Saving for a secure retirement can often seem like a daunting task. But when you have even loftier goals it can feel near impossible. What would it take to become a millionaire, or even a multimillionaire? Would you need a big inheritance, some luck when playing the lottery? Do you need to spearhead a super-successful tech start up? Or become a doctor or a lawyer?
Not necessarily. In fact, it’s entirely possible to achieve more than a million dollars in retirement savings on a regular working person’s salary. Take for example Ronald Read, a gas station attendant and janitor from Vermont. At the time he passed away, he had amassed more than $8 million. And no, he wasn’t a bank robber or jewel thief in his spare time.
Instead, he did two things. First, he lived frugally, within his means; and second, he invested — regularly and consistently over his lifetime.
His approach, according to his attorney, was to invest in companies he recognized that also offered regular dividends. He invested in businesses such as AT&T, GE, CVS and Bank of America. No one in his family — not even his stepchildren — knew what he had achieved over the course of his lifetime. In the end, he was able to bequeath a large amount of money to his community hospital and library.
One financial strategist interviewed in CNBC’s story on Read estimated that an investor today would have to sock away approximately $300 a month and realize about 8% in returns annually over 65 years to achieve similar results. But the earlier you start, the more you give what Einstein called the eighth natural wonder of the world, time to work on your behalf.
So start investing for retirement as early as possible — but the most important thing is just to start, and not stop. Pick a strategy that suits your individual risk tolerance and stay committed to that strategy over the long term.
It can be challenging to ride out the occasional ups and downs of the stock market. But by investing regularly and dollar-cost averaging over time, you’ll be buying more shares when prices are low and fewer when prices are high. Increase your levels of contribution when you can, and always live within your means.
In the end, anybody can be a Ronald Read. You don’t have to pick the next Apple or Google or Amazon in order to accomplish what he did. And you don’t have to win the lottery. But you do have to start early, make well-informed investment decisions and stay the course.
A good first step is to meet with your NFP financial advisor. It’s a free and valuable benefit offered by your employer that you can take advantage of. He or she can do an assessment of your overall financial wellness and then help you chart a course toward the retirement you deserve.