Planning for retirement can be a challenging task for those who have not yet saved any money, especially as more years pass, reducing the time available to save and potentially delaying retirement plans. Ideally, individuals start investing in their 20s, but it is still possible to invest later in life without negative impacts on retirement goals. Investing in one’s 30s can still be advantageous, as income levels and saving potential often increase with age.
Those starting at age 35 with no savings can still aim for $1 million by retirement. A recommended strategy involves regularly investing in a top growth fund. Allocating approximately $350 monthly to the stock market could significantly grow savings. If this amount is unmanageable, individuals should consider increasing income or cutting expenses to accommodate this saving strategy. Investing less may not yield sufficient returns to reach the $1 million goal by retirement.
Once the monthly investment plan is feasible, selecting an exchange-traded fund (ETF) is the next step. Growth-oriented ETFs, such as the Invesco QQQ Trust, which tracks the Nasdaq-100 index, are attractive options. This fund provides exposure to leading technology stocks and prominent companies in other sectors, including Costco Wholesale and T-Mobile. Historically, this fund has outperformed the S&P 500, which typically averages an annual return of around 10%.
For those starting at age 35, assuming retirement occurs around age 70, there are 35 potential years of investing. With life expectancy increasing, age 70 may become a common retirement age, offering additional years to increase returns. Projections show how a $350 monthly investment in the QQQ ETF may grow with different average annual returns over the years. The calculations suggest that waiting approximately 35 years is necessary to reach $1 million, assuming even modest annual returns of 9%. Investing for just 30 years may not suffice unless investments consistently outperform the market, but over 35 years, achieving $1 million is feasible.
Investors may feel pressured to pursue aggressive investments in later life to quickly accumulate savings. However, this approach could risk substantial losses. It is advisable to balance growth and safety when saving and investing for retirement. A diversified ETF like the Invesco QQQ Trust represents a prudent long-term investment choice, minimizing risks associated with aggressive investment strategies.
