Q & A: How do you retire with an extra million dollars?
Q: “You did a money management session today at Georgia State University…do you have any books you would recommend to[young people] for money management and investing? Lastly, what was the calculation that you did to figure out the millionaire question, in case I wanted to retire earlier? Thank you.”
I had a great time at Georgia State. Here’s a Millionaire Formula: Starting at age 22 (or earlier) invest $3000/yr. in a Roth IRA (Individual Retirement Account) for 43 years (up to age 65) at 8% interest and you’ll retire with an extra million dollars.
There are other accounts or investments you could use if the interest rate is good but a Roth IRA is supposed to be good for people in your age group because you’ll probably be in a higher tax bracket when you retire than you are in now. With a Roth IRA you don’t get taxed at 65 when you take out the money. (WARNING: Talk to your bank or a financial adviser.)
Here are several good books on money management for young people:
- The Money Book for the Young, Fabulous & Broke by Suze Orman
- The Wall Street Journal Guide to Understanding Money and Investing by Kenneth Morris
- Please Send Money. A Financial Survival Guide for Young Adults on Their Own by Dara Duguay
- Financial Lovemaking 101: Merging Assets with Your Partner in Ways that Feel Good by Dr. Boyce Watkins (for mature audiences only!)
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