MONEY Savings

When $1.5 Million Isn’t Enough for Retirement

Q: I am 76 and have been retired for more than 10 years. I have $1.5 million. Is that enough to last till I am 100? How do I make sure I am on track? – William Ricketts

A: It may be surprising that someone who still has $1.5 million a decade into retirement would need to ask if it’s enough. But it’s a legitimate worry. “Whether $1.5 million is enough depends on your lifestyle and spending,” says Theodore Saade, a senior partner at Signature Estate & Investment Advisors in Los Angeles.

Let’s put that $1.5 million in perspective. Using a traditional 4% annual withdrawal rate (increased each year for inflation), a 66-year-old retiring with that amount could safely start out with an income of $60,000 a year, assuming a 30-year time horizon. If you have $1.5 million at age 76, you can withdraw a bit more—perhaps 6% or 7% year—without risking a major decline in your living standards if markets dip. That works out to an income of $90,000 to $105,000.

Read next: When Good Investments Are Bad for Your Retirement Savings

You may not even need to withdraw that much, since you most likely have Social Security income too. A typical single person earning $75,000 a year who claims at full retirement age might receive a payout of $24,000 a year. For a couple, Social Security could easily provide a combined $30,000 to $40,000 a year. All of which suggests you can probably maintain a six-figure income with little risk of running short in retirement.

Whether that income is really enough, however, depends on your spending needs and your financial goals, which might include helping one or more grandkids pay for college or leaving money to heirs. To see if you’re on track, plug in your expenses into a planning calculator, such as Fidelity’s Retirement Income Planner; and to see how long your money will last, try our retirement calculator here.

These projections assume you are keeping your assets invested in a mix of bonds and stocks. Even at 76, you’re still investing for two or more decades, so you need to keep some money in stocks for growth. “It’s not uncommon to live into your 90s and even to 100, and the number of people who do is growing,” says Saade. If you stash that $1.5 million only in low-yielding but stable investments, such as Treasury bonds and money market funds, you may feel more secure. But over those decades, inflation can severely erode your nest egg.

Looking beyond your portfolio, there’s an even bigger risk to consider: incurring medical bills and, especially, long-term care costs. While more people are living longer and healthier lives, the older you get, the more likely it is that you will have some health issues. About 70% of people turning 65 today will eventually need at least some kind of long-term care, which isn’t generally covered by Medicare.

Read next: What You Can Expect from Medicare on Its 50th Anniversary

So it makes sense to plan ahead by checking out costs for long-term care in your area. These prices vary widely by region, but the average stay in an assisted living facility can run $42,000 year, while nursing home care may cost $77,000 or more. Granted, not everyone will need years of expensive care—the average nursing home stay is less than a year. Even so, it’s better to understand your costs and options, says Saade. Odds are, with the right planning, $1.5 million will be enough to meet most of your goals.

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MONEY financial advice

Financial Website Brothers Share Their Best Financial Advice

BrightScope co-founders Mike and Ryan Alfred talk about retirement savings and their biggest money mistakes.

Save until it hurts was the first thing Mike Alfred, a co-founder of BrightScope, said about retirement savings, and that’s part of his best financial advice to give others as well. “Live below your means,” he said, “which sounds very simple in theory but it much more difficult in practice.” His brother Ryan, the other BrightScope co-founder, suggests keeping your investments at arms-length so you’re not tempted to overanalyze them.

Mike said his biggest mistake was buying in to the dot-com bubble, while Ryan talks about how they funded a large part of their business on their own credit cards.

Read next: The Co-founders of BrightScope Share The Painful Secret to Retirement Success

MONEY Millennials

5 Steps Millennials Can Take Now for a Richer Retirement

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Jamie Grill—Getty Images

Start now, and you'll have an even bigger nest egg when you stop working.

A couple of years ago, Emilie Hunt had to go to the emergency room with a stomach virus. The bill took a huge chunk of money out of her savings, more than $800, and kept her from saving for a couple of months.

“I’m really bad at planning for unexpected expenses,” she said. “And instead of cutting other expenses, often the first money I cut is what would go into savings.”

Hunt, an executive assistant at a private equity firm in New York City puts $150, about 2% of her salary, automatically into a retirement plan every month. Her biggest expenses are rent, student loans and food, in that order.

She makes a budget, but doesn’t necessarily stick to it.

“I don’t feel that I’m in trouble,” she said. “But I feel like I’m not growing my savings at the rate I’d like to.”

Many millennials like Hunt are saving for retirement, but not enough. They put away an average of 8% of their salary for retirement, according to investment firm T. Rowe Price’s Retirement Saving & Spending Study, which looked at 1,505 millennials with 401(k)s.

That’s a lot less than the minimum 15% that most experts recommend.

So what can millennials do to save more for retirement? Here are five tips.

Cut Costs

Before you sign a lease or buy a car, think about cheaper options. Housing and transportation are the two biggest costs for most people and significant commitments of your future income, said Stuart Ritter, senior financial planning analyst at T. Rowe Price. A small change can give you a lot of financial freedom.

“There’s a big difference between buying an expensive car, riding a bike or sharing a ride,” said Ritter.

Make a Budget

Track your spending for at least a month. That is the first step for exercising restraint. Otherwise, your spending can sneak up on you. A $3 Starbucks coffee a day adds up.

Categorize your expenses as “needs” and “wants,” and distinguish between the two, said Mark Kantrowitz, senior vice president & publisher at Edvisors.com, a site that provides financial advice for students and families.

“Cable TV is not a need, it’s a luxury,” he said.

If you think it’s overwhelming to make a budget for all your expenses, pick a couple of categories and track them, said Ritter. Apps like Mint, a unit of Intuit, and LevelMoney help you track and analyze your spending habits.

Adjustments

Try increasing your savings for three months. Most people adjust to it, according to Ritter, who warns against having an “all-or-nothing mentality.”

“Some people think they can never go out with their friends if they save more for retirement,” Ritter said. “But maybe it means that you go out two times a week instead of three.”

Be careful with how much you spend after college.

“When people start making a bigger salary, their lifestyle often inflates and suddenly they are living paycheck to paycheck,” said Jason Vitug, founder and chief executive of Phroogal, a company that provides financial advice for millennials.

Phone bills, Netflix and magazine subscriptions are some of the expenses you can reduce, he said.

Save While Paying Off Loans

Student loan debt prevents some millennials from saving, according to T. Rowe Price’s study. But it’s important to prioritize both saving and paying off loans.

First, build an emergency fund of three to six months of salary. Then prioritize paying off your loans, said Kantrowitz. Start by paying off the loan with the highest interest rate.

Make it Automatic

While you are working, you should save a fifth of your salary so that you have money for the last fifth of your life, Kantrowitz advises.

Tell your employer how much you want to save and have the money automatically taken out of your paycheck. That will help you get used to having less money for spending.

Make sure you maximize your employer match, which can be upwards of 6 percent. “That’s free money,” said Kantrowitz.

MONEY retirement income

This Is the Top Secret of Wealthy Retirees

yacht in front of Miami mansions
Barry Winiker—Getty Images

Successful retirees still save nearly a third of income from their pension and 401(k) distributions.

Individuals that have saved successfully for retirement evidently cannot kick the habit. Even after they have reached retirement age they continue to save, on average, 31% of income, new research shows.

In many cases this continued saving comes from income streams guaranteed for life, such as a traditional pension, certain annuities, or Social Security. So further saving may have little to do with financial security—and much to do with a routine that has served them well over the years. If you are looking for the top secret of affluent retirees, it may be just that simple.

Retiree income flows from five primary sources, according to the research from fund company Vanguard. Guaranteed lifetime income is the biggest cut at 42%. Withdrawals from tax-advantaged accounts like IRAs and 401(k) plans are the second biggest source (20%), followed by pay from a part-time job (12%), withdrawals from savings accounts (7%) and from specialty accounts like a cash-value life insurance policy (4%).

The income source matters. Those who mainly get by on withdrawals from a 401(k) or other financial accounts reinvest about a third of what they take out due, say, to required minimum distribution rules. Those collecting guaranteed monthly income save only 25%.

This makes perfect sense. Lifetime income, by definition, never runs out. Those who get most of their income this way are under far less pressure to save anything at all. Meanwhile, those living off withdrawals from financial accounts, which can run dry, show a predictable concern with that possibility.

These are findings worthy of some study in government and pension circles. In coming years, a greater share of retirees will rely more heavily on their own savings, which could undermine spending in general and take a bite out of economic growth. On the other hand, those who get most of their income from withdrawals from financial accounts are more likely to work longer or part-time in retirement, which contributes to the economy and probably the individual health of those doing so.

The Vanguard study looked at households where the head was 60 to 79 years old, had at least $100,000 of investable assets, and at least one member of the household was fully or partially retired. This is an affluent, though not rich, group that continues to save and, in some ways may be doing so inappropriately.

Two-thirds of the money saved from income that comes from financial accounts goes into low-yielding savings vehicles. That might be by design—a desire to lower risk or save for a big purchase. But it might also be the result of inertia—required distributions left unattended. If such distributions are not needed for spending they might be better reinvested in growth or higher income accounts.

It’s tempting to assume that affluent retirees keep saving simply because they have the means to live as they wish and still have income left over. But that probably sells them short. They had to save or work hard for their pension to get there. It’s the habit that made it happen—and once established it’s tough to kick.

Read next: How Being a Boring Investor Can Make You Rich

MONEY Savings

6 Reasons Not to Be Ashamed of Your Frugal Ways

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Jamie Grill—Getty Images

Being frugal is hard work.

From time to time we bring you posts from our partners that may not be new but contain advice that bears repeating. Look for these classics on the weekends.

Your friends might label you the cheapskate of the group and your frugal ways might be a running joke, but there’s no reason to be embarrassed by your money-conscious mindset.

A lot of people cry broke and whine about never having enough cash to get by, yet they’re not always willing to do what it takes to free up cash and save money. Being a frugal person is hard work. And if frugality doesn’t come naturally for you, resisting impulse buys can be a daily struggle, and you may go back-and-forth with whether to spend money on an item.

At the end of the day, a frugal mindset benefits your bottom line. So, while others may make you the butt of their money jokes, here’s why you’ll eventually have the last laugh.

1. This is who you are

We all have different money personalities. Some people are big spenders, whereas others hold onto a dime as if they won’t earn another. To each his own.

If you’ve been a frugal person for as long as you can remember, you don’t have to apologize for being you. Everyone has their own way of spending money. Just know that there’s a difference between frugal and cheap. Cheapness can affect the quality of your life, but frugality lets you enjoy the same qualify of life for less. Those who like to spend money might pressure you to loosen the purse strings. But if you’re not bothered by your spending habits, you don’t have to change your ways.

2. You don’t care about keeping up

If you’re committed to being frugal, chances are you don’t feel pressure to keep up with the Joneses or anyone else for that matter. We live in the age of financial peer pressure. This is a big problem in some social circles. If one friend buys a house, then the others are ready to upgrade. If someone wears designer clothes or buys expensive gadgets, then the others have to follow suit. It’s an exhausting cycle that not only reveals an impressionable mind, it keeps people broke.

If you don’t care how others spend their money, and if you’re only interested in your bank account as you should be, being frugal keeps your head out the clouds.

3. It’s a financial necessity

Others might pressure you to spend money or make comments about your frugal ways. But if you’re frugal out of necessity, there’s no reason to be embarrassed or ashamed, especially since you’re willing to sacrifice more than a lot of people.

When dealing with money problems, some people want to save face, so they don’t make adjustments to their lifestyle. They continue with old habits, even if it further complicates their situation. A frugal person, on the other hand, does whatever it takes to save money so they can keep a roof over their head, food on the table and clothes on their back.

4. You might have a bigger bank account

This isn’t a guarantee, but if you choose not to spend your extra income, you’ll probably have a bigger bank account than those who poke fun at you. So, the next time you feel ashamed or pressure to adjust your frugal mindset, look at your savings account and consider how most Americans don’t have enough in their savings to handle a small emergency.

5. You can reach your goals sooner

You might have a long list of financial goals, but without a lot of extra money, it can take years to fulfill these goals. Being frugal speeds up your progress. If you reduce spending and free up cash in your budget, you’ll have income to pay off debt, save for vacation or prepare for retirement.

6. You’re teaching your kids good money habits

Kids often mimic the money habits of their parents. Remember this the next time you start feeling embarrassed about your frugality. If you’re an irresponsible spender, your children could imitate this behavior in adulthood with long-term financial consequences. But if your kids see you pinching pennies, looking for deals, and taking advantage of other opportunities to save money, then they’ll probably develop similar good financial habits. And if your children become savvy savers, they can build a firm financial foundation with less debt than their peers and a bigger nest egg.

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MONEY Savings

Here’s How Much Cash You Need in Retirement

Q: I am in my eighth year of retirement. A few years in, I found myself spending a considerable amount on repairs and upkeep on my old house. I also had to replace my car. Luckily, I was able to build up a reserve fund to cover costs so I didn’t have to dip into my investments for these “life happens” events. What is your advice on how much cash a retiree should have on hand to feel secure? – Karen Hendershot

A: Of course, everyone should have a cash cushion to handle unexpected expenses, but retirees need a larger cash reserve than people who are still working, says Richard Paul, president of Richard W. Paul and Associates in Novi, Mich. “The stakes are higher for retirees,” Paul says. “When you’re no longer earning an income, the money you have saved isn’t easily replaced.”

If you need to tap your investments for emergencies, you risk spending down your portfolio too quickly. And if you have to sell securities in a down market, you’ll need to take a bigger chunk to get the amount you need.

Relying on your investments for unexpected expenses could also trigger some nasty tax consequences. If you liquidate money from a taxable account, the income could bump you into a higher tax bracket and cost you even more.

So, how much do you need? While the standard recommendation is to have six to 12 months of money set aside to cover emergencies, retirees should have at least 12 to 18 months of cash, says Paul. That should be enough to cover daily expenses as well as any emergencies that might crop up. “This creates a safety valve, so you’re not at the whims of the market,” he says. Use an interactive worksheet like this one from Vanguard to tally up your monthly expenses.

Exactly how much you will need depends on your individual circumstances. If you have guaranteed cash flow, say from a pension and Social Security, that covers your daily expenses, you won’t need to have as much set aside as someone who is already withdrawing money from a portfolio to cover living costs. You can’t foresee emergencies but you can plan for them. If you have an older home, for example, you can anticipate needed repairs or upgrades like a new roof. If you have any medical issues, you’ll want to keep a larger stash for medical costs. “Medicare doesn’t cover everything,” Paul notes.

Since people tend to enter retirement with most of their money tied up in investments, such as 401(k)s and IRAs, Paul recommends that you start building up an emergency fund before you retire. While you’re still earning, start funneling money into a savings account and move a portion of an IRA into a short-term bond fund.

On the flip side, you don’t want to keep too much of your savings in cash. You won’t earn much interest in a money market fund or basic savings account, so balance that cash cushion with investments that can keep up with inflation. “You still need your money to grow,” Paul says.

MONEY financial advice

How to Become a 401(k) Millionaire

Fidelity Investments' Jeanne Thompson lays out three simple steps.

For millennials, retirement is something that feels like it’s forever away, which is a good thing when it comes to preparing for it. Jeanne Thompson, Fidelity Investments’ vice president of thought leadership, lays out three simple steps for hitting the ultimate 401(k) milestone: a million dollars.

1) Save a lot. Seriously, save as much as you can. One of the BrightScope co-founders phrases it simply as “Save until it hurts.

2) Start now. When you start saving while you’re young—Thompson says 25 at the latest—you give your money as much time as possible to mature alongside you.

3) Invest for growth. Keep your eye on stocks, and don’t shy away from aggressive investments.

Read next: The Painful Secret to Retirement Success

MONEY 401(k)s

Why the Rich Benefit Most from This 401(k) Tax Break

wealthy couple on retirement vacation
Tom Merton—Getty Images

Catch-up saving is available to everyone in 401(k)s, but most of us can't afford to do it.

Americans don’t save enough for retirement. That’s hardly news, but even well-intentioned policies meant to incentivize saving don’t always work as anticipated.

Take the so-called 401(k) catch-up provision, which lets workers 50 and older funnel additional tax-sheltered dollars into their plans. Great idea, right? But a new study by the Boston College’s Center for Retirement Research finds that nobody really uses the catch-up option — except for the tiny percentage of high-earning workers who are already maxing out out their contributions.

The study analyzed the response of people saving for retirement to the addition of the catch-up provision in 2001. Researchers looked at savings behaviors before and after older workers got the chance to sock away an extra $1,000 in 2002, which rose to an additional $4,000 by 2005. (Contribution limits, both regular as well as catch-up, are adjusted for inflation. In 2015, the cap ticked up from $17,500 to $18,000, and the catch-up limit rose from $5,500 to $6,000.)

The investors who take advantage of the catch-up provision tend to be the few who can afford to max out their contributions in the first place. Since most 401(k) savers don’t come close to hitting that limit, the distinction of being able to save $18,000 or $24,000 in a tax-deferred account is meaningless. Only about 3% of workers max out their contributions, according to a 2014 U.S. Government Accountability Office report. (And this entire conversation leaves out the vast number of low-wage workers who don’t get any retirement benefits at all.)

Not surprisingly, the brief finds that people who do take advantage of the higher cap once they hit 50 tend to earn a lot more money than average. The Center’s analysis found that those who maxed out their 401(k) contributions earned around $163,000, compared to an average of $57,000 across the board. Along the same lines, the top contributors had more than twice the net worth of the typical worker—an average $439,000 vs. $200,000.

Between 2001 and 2005, the older workers already maxing out bumped up their savings by 14%, on average, once they became eligible for catch-up contributions. By contrast, younger workers already at the limit boosted their deferrals by an average 7%, as regular contribution limits were adjusted for inflation.

Workers under the age of 50 who were maxing out saved nearly $1,200 extra, vs. $250 for the average worker. For workers 50 and over who were maxing out, the increase was even more dramatic—they saved about $1,700 more. “While this group does not increase their contributions all the way up to the new limit, they appear to be quite sensitive to tax incentives to increase their 401(k) saving,” the brief says.

Unfortunately, most of the American workforce can’t afford to take advantage of this perk. Still, even if you can’t manage to max out, saving even a bit more can make a big difference. As an earlier study by the Center found, if you’re 25 and start saving 10% a year (including an employer match), you’ll be on track to comfortable retirement—if you keep up that till age 65. For those in their 30s, you’ll need to put away at least 15%. (To see if you’re saving enough for your goals, try this retirement calculator.)

What if you’re a late-starting saver? If you’re 45 and stash away at least 10% a year till age 70—yes, you’ll need to work longer—you could still have a secure retirement, the researchers find. And catch-up saving, if you can manage it, will do a lot to speed that timetable.

Read next: 10 Reasons You’re Not Rich Yet

MONEY consumer psychology

10 Reasons You’re Not Rich Yet

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H. Armstrong Roberts—Getty Images

#5: You’d rather complain than commit.

As a financial advisor, I have spent many years helping other people overcome financial stumbling blocks so they can become rich. Ironically, the one person I have had the most trouble helping is myself.

Being “rich” can mean different things to different people, but I believe it means having the financial freedom to achieve your goals and live the life you want. I am great at giving advice; I am not always so great at taking my own advice (know anyone like that?). So, when it came to helping my clients understand why they weren’t rich yet, the easy part was explaining the culprits, because I was all too familiar with most of them.

Regardless of our upbringing, education, profession or lifestyle, most of us are not where we want to be financially and our reasons are probably more similar than different. The good news is that it is never too late to become rich if you, like me, are ready to own up to the reasons you’re not and do something about it.

Want to know why you aren’t rich yet? Keep reading.

#1: You spend money like you’re already rich.

Sure, it feels good to buy expensive things, whether it’s a luxury car, designer clothes, a big house in the burbs, or a tropical vacation. Even if you don’t necessarily buy pricey items, if you consistently buy stuff you really don’t need, it still adds up fast ($300 trip to Target for toothpaste? AHEM). But the shopping high only lasts until the guilt and regret set in or the credit card bill arrives. Most of us are guilty of living beyond our means and using credit cards more than we should. The problem is that as long as we continue to spend more than we have, we can’t start building wealth. Chronic overspending and high-interest, revolving credit card debt are your worst enemies when it comes to financial success. Spend like you’re poor and you are much more likely to become rich.

#2: You don’t have a plan.

Without clearly defined short, mid and long-term goals, becoming rich will just seem like an unattainable fantasy. And that turns into your go-to excuse for why you shouldn’t bother saving or stop overspending. As we say in the financial industry: those who fail to plan, plan to fail. Creating a financial plan may seem overwhelming or intimidating, but it doesn’t have to be. Whether you do-it-yourself or decide to work with a financial professional, the process simply starts with prioritizing your goals and writing them down. Put that list where you can see it on a regular basis. Visual reminders go a long way in helping us stay on track.

#3: You don’t have an emergency fund.

I know, you’ve heard it a hundred times: you need to have at least six months of income saved in an emergency fund. And yes, it’s much easier said than done. However, I’ve seen too many people (including myself) get hit with a major unplanned expense, whether it’s a car or home repair or a medical bill, or an unexpected job loss, accident or illness that’s led to a drastic reduction in income. When these things happen–and they do, more often than you might think–not having a financial safety cushion can make the situation much, much worse. If you’re forced to rely on credit cards, you’ll end up sinking deeper into debt instead of, yes, saving to become rich.

#4: You started late.

With every year or month that goes by without saving, your chances of becoming rich decrease. Time and compounding interest are your two best friends when it comes to growing money, so wasting them really hurts. Just like exercising, the hardest part of saving is starting. Even if you’re in debt, making little money or have a lot of expenses, you can still always save something — even if it is a small amount. The sooner you get yourself into the habit of saving — regardless of how much — the easier it will be for you to continue and eventually increase those savings. I like to think of saving as a muscle you have to work out and build with practice. Even if you start saving late, you can still become rich if you’re committed enough. But you need to start. Now.

#5: You’d rather complain than commit.

“Life is too expensive.” “I’ll never get out of debt.” “I don’t make enough money.” “Investing is too risky.” I’ve probably heard every excuse for why someone isn’t saving, investing or planning in general, and I’ll admit I’ve used a few of them myself from time to time. It’s easier to be lazy and let bad habits fester than to commit to –and follow through on — changing them. It’s no wonder obesity and debt are epidemics in our country, and that millions of Americans have had to push off retirement. As long as the complaining, excuses and finger-pointing persist, so too will not becoming rich. Instead, take responsibility for your bad habits and focus on what you can do to change them. Then do it.

#6: You live for today in spite of tomorrow.

I get it. It is really hard to think about retirement and other distant fantasies when we have needs and plenty of wants now. The bills have to get paid, the family must be fed, momma needs a vacation — and a new wardrobe to go along with it. The problem is that impulsive and overly-indulgent behavior commonly lead to credit card debt, spending money you might have otherwise saved and, yes, not becoming rich. Do yourself a favor: Ditch the “buy now, worry later” mindset and instead, adopt a “save now, get rich later” mindset.

#7: You’re a one-trick investor.

You might be lucky enough to become rich by betting all your money on one type of investment. Just like you might be lucky enough to win the lottery. But that’s not a strategy for getting rich (at least, not one I’d ever recommend).

One of the worst financial mistakes you can make is putting all your money eggs in one basket. Doing so puts you at too much risk, whether it is being too conservative or too aggressive. Sure, the stock market is on a run and real estate is on an upswing again, but are you prepared for when the tides turn? Because they will. And if you are invested in all fixed-income securities like CDs, bonds and annuities and think you’re safe, inflation should make you think again. Your investment portfolio needs to include a good mix of investments with varied levels of risk and return potential and liquidity (so you can get your money when you need it).

#8: You don’t automate.

Here’s the secret to saving: Automation. Saving is seamless when it’s automatic. Unfortunately, we are not born to be savers. We are impulsive and greedy by nature. Being responsible requires much more discipline. However, automation forces us to be responsible without too much effort. And all it requires is setting up regular transfers from a paycheck or bank account to a savings or investment account. Without it, we are much more likely to spend money we could be saving. Even if it is a seemingly small amount that you automate, those steady investments can make a big difference over time. Automate whatever you can whenever you can; just be careful to avoid overdrafting your account and try to increase your savings amount periodically.

#9: You have no sense of urgency.

You might think you don’t need to worry about getting out of debt or saving because someone, or something else will save you. Maybe it’s a pay raise, a new job, an inheritance, a rich spouse, or the lotteryyou’re counting on. Whatever “it” is, you use it as an excuse to put off taking steps on your own to become rich. The problem is that very little in life is certain. Who knows what will actually happen, or not happen, so why not focus on what you can control now? Save now and save yourself — just in case something, or someone, else won’t.

#10: You’re easily influenced.

Maybe you live with a chronic overspender or a typical day out with your girlfriends involves shopping. Or maybe it’s your inner “Real Housewife” that you sometimes can’t control. We all have negative influences in our lives that threaten our chances of becoming rich. The superficial, materialistic, sensational culture in which we live is probably the biggest one. The suffocating swirl of media that goes along with it makes it ten times worse. The trick is not giving in to temptation. How? Some of it is making conscious choices to avoid putting yourself in vulnerable positions. But most of it is having the willpower to keep the goal of becoming rich in the front of your mind, especially when you are tempted to sabotage yourself.

Read next: The 10 Richest People of All Time

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MONEY Savings

When Good Investments Are Bad for Your Retirement Savings

Q: I have an investment portfolio outside of my retirement plans. That portfolio kicks out dividend and interest income. If I roll all that passive income back into my portfolio, can I count that toward my retirement savings rate? — Scott King, Kansas City, Mo.

A: No. The interest income and dividends that your portfolio generates are part of your portfolio’s total return, says Drew Taylor, a managing director at investment advisory firm Halbert Hargrove in Long Beach, Calif. “Counting income from your portfolio as savings would be double counting.”

There are two parts to total return: capital appreciation and income. Capital appreciation is simply when your investments increase in value. For example, if a stock you invest in rises in price, then the capital you invested appreciates. The other half of the equation is income, which can come from interest paid by fixed-income investments such as bonds, or through stock dividends.

If your portfolio generates a lot income from dividends and bonds, that’s a good thing. Reinvesting it while you’re in saving mode rather than taking it as income to spend will boost your total return.

But dividends can get cut and interest rates can fluctuate, so counting those as part of your savings rate is risky. “The only reliable way to meet your savings goal is to save the money you earn,” says John C. Abusaid, president of Halbert Hargrove.

It’s understandable why you’d want to count income in your savings rate. The amount you need to save for retirement can be daunting. Financial advisers recommend saving 10% to 15% of your income annually starting in your 20s. The goal is to end up with about 10 times your final annual earnings by the time you quit working.

How much you need to put away now depends on how much you have already saved and the lifestyle you want when you are older. To get a more precise read on whether you are on track to your goals, use a retirement calculator like this one from T. Rowe Price.

It’s great that you are saving outside of your retirement plans. While 401(k)s and IRAs are the best way to save for retirement and provide a generous tax break, you are still limited in how much you can put away: $18,000 this year in a 401(k) and $5,500 for an IRA. If you’re over 50, you can put away another $6,000 in your 401(k) and $1,000 in an IRA.

That’s a lot of money. “But if you’re playing catch-up or want to live a more lavish lifestyle when you retire, you may have to do more than max out your 401(k) and IRAs,” Taylor says.

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