The One Retirement Habit That Quietly Builds You A Million-Dollar Nest Egg

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According to a recent CNBC survey, only 37% of Americans feel confident about their retirement savings. Retirement planning for most people can feel overwhelming, especially when it seems far away. But here’s the most important factor that can help you get ahead in retirement.

I’ve worked with lots of clients over the years.

I’ve seen firsthand how starting to invest early can make a massive difference in how much you can save by the time you retire.

The incredible thing about investing early is that it leverages compounding interest, where your money grows over time as you earn returns on both your initial investment and the returns themselves.

Retirement account options like 401(k) plans with employer matches or IRAs are the best starting points. These investment accounts can be powerful because they grow through compound interest. This creates a snowball effect and leads to exponential growth the longer your money stays invested.

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Real-life example

For example, let’s say you’re a 25-year-old saving just $100 weekly until age 65. At this savings rate and with a 7% annual return, you would build up your investment to over $1 million.

But if you wait until 30, that drops to $726,000. And if you delay until 35, you’ll have just $500,000. Those extra five years translate to more than $226,000 in additional retirement savings.

One bright note is that a 2024 Schwab Modern Wealth survey shows Gen-Z adults are starting to invest at age 19 on average, which is much earlier than Millennials and Baby Boomers.

Bottom line

Here are some key strategies to help you get ahead:

Maximize tax-advantaged accounts first (401(k)s, IRAs)
Build taxable investments for flexibility
Balance student loan repayment with retirement contributions

Also, don’t think that modest contributions don’t make much of a difference. A recent Morningstar study showed 79% of individuals with at least two decades of participation in employer retirement plans are likely to end up with sufficient savings for retirement. The key is to take that first step and stay consistent and increase contributions as your income grows.

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Lastly, here’s a common regret I hear from older clients: I wish I’d started earlier. Your greatest asset isn’t your income — it’s time.

Alvin Yam is a Certified Financial Planner™ and founder of Paraiba Wealth, an independent registered investment advisor firm. He specializes in working with professionals to optimize their financial futures and retirement. His articles have been featured in MoneyGeek, Physician on Fire, and others.