Want to be a millionaire?

Yeah me too. Here are some pretty simple things you can do to make sure you can retire a millionaire when you are old and grey (gray?).

Start saving early.

Starting early will make all the difference in your quest for a million dollar retirement nest egg. Here are some scenarios that will demonstrate the importance of starting early. Assuming a 7% annual return on your investments:

• If you start at age 25 and save $4,800 per year and earn 7% returns you will end up with just over $1 million by age 65
• If you wait until age 35 you will need to save over $10,000 per year in order to get to $1 million by age 65.

Take the free money.

If your employer offers a 401k match then you should jump for joy… well after you make sure that you are maximizing that match. That free money can dramatically reduce the amount you need to save in order to get to $1 million by the time you turn 65. And again, the sooner you start the better. If you are getting a $1,500 employer match and getting that same 7% return on your investments, here is how that will impact your savings goals.

• Starting at age 25, you will only need save about $3,300 per year to get to $1 million by age 65.
• Starting at age 35, you will need to save at least $8,700 per year in order to have $1 million by age 65.

Don’t pay retail.

So you think you are doing pretty well because you started saving early and are maximizing your employer match, but now you have to think about how much you are paying in fees. We’ve written before about why it is not worth paying high investment fees for mutual funds because the returns rarely beat the market. Here we will show you how those high fee mutual funds can get in the way of your million dollar retirement dreams.

• If you start at age 25 and pay 1% annual fee that will turn your impressive 7% annual turn into a less impressive 6% annual return. And that will mean you need to save over $6,200 each year to get to $1 million by age 65 – that’s quite a bit more than the $4,800 you’d have to save without the fees.

Shop around for low fee or no fee funds. Most major brokerage companies offer their own low cost branded funds.