much good if you have $12 million in debts. One sure sign you’ll retire wealthy is that you’ve paid off your mortgage, car loans, student loans and other debt.
4. You Surround Yourself With the Right People
The vast majority of Americans don’t have expertise in the many financial areas that can make you wealthy. One sign you’ll retire wealthy is that you regularly consult with personal financial advisors, tax professionals, stock experts, investment managers and other money experts. Financially savvy people always seek tips and guidance from successful professionals.
5. You’ve Built Retirement Savings Based on Your Expected Lifestyle
Retiring wealthy means different things to different people, but for most, it means enjoying some of the finer things in life. Another sign you’ll retire wealthy is that you’ve built enough savings to finance post-retirement activities you want to enjoy, whether that means traveling extensively, living abroad, buying a vacation home, joining a country club or donating to your favorite charities.
6. You Have a Diversified Portfolio
The cliché that you shouldn’t put all your eggs in one basket has been around for a while, but it’s as true today as it was when it was first coined. Having a balanced portfolio means you’ve spread your investments across different asset classes, which reduces risk and increases the potential for high returns. A sign you’ll retire wealthy is that you have a good balance of savings accounts, stocks, bonds, mutual funds and other investments.
7. You No Longer Have To Support Your Adult Children
Suze Orman and other financial experts suggest you stop supporting your adult children financially if you want to enjoy a rich retirement. The goal here is to allocate more of your income toward your retirement accounts so you can build up a sizable nest egg. If you’re free and clear of unnecessary family financial obligations, your wealth stays in your own accounts when it’s time to retire.
8. You Won’t Need To Rely on Social Security
Even though millionaires and billionaires qualify for Social Security retirement benefits if they worked long enough and paid into the system, it’s not something they rely on. A sure sign that you will retire wealthy is that you’ve already determined that you won’t need Social Security to help fund your lifestyle.
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This article originally appeared on GOBankingRates.com: 8 Signs You’ll Retire Wealthy
