How you can easily be set for life

Everyone wants to be set for life; having enough money to not have to worry about your retirement. You can do it; it’s easier than you think. Here’s an inspirational story.

FILE--In this Nov. 2, 2012 file photo, Detroit Lions wide receiver Ryan Broyles (84) watches during pregame warmups of an NFL football game against the Indianapolis Colts in Detroit. Lions head coach Jim Schwartz says Broyles has a ruptured Achilles tendon and will have surgery Tuesday, Oct. 29, 2013. Broyles was hurt in Sunday's 31-30 win over Dallas. (AP Photo/Paul Sancya)

FILE–In this Nov. 2, 2012 file photo, Detroit Lions wide receiver Ryan Broyles (84) watches during pregame warmups of an NFL football game against the Indianapolis Colts in Detroit. Lions head coach Jim Schwartz says Broyles has a ruptured Achilles tendon and will have surgery Tuesday, Oct. 29, 2013. Broyles was hurt in Sunday’s 31-30 win over Dallas. (AP Photo/Paul Sancya)

Meet Ryan Broyles; a wide receiver for the Detroit Lions of the National Football League. Broyles has been saving for his retirement; living well below his means. He and his wife have elected to live on $60,000 a year and invest the rest. This is a huge departure from most NFL players who spend everything that they earn. There are many stories about NFL players, current and former, having to file for bankruptcy.

After speaking with a financial advisor, Broyles has elected to live on a reasonable amount of money and invest the rest for his future. He understands that his career is short-lived and he needs to have cash available for the remainder of his and his wife’s lives after football.

Broyles signed a contract worth more than $3.6 million after being taken in the second round of the NFL draft. All that money wasn’t assured; more than $1.422 million was guaranteed. But Broyles knew from his rookie symposium that NFL players, and athletes in general, go bankrupt. He saw athletes blow through millions. He was determined not to have that happen to him. By being frugal financially, Ryan Broyles believes he has set up future.

Broyles drives an ordinary car; lives in an ordinary house. This is a great lesson that everyone should hear. While most of us will never earn what a professional athlete earns, the lesson can still be applied to most people’s life: live below your means. The more money that you can set aside for your future, the more you will have when you retire.

Broyles is setting aside hundreds of thousands of dollars; of course, most of can’t, but you should put away as much as you can. A 25 year old who sets aside 15% of her gross wages every year will likely have hundred of thousands when she retires.

If you invest $5,000 every single year for 40 years, you will likely be a millionaire when you retire. Investing that $5,000 in an S&P 500 index fund — which historically has earned over 8% — will result in nearly $1.3 million.

The more you can invest, the better. If you can set aside 15% of your wages every single year, you will have even more money. As you get a raise, continue your planned 15% investment. Much of this investment can be made in your company 401(k) plan. Your employer will likely match your investment affording you even more money. The average company match is half of the first 6% that you invest in the company 401(k) plan. So if you earn $50,000 and invest 15% of your wages, you would invest $7,500. Your employer would match 50 cents on the dollar for the first first 6%, so they would kick in an additional $1,500. While that might not sound like much, over time, it really adds up.

Your $7,500 annual investment would likely be worth $1.9 million when you retire 40 years later. Add in your employer’s corporate match and that nest egg will likely exceed $2.3 million.

You could have even more money; as you get a raise, keep increasing your contributions. In fact, those additional investments will happen automatically; if you have a 15% contribution level established with your employer,  your raises will still be impacted by the 15% level. So if you get a raise from $50,000 to $60,000, your annual contribution will increase from $7,500 to $9,000 and your employer’s match will increase from $1,500 to $1,800. Each year that you get a raise, you will automatically be saving more and more money for your retirement. It’s easy; it’s automatic.

Live within your means; live well below your means. Save for your future. Ryan Broyles understands this. You should too.

Looking for inspiration?

“People with clear, written goals, accomplish far more in a shorter period of time than people without them could ever imagine.” – Ryan Broyles

Follow Broyles on Twitter @RyanBroyles and tweet your living below your means success stories to #TheFrugalTeam.

 

 

 

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