— Finance

Opinion: How to have substantially more money when you retire without saving even one additional dollar

1 Mins read

It might sound too good to be accurate, but if you’re saving for retirement, you may be able to boost your portfolios without saving more money substantially.

In a recent article, I showed that your financial options in retirement are vastly better if you have saved 1.5 times as much as you need to cover your cost of living. Doing this can be easier than you think. And it’s worth doing.

There are many ways you can safely increase your retirement income by 50% or more. You can save more money. You can plan to postpone your retirement. You can arrange to work part-time in retirement. You can move to a place with a lower cost of living.

Today I’ll show you how you might achieve the “1.5 times” goal without doing any of those things. The key is how you allocate your retirement assets. In other words, what you invest in.

For the present comparison, I’ve turned to a reasonably simple four-fund strategy that I’ve been describing and recommending for years. Let’s compare two investors who we’ll say were born in 1940. (I chose that date because it works with readily available data.)

These two investors have identical goals and savings habits. (Maybe we can think of them as twin sisters.) Each starts saving in 1970 at the age of 30 and plans to retire in 2005 at age 65.

Each one starts by contributing $1,000 the first year. Every year after that, each increases her contribution by 3%. Each invests entirely in equities for the first 25 years, switching to a more balanced 60/40 equity/bond split in 1995.

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About author
Tristan McCue is a 26-year-old junior programmer who enjoys reading, binge-watching boxed sets, and appearing in the background on TV. He is smart and friendly, but can also be very evil and a bit lazy.He is an Australian Christian. He has a post-graduate degree in computing.
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