A supplemental retirement income strategy for the average person

Saving as much as you can as soon as you can is the secret to a financially secure retirement. That includes , but not limited to, taking advantage of qualified retirement vehicles. It’s that simple and it’s possible for just about anyone.

The amount a person must accumulate is relative to their income just before retirement. If you are earning $40,000, you don’t need to accumulate millions. At 66 in 2020 your family Social Security annual benefit is about $22,266. This means to replace 100% of pre-retirement income you need to accumulate about $443,350 over your entire working life.

One of the keys to an enjoyable retirement is a steady income. For some that means dividends – outside a retirement plan. If you start small buying dividend paying stocks, reinvest all dividends over many years, it’s possible to build a nice modest supplemental income stream to be used in retirement.

One comment

  1. Proof that little things like dividend and company matches add up when compounded over time.
    Back in 2010, my company cut the match to my 401K for that year. It “costed” me $3016.14 in matching funds in 2010. At the end of 2019 those “lost” matching funds would have total $6412.57. That was in 9 years time.

    If I remember correctly, the match was cut from 50 cents on the dollar to 25 cents on the dollar for the first 7% of my contribution. What if I took advantage of my 401K fully when I first started working in 1985 and deposited enough of my own money to qualify for $3k in matching money and let that compound for 35 years? The way that I had it invested it might have been worth $24,000 or more. That is what compound investing with $0.25 might have done. Actually that is what it did do since I did contribute and got the undercut amount in my 401K in 2010.

    Now a quarter does not seem like much nor does $24k. But what if you were able to save $1.00? That would be 4 times as much or $100,000.00 in the end. Now thats some cash.


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