Here’s how to multiply your retirement savings by 3

Once you retire, you may need more income than you expect. This is because some of your costs, like health care, may go up with age, while others may not go down as you want them to.

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Here’s how to multiply your retirement savings by 3

This is why it is so important to independently save for retirement. If you rely too much on Social Security, you could find yourself strapped for cash.

Of course, building a solid nest egg can seem like a challenge. But here’s one way to make it easier for you: invest your money wisely. In fact, if you play your cards right, you can triple your pension contributions and raise a good amount of money in time for your retirement years.

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Develop your wealth transparently

The advantage of investing is that it allows you to take money that you are not using and turn it into a larger sum. When you invest money in your IRA or 401 (k) plan, you should invest it with the goal of getting as high a return as possible without taking excessive risk.

Video: How Much Retirement Money You’ll Have If You Put $ 100 A Week In Your 401 (k) (CNBC)

How much retirement money you will have if you put $ 100 per week in your 401 (k)

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To that end, stocking up on stocks during your working years and turning to bonds as retirement approaches is a good bet. Bonds are a poor investment choice for your 30s and 40s, as the returns they offer may not be enough to grow your nest egg significantly over time. Stocks are, of course, riskier, but if you use them a lot in your 30s, 40s, and even 50s, you will have the opportunity to cut back as you approach retirement.

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Now suppose you are able to put $ 200 per month into a retirement plan over a 30 year period. Let’s also assume that during this period your investments generate an average annual return of 7%. This 7% return is a little lower than the stock market average, and it also explains the fact that you may not have had such a large equity position in your pension plan during your last years of savings. .

If you save $ 200 per month over 30 years, you will end up contributing $ 72,000 to your savings from your own paychecks. But with that 7% return, you’ll end up with about $ 227,000 in your nest egg after three decades. That’s a little more than triple the amount you put in.

Now look at what happens if you only get an average 4% annual return on your pension plan because you stay away from stocks and fill up on bonds. Assuming the same period of monthly contribution and savings, you will end up with approximately $ 135,000. It’s a decent payoff, but you’re not tripling your money the way you would by investing in stocks.

Put your money to work

Some people who contribute to a retirement savings plan keep their money in cash or bonds and see little growth over the years. If you want to triple your savings, go for abundant stocks when appropriate and cut them later in life. It’s a great way to raise a good amount of money for retirement without having to sacrifice too much.

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