“Life gets in the way of everything; all of a sudden you want to buy a house, or you have kids,” Slott said, naming events that could trigger you to dig into your investments. “You can’t count on anything for five minutes, let alone 50 years.”
In addition, he said that the average returns over a long period of time can mean nothing to someone who needs their retirement money, say, amid a recession. “The problem is the dips,” Slott said.
But there’s good news, he added: You don’t need a 10 percent return to make it to seven figures.
He gave an example: if you saved $5,500 a year in a Roth IRA — in which the contributions are after-tax and the withdrawals are tax-free — for 40 years in a row with a conservative 6.5 percent annual return, you’d still retire with over a million dollars.
“That’s nothing to sneeze at,” Slott said. “If you take small steps over time, you can easily have $1 million in your retirement.”
As for the $5 a day? At a 6.5 percent annual return, you’d have around $26,000 in 10 years, $168,000 in 30 years and $667,000 in 50 years, according to Taylor.
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