So, let’s say oops you didn’t start investing as early as I had recommended. But instead you’ve been in your job for over a decade now, you’re 35 and you finally get around to looking at the 401(k) plan your company offers. (Same example as yesterday but you’re 35 and not 22.) How are you going to go from a Millennial to a Millionaire? Can you get from $47K to $3.2M?

Yes! Here’s how:

  1. Prioritize retirement savings. By your mid-30s you may already be married, have a child (or two) and own a home. All of these life experiences cost money, taking savings away from retirement planning. So, you see that the older you get the more challenging saving for retirement becomes because of competing life priorities. But if you’re serious about retirement savings, then it will take a real commitment on your part (as well as on the part of your significant other) to make retirement planning a financial priority. If you’re married, talk it over with your partner and get on the same page. If you’re single with no kids, saving may be easier but even so you’ve become accustomed to a certain lifestyle by now. Whatever your life situation, have an honest conversation with yourself, and with those whom your financial decisions will impact, in order to prioritize 401(k) savings and investing.
  2. Invest more of your income. To get to $3.2M by age 67 starting at age 35 you’d have to save ~$18,000 per year (of your own 401(k) contributions, not including the 7.5% matching contribution, which is free money to you), which amounts to ~38% of a $47,000 annual income. The good news is that $18,000 is the current maximum amount one can contribute to a 401(k) each year. More good news here is that by 35, you’re probably going to be making more than $47,000 from when you first started working, so the percentage of your income that you’d have to invest would be lower. Let’s assume by 35 your salary has grown to $67,000 due to various promotions. Still, in this case you’d have to invest ~26%. Both of these savings ratios are doable. But as I mentioned you’ll need to prioritize and plan your retirement savings and investing accordingly. Plan to save a much larger proportion of your income in your 401(k) as you grow older if you start saving in your 30s compared to your 20s.
  3. Stay the course. Once you’ve prioritized and planned your retirement savings, stay the course in contributing to your 401(k) each pay period. The best way to do this is to ensure you’re enrolled in automatic deductions each pay period. What happens here is if you indicate you want to save 38% or 26% (from Step 2) each pay period, then your employer will automatically deduct that amount from your gross pay. The benefit to you is that 401(k) investing becomes second nature and you’ll never miss a contribution to your plan. Additionally, plan accordingly for unplanned life situations with an emergency fund so that you don’t take money out of your 401(k). Once you’ve prioritized and planned your retirement savings, stay the course when the going gets tough and you’ll come out of the storm just fine.

It’s never too late to change. True, if you start investing early, you’ll be able to save less of your income to get to a higher net worth. But if you’re truly dedicated to retirement savings and investing then you too can do so even later in life. In my upcoming book, I’ll show you more of how to do this through your employer-sponsored 401(k).

Stay tuned! To get this blog started, I’ll be taking inspiration from my upcoming book, From Millennial to Millionaire: DIY 401(k) – 5 Do-It-Yourself Steps for the Digital Generation to Design and Manage their 401(k), to write blog posts. My new book should be available in eBook and paperback on Amazon by summer 2017.