Image source: Getty Images
Hitting $1 million in retirement savings is a milestone that most people spend decades pursuing. But once you get there, what's next? First, it's important to celebrate the fact that you made it to this milestone.
For context, the average 401(k) balance for people in their 60s is just under $600,000, according to data from Empower, a financial services company. So this is no small task, and it's a direct result of years of hard work. After that, there are some important steps that you should take to ensure that you're making the smartest money moves, given your sizable retirement savings.
Here are three key things to do once you get to $1 million.
1. Revisit your goals
Getting to $1 million may have been your driving goal for a long time, so now is a good time to look at what else you want from your retirement savings. That could mean getting to $2 million because you've decided that you want to travel during your retirement years. Or it may mean recalculating your desired income in retirement to accommodate supporting one of your children. Or you may have developed a chronic illness, so you may want to open a health savings account (HSA).
In other words, since it takes years to get to this milestone, you may have a new set of retirement-related goals to pursue. And the sooner you can start on those, the better.
Knowing what you want your ideal retirement to look like and the factors that could impact it will be vital to creating goals that will bring you closer to that reality. The viability of those goals will depend on your budget . But this is an excellent opportunity to at least understand where you stand and potentially make changes so that you can accomplish those new goals.
2. Consider adjusting your investing strategy
It's probably taken you a considerable amount of time to get to $1 million in retirement savings. So with this milestone comes an excellent opportunity to reevaluate how your funds are being invested.
The classic advice here is that the closer you get to retirement, the more conservative your portfolio should be. That often means investing a higher proportion of your portfolio in stable options, such as bonds, and less in more volatile investments, like stocks. After all, the less time you have to grow your funds, the more vulnerable your investments will be.
Ultimately, the proportion of investments that you choose will depend on your timeline to retirement. So, depending on your age, you may not have to make any changes to your investing strategy. Still, it's a good idea to use this time to check that you're maximizing your earning potential while hedging against losses in your brokerage account .
3. Talk to a financial advisor
Reaching this financial milestone can make your finances more complex, so it's a good idea to talk to a financial professional to ensure that you're managing your money in the best possible way, given your circumstances.
Some of the topics you may want to discuss include:
- What you want your retirement to look like
- How to reach your various financial goals alongside retirement savings goals
- Investing strategies that make sense for you and your family
Getting to $1 million in retirement savings is a big accomplishment, and you should take time to celebrate that. But it's also important to take the time to review your financial goals, make necessary changes, and get professional advice if you want to take your finances to the next level.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy .
Most Popular
Comments / 0