How to Retire with $2 Million on a $70,000 Salary – Buffalo News

If you save 15% of $70,000, that’s equal to $10,500 each year, or $857 per month. Someone who squirrels away that amount of cash starting at age 25 would have retained $420,000 by the time they’re 65.

Invest for growth

You don’t have to settle for $420,000 in that scenario. Any money saved can be invested for growth, whether it’s in a 401(k), Roth IRA, or brokerage account.

Early on, investors should prioritize long-term returns. That means a portfolio that’s allocated almost entirely to stocks, with a relatively heavy weighting in growth stocks, small caps, and emerging markets — these are usually considered high-growth, high-reward. If you have 20 or 30 years until retirement, then you can afford to ride out some cycles and volatility. Your 20s, 30s, and 40s should be your highest-growth years.

As you get closer to retirement, you have to find a better balance between volatility and growth. You won’t have as much time to recover from market downturns. To reduce risk, older investors allocate more heavily to dividend stocks, value stocks, and bonds. These can still produce growth, but the expected rate of return isn’t as high as growth stocks.

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