48 m o n e y . c o m S E P T E M B E R 2 0 1 6

one millionh o w t o r e a c h

plus: tap your inner millionaire » p. 6O

one millionYour goal isn’t to live like the 1%. It’s to achieve 100% of the lifethat matters to you. Steal a page from today’s millionaires and

learn how to plot your best route to financial freedom.

By CAROLYN BIGDA, DANIEL BORTZ, ELAINE POFELDT, and PENELOPE WANGPhotographs by THE VOORHES

G E T YO U R H E A DI N T H E G AM E

Building wealth isn’t justabout strategy; it’s abouthaving the right mind-set.Sarah Fallaw, founder ofData Points, a behavioral fi-nance research firm thatanalyzes wealth potential,says the four key traits tomaking money are frugality,confidence, responsibility,and social indifference—thatis, the strength to avoid fads.

“These behaviors arelinked to greater wealth po-tential for people of all agesand incomes,” says Fallaw,advancing the work of herfather, Thomas Stanley, co-author of The Millionaire NextDoor. Among 30-year-oldsworth at least $100,000, DataPoints found that people with“high wealth potential” basedon those traits had a mediannet worth of $300,000, vs.$200,000 for those with “me-dium potential.”

Here’s how to apply thesequalities to your portfolio:50 m o n e y . c o m S E P T E M B E R 2 0 1 6

»BE A CHEAPSKATE. Say youhave $150,000 and are paying1% in investment fees, whichis typical for actively man-aged funds. If you cut costs byjust three-quarters of a per-centage point, you’ll save$1,125 in fees a year.

Great, right? But this un-derstates the real impact.“It’s not just 1% of assets, butof your potential return,”which is then compoundedover time, says investing ex-pert Charles Ellis, author ofThe Index Revolution. “Whenyou look at it that way, a 1%fee is enormous.” If you earn7% in the market but pay a1% fee, you’ll lose nearly 15%of your return. Given thosecosts, over 30 years $150,000will grow to $862,000. Cutthose expenses to 0.25%, andyou’ll have $1.1 million.

Lowering costs by three-quarters of a percentagepoint isn’t that hard withindex funds and ETFs. Infact, the median annual ex-pense ratio for passivelymanaged portfolios in theMONEY 50, our recom-

HEN YOU THINKof millionaires,w o r d s l i k e“privilege” and“opulence” of-ten come tom i n d . W h atabout “com-fort”? That’s a

term more commonly associated with themiddle class. But while most Americanfamilies enjoy creature comforts, theyyearn for a more enduring variant—thepeace of mind that comes from knowingyou have the financial freedom to pursuewhatever life you want.

That sense of comfort is more attainablethan you might think. The majority of theseven-figure club’s 10 million members comefrom middle-class households. And one infive high-net-worth Americans grew up poor,according to a survey by U.S. Trust. Con-trary to popular belief, inheritance played asmall role in their success; more than 80%of their wealth was earned through theirjobs, small businesses, and investments.

On the following pages, you’ll learn justhow those millionaires maximized their in-comes and portfolios to achieve their finan-cial goals (hint: most of them chose to playthe smart odds, not roll the dice). You’ll alsofind how you can put their strategies to work.

The truth is, becoming a millionaire isn’tabout living like the 1%. It’s about doing allthe little things at work or in your portfolioor in your budget (see the next story on page60) that can move the dial 1% here and 1%there to achieve your financial goals.

W investsmarter

Millionaires say small moves make thebiggest differences in your portfolio.

M O N E Y » C O V E R S T O R Y

HA

IRA

ND

MA

KE

UP

BY

BIL

LY

ME

RC

ER

mended list of mutual and ex-change-traded funds (see page86), is just 0.20%.

»IGNORE THE CROWDS. There arealways big trends on Wall Street,like the recent rise of “liquid al-ternative” funds, which bringhedge-fund-like tactics to themasses. Yet the path to $1 millioninvolves being disciplinedenough to go against the tide.

Just ask millionaires them-selves. Contrary to popular be-lief, the wealthy don’t rely ontrendy forms of investing—infact, only 15% own hedge funds.By contrast, nearly 90% say theirbiggest success is due to buyingand holding basic stocks andbonds, a U.S. Trust survey found.

You don’t need to resort toinvestment exotica, either, to findways to boost returns while re-ducing risk in your portfolio (seenext page). Plus, history showsthat faddish investments typi-cally don’t pay off in the longterm—at least not as much ascore holdings (see chart above).

Consider this: Over the past15 years—a period marked byextreme highs and extremelows—a plain-vanilla basket ofblue-chip U.S. stocks gained5.8% annually. By comparison,hedge-fund-like “long-short”funds, which are supposed tothrive in such times, gained3.2 percentage points less. A$500,000 portfolio earning 5.8%a year would grow to $2 millionin 25 years. The same portfolioearning three points lesswouldn’t even get to $1 million.

»STICK TO THE PLAN. Confidentinvestors “make decisions with-out second-guessing or quickly

changing their minds,” says Fal-law. This is important becausethat self-assurance can preventyou from being whipsawed.

Successful investors alsohave the composure to hang onto—and even buy—“out-of-favorasset classes with poor priorperformance,” says financial ad-viser William Bernstein, authorof The Four Pillars of Investing.That is also critical, as Bern-stein notes that asset classes“with below-average past re-turns tend to have higher-than-average future returns.”

Case in point: foreign stocks.After outpacing U.S. stocks from2000 to 2009, European andemerging-market shares havestruggled, mired by everythingfrom China’s slowdown to Brexitto the Zika virus (see “The Casefor Going Global” on page 41).

Over the next 10 years,though, foreign equities are ex-pected to outperform U.S.shares by an average of five per-centage points a year or moreafter taxes and inflation, ac-cording to Research Affiliates.

That’s largely owing to beingundervalued for so long.

»OWN UP TO YOUR MISTAKES. Thereare going to be times when youmake the wrong decision. Thekey is accepting responsibilityand moving on appropriately.“Investors too often have dif-ficulty acknowledging theirmistakes,” says Meir Statman, afinance professor at Santa ClaraUniversity. In stock picking, thiscan lead to hanging on to lag-gards out of pride rather thancutting losses.

Emotions can also creep inwhen you fall short of a goal. Sayyou’re 45 with $200,000 savedand you’re socking away $10,000a year. Maybe you were hopingto hit $1 million by 65 by earning7% a year. But what if you windup gaining just 5.5% annually?

You could try to make up forthis shortfall by ramping up risk.But a more rational response isto boost your annual savings byabout $2,500, which will get youback on track for seven figureswith far more certainty.

Just SayNo … to

Fees“We learned

how to handleour own

investmentsand money.That means

no-loadfunds, no

high brokerfees, and nomanagement

fees.”MARY VICK

Waukesha, Wis.

R E A D E RT I P

h o w t o r e a c h a m i l l i o n » pa r t o n e

Millionaires attribute their success to basicinvestments held patiently over time.

SOURCE OF BIGGEST GAINS

sources: U.S. Trust, Morningstar

Keep Things Simple Millionaires are often associated with exotic investments, but that’s actually not the case.

89%Stocks

and bonds

11%Alternative

assets

86%Buy-

and-holdinvesting

14%Markettiming

For good reason: Hedge-fund-like strategieshave historically lagged stocks and bonds.

GROWTH OF $10,000 OVER 15 YEARS

“Marketneutral” funds

U.S. stocks

Bonds

“Long-short”funds

$23,100

$21,000

$14,500

$12,200

52 m o n e y . c o m S E P T E M B E R 2 0 1 6

L O S E L E S S

Risk is the most important fac-tor in investing, according to mil-lionaires surveyed by the Spec-trem Group. Well, here’s one wayto think about it: “If you lose lesson the way down, you have lessto make up when the market re-covers,” says Sam Stovall, U.S.equity strategist at S&P GlobalMarket Intelligence.

»SEEK STABILITY WISELY. Stovallcalculated returns for a portfoliowith 60% in global stocks thattend to gyrate less than thebroad market, and 40% in U.S.bonds. Had you invested $10,000nearly 20 years ago, it wouldhave grown to $39,670 by the endof 2015. The same 60%/40% port-folio without a low-volatility focuswould have grown to $32,660.This is in line with other researchshowing that “low-vol” strategieshave beaten the market by about1.5% annually in the long run.

With so much anxiety aboutthe market lately, though, low-volshares have been bid up, tradingat an average price/earnings ra-tio of nearly 22 today, vs. 18 forthe S&P 500. The solution: Focuson value funds with a long recordof stability but whose holdingsare less frothy. American CenturyEquity Income (TWEIX) isn’t as rockyas many low-vol funds and haslost 40% less than the market indown months. That has helpedthe fund beat 98% of its peers forthe past 15 years.

»DON’T FORGET DIVIDEND GROW-ERS. Not only do shares of com-panies that boost their payoutsbeat non-dividend-paying stocksin the long run, but they outper-

form nonpayers by 0.8 percent-age point in months when volatil-ity spikes, according to a recentstudy by Nuveen. Among thebest is T. Rowe Price DividendGrowth (PRDGX),which has beatenthe S&P 500 by nearly one pointa year for the past 15 years.

D I V E R S I F Y M O R E

Historically a 60% U.S. stock/40%U.S. bond strategy was diversi-fied enough. But with equities atrecord highs and investors flock-ing to Treasury bonds, thesebasic assets are frothy. So muchso that over the next decade, a60% large U.S. stock/40% U.S.bond portfolio is likely to returnjust 4.3% annually—1.3% afterinflation—says Chris Brightman,chief investment officer of Re-search Affiliates. This requiresmore diversification, not less.

»EXPAND YOUR MIX OF STOCKSAND BONDS. Don’t add exotic al-ternative assets to the mix, butrather the type of assets you’llfind in a target-date retirementfund. In the stock portion ofyour portfolio, that meansallocating 5% to 10% in foreignshares, emerging-marketsstocks, real estate investmenttrusts, and commodities to gowith U.S. blue chips. Add similardoses in global bonds, emerging-market debt, inflation-protectedTreasuries, high-yield debt, andbank loan funds to round outyour bonds.

By doing this, your moreelaborate 60% stock/40% bondportfolio is likely to return about6% a year—or 3% after infla-tion—for the next decade. Andthat’s with no increase in volatil-

ity. With a $500,000 portfolio,that would bring you nearly$134,000 closer to your goals inthe next 10 years.

A C T I V E LY P I C K YO U RPA S S I V E F U N D S

While the average actively man-aged stock fund charges 1.3% inannual fees, the typical equityindex fund’s expense ratio is

Max OutEarly

“As a boost,I always tryto max outmy annual

401(k) con-tribution by

June 30. Thisgives mymoney anextra six

months tocompound.”CHRIS COLLINS

Don’tMarket

Time“In 1978 the

markettanked, andI moved my403(b) ac-count into a

money mar-ket. Decidingwhen to get

back in isharder thangetting out,and I waited

too long. Inever did

that again.”HAMPDENSMITH III

Lexington, Va.

R E A D E RT I P S

S E P T E M B E R 2 0 1 6 m o n e y . c o m 53

Play theLongGame

“There are anumber of

ways to buildwealth—

rentalhouses, for

instance, area good way

to build yourportfolio. Butthe main at-tributes arepatience and

diversifi-cation.”MICHAEL GILLAM

Franklin, Tenn.

ForgetStock

Picking“Don’t try

to buyindividual

securities.Don’t try to

buy thelatest hot

investment.Invest in

low-cost,broad-basedindex mutual

funds orETFs.”LOUIS I.

Augusta, Ga.

R E A D E RT I P S

0.7%, according to Morningstar.If you had $250,000 to invest for20 years and earned 6% in themarket before fees, cutting costsby indexing would amount tomore than $75,000 in savings.

» BARGAIN HUNT. Yet even 0.7%is high. While index funds arecheap vs. actively managedportfolios, you must still com-pare their fees. This is espe-cially true when it comes to

funds that mirror broad bench-marks such as the S&P 500.“Those funds are substantiallysimilar,” says Ben Johnson, di-rector of global ETF researchat Morningstar, “so pick the onewith the lowest fees.” SchwabS&P 500 Index (SWPPX), which isin the MONEY 50, charges just0.09% annually. On that same$250,000, you could save an-other $86,000 over 20 years byswitching.

B E HA N D S-O N W I T HR E A L E STAT E

A PNC survey found that onlyone in five millionaires says realestate accounts for most of his orher wealth. Yet tangible assetssuch as investment properties doplay a role in the strategies ofnearly half of the wealthy, theU.S. Trust survey found.

One appeal: Physical real es-tate is financed with debt, whichcan amplify gains you’ll enjoy onthe underlying home value. Butowning investment properties “isnot passive, like buying a mutualfund,” says Ben Gurwitz, a finan-cial planner in San Antonio. “Itneeds a lot of TLC to be success-ful” and to squeeze out savings.

» MANAGE IT YOURSELF. Propertymanagers save you the worry ofdealing with a leaky faucet, butthey also charge about 5% to 10%of the monthly rent, plus a one-time fee when finding new ten-ants. By doing the work yourselfon a rental that fetches $2,000 amonth, you’ll net as much as$2,400 a year in savings, which ifinvested at 5% gains could growto nearly $120,000 in 25 years.

»DOUBLE DOWN WITH A DUPLEX.Save on costs with a duplex or ahome with a rental unit, says fi-nancial planner Jason Dahl.Since the rental is part of yourprimary home, you can qualifyfor a mortgage with a lowerrate—on average 3.6% for a 30-year fixed-rate loan today, vs. asmuch as a percentage point morefor an investment property. Plus,you won’t have to come up with asecond down payment, and you’llminimize maintenance costs.

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54 m o n e y . c o m S E P T E M B E R 2 0 1 6

N E G OT I AT E FO RH I G H E R PAY

Nearly two-thirds of millionairessay their wealth is largely attrib-utable to their jobs, a PNC sur-vey found. Maybe that’s becausemost Americans who earn sixfigures (like millionaires) haggleover their salaries, according toa study by PayScale.com. By con-trast, 59% of all U.S. workerssettle for the first offer.

» BEAT HIRING MANAGERS TO THEP U N C H . There’s a school ofthought that says job seekersshould wait for interviewers toreveal a salary range, to avoidasking for too little or too much.By waiting, though, you’re ensur-ing the negotiations take placewithin the company’s range. In-stead, throw out a figure first,says Robin Pinkley, managementprofessor at Southern MethodistUniversity and co-author of GetPaid What You’re Worth. “Thefirst number becomes an an-chor” around which the hagglingbegins, she says. Start with com-pensation data from Glass-door.com and PayScale. And seeif anyone in your network knowspeople at the company to get abetter sense of pay there. “Youwant to find the highest numberyou can defend,” says Pinkley.

work hardMany millionaires attribute their success to their

careers and companies. Do what they do.

» A S K F O R A S I G N - O N B O N U S .More than two-thirds of compa-nies are having trouble recruit-ing full-time talent, according tothe Society for Human ResourceManagement. No wonder 76% ofemployers now offer sign-on bo-nuses, according to Worldat-Work. And “they’re not just forCEOs or executives,” says careercoach Marcelle Yeager.

For supervisors and middlemanagers, most bonuses rangefrom $5,000 to $25,000. Whilethat’s a one-off, it can help youcatch up if you’re behind on sav-ings. And if the company can’tmeet all of your salary demands,inquire about a bonus as analternative, says Los Angeles–based executive coach Libby Gill.

»FIGHT FOR ONE BIG SALARY AD-JUSTMENT. Even if you’re a topperformer, you may not scoreroutine pay hikes. That’s okay.Even one big bump can make adifference. For instance, a$10,000 raise when you’re 45can amount to $232,000 inadded lifetime earnings (seechart at right).

If you feel you’re significantlyunderpaid compared with peers,start by asking for a “salary ad-justment” rather than a raise.It may be easier for your super-visor to justify a bigger-than-average adjustment than a merit

raise if your pay is out of whack.Also, take advantage of annualperformance reviews. Quantifyyour contributions in writing.“Talk about how you performedon a project in terms of budget,hitting milestones, and how itimpacted the bottom line,” saysStefanie Wichansky, CEO at Pro-fessional Resource Partners.

» PLAY FREE AGENT. The best wayto boost pay is to change firms.External hires get paid 18% to20% more on average than folkspromoted internally, accordingto research by Wharton manage-ment professor Matthew Bidwell.

Still, workers change jobsonly once every 4.6 years. Digdeeper than job boards andLinkedIn. “Online networkingisn’t a substitute for in-personnetworking,” says career coachNancy Ancowitz. Meet recruit-ers face to face at industryevents so that when job openingscome up, your name will too.

Act Likean

Owner“I buy good-

qualitycompanies

and hold foryears. I buy

dividendstocks

because ifI own a

businessthroughstock,

I expect tobe paid.”

ARNOLDGUTTMANChicago

R E A D E RT I P

h o w t o r e a c h a m i l l i o n » pa r t o n e

HOW WILL YOU GET TO $1 MILLION? Tell us at letters@moneymail.com.

CUMULATIVE GAIN IN LIFETIME INCOME

note: Assumes a 1% annual inflation adjustment. source: MONEY research

The Power of OneA single $10,000 raise midway into your careercan make a huge difference in lifetime earnings.

$100,000

$200,000

Age 45 6555

56 m o n e y . c o m S E P T E M B E R 2 0 1 6

MORE ONLINE

For more insightsinto the mind-set

of millionaires,visit money.com/

million.Quiz: Are you a

millionaire in themaking?

Video: How doyou join the

seven-figureclub?

h o w t o r e a c h o n e m i l l i o n »

H O N E T H E S K I L L S T HATR E A L LY M AT T E R

»BE A LEADER. Nearly one-thirdof HR execs are struggling tofill senior leadership positions,a WorkplaceTrends.com surveyfound. Average pay hikes forexecs who were promotedjumped to 9.1% last year, vs. 2.8%for workers overall.

Not a manager yet? Show thebosses you can lead by taking onsmaller tasks where peers reportto you. Showcase your team-building skills, not dictatorialprowess. “Great leaders knowhow to build relationships,” saysexecutive coach Julie Cohen.And make sure all your refer-ences can speak to specific ex-amples of your leadership.

A big part of motivating oth-ers involves verbal and writtencommunication, two of the mostsought-after skills by employ-ers, according to job marketresearch firm Burning GlassTechnologies. Practice speakingand running meetings outsidethe office, says Atlanta careercoach Hallie Crawford, by join-ing Toastmasters, which offerspublic speaking workshops(cost: about $72 a year).

»HEAD UP A BIG PROJECT. Theskills involved in running a mul-tifaceted project are transfer-able to virtually any industry—and can lead to 4.4% higher pay,a MONEY/PayScale study found.If there are no project manage-ment opportunities for your posi-tion, volunteer for the company’scommunity outreach program orserve on the board of an industryassociation and run an initiativethere, suggests Crawford.

P UT T H E FAM I LYTO W O R K

»RECRUIT YOUR SPOUSE. Four outof 10 wealthy entrepreneurs liketo hire their kin, according to aU.S. Trust survey. At the sametime, six in 10 are worried abouttaxes. Address both issues by hir-ing a spouse and putting a largechunk of his or her salary into a401(k) plan. That will reduce yourjoint taxable income and boostretirement savings, says MartyMcCutchen, a certified public ac-countant. The maximum contri-bution for 2016 is $18,000, or$24,000 for those 50 and older. Ifyou have a solo 401(k), you canadd your spouse to it.

»HIRE THE KIDS. Saving for col-lege and finding that there’s littleleft for your own retirement?Hire your children and set up adirect transfer of their pay to atax-sheltered 529 college plan orRoth IRA, says certified publicaccountant Sandy Botkin.

The first $6,300 they earnwill be tax-free for them becausethey will get an equivalent stan-dard deduction on their tax re-turn. They will be taxed at 10%on the next $9,225. Plus, theirwages will be a tax-deductiblebusiness expense for you, as arewages you pay others. Just makesure you assign the kids workthat’s reasonable for their age.And don’t pay them excessively,in case of an IRS audit.

58 m o n e y . c o m S E P T E M B E R 2 0 1 6

sweatthe keydetails

Keeping more of what you earn—and finding waysto motivate yourself to act—will help you

move the dial to seven figures.

F I G H T TA X E S O NA L L FR O N T S

Two out of three millionairesworry about the tax implicationsof their investments, accordingto Spectrem’s survey. With goodreason: Research by Vanguardsays taxes can cost as much astwo percentage points in returnsa year. The price tag: $70,000 ifyou were to invest $10,000 annu-ally for 20 years and earned 4%on your money instead of 6%.

»FIND THE RIGHT HOME FOR YOURFUNDS. Use your 401(k)s andIRAs for investments that throwoff short-term capital gains orinterest income, which are taxedas ordinary income. This meanstaxable bond funds, high-yieldingdividend stock funds, and ac-tively managed funds that tradefrequently. Then use taxable ac-counts for buy-and-hold equity

funds that trade infrequently,such as index funds, and munibond funds. Being smart about“asset location” can save up to0.75 points a year in returns, saysVanguard senior investmentstrategist Joel Dickson.

» MAKE UNCLE SAM SHARE YOURPAIN. Sell stocks that are downand use the losses to offset gainselsewhere in your account. Overthe past decade, doing so once ayear at year-end has added 0.6points in annual return to yourtaxable account, according toWealthfront, an automated in-vestment service. (This assumesa combined federal and state taxrate of 42.7% for short-term gainsand 24.7% for long-term gains.)

»EXPAND YOUR ALPHABET. Evenamong millionaires, more than athird are worried about risinghealth care costs, according toPNC’s survey. That’s understand-

able. A typical 65-year-old couplewill spend $245,000 throughoutretirement on health care, Fidel-ity says. If you choose a high-deductible health plan, you cancontribute up to $3,350 in pre-tax money as an individual or upto $6,750 for a family to a tax-sheltered health savings account,or HSA ($7,750 for those 55 andolder). “I call them the healthcare IRA,” says CPA McCutchen.(See “Five Things to Know AboutHSAs Now,” page 27.)

As with 401(k)s and IRAs,money that goes into an HSA istax-deductible and is allowed togrow tax-free. If you saved$6,750 a year for 20 years in anHSA, earning 6% annually, youwould have $248,000—enoughto cover average medical costs.And withdrawals for qualifiedhealth care needs are tax-free.

»STRUCTURE YOUR BUSINESS THERIGHT WAY. Eight out of 10 mil-lionaires who are entrepreneursbuilt their businesses from theground up, according to U.S.Trust. Only 2% inherited them.

Early on, a sole proprietorshipis often the best way to limit tax-able income. If you lose money atfirst, you can use losses to offsetother income, including capitalgains, which is harder to do in acorporation, says CPA Botkin.

But if you seek liability pro-tection and start generatingclose to a six-figure income,electing to pay taxes as an S cor-poration—rather than a limitedliability company, or LLC—couldhelp you avoid getting killed byself-employment taxes, coveringSocial Security and Medicare.

While workers pay only half oftheir Social Security and Medi-care taxes—their employers

Invest inYourself

“We putretirementfirst, with

college sav-ings a lower

priority—though we

have alwaystried to payone-third oftotal costs.”PAUL AND LORIE

HOEKSTRAMaple Grove,

Minn.

R E A D E RT I P

cover the rest—the self-employedare hit with the full 15.3% rate.

But an S corp lets you controlhow you’re paid. If your firmearns $150,000, you may opt topay yourself a salary of $75,000and take the rest as a so-calleddistribution of earnings. You’dpay only the self-employmenttax on your $75,000 salary. AnS corp also avoids the 3.8%Medicare surtax imposed byObamacare on high earners.

This move would save youmore than $7,000 a year, esti-mates CPA Jeff Cohen, partnerat Grassi & Co.: “That’s a layup.”

U S E R I S K A S AM OT I VAT I O N A L TO O L

It’s impossible to predict thefuture, except for this: Whenyou’re five years or so from re-tiring, you’ll have to cut backon risk by reducing your stocks,perhaps to a 50% stake or less.That’s because if a bear marketstrikes, you won’t have time to

recoup your losses before hav-ing to tap your nest egg.

To be able to afford such aconservative stance, though, youhave to take risks at other stagesof life. “If you embrace risk at theright time, you can actually re-duce it over the long term,” saysSpencer Jakab, author of HeadsI Win, Tails I Win.

A perfect example is in thechart below. If you had 85% ofyour money in equities when youwere young—and gradually re-duced that over time—you couldafford to keep less than half yourmoney in equities at retirement.And you’d still be better off thaninvestors who kept 60% of theirportfolios in stocks throughouttheir lives. The takeaway: If youwant the flexibility to play it safelater, you must take a fair amountof risk while you’re young.

L O O K TO T H E F UTU R E

Take these tiny steps to trickyourself into saving and invest-ing better. A 2014 study by re-searchers at Stanford and theUniversity of Minnesota foundthat people save more when theysee projections of their futureincome. That’s something more401(k) statements provide. Ifyours doesn’t, use the retirementincome calculator at Money.com.

Also, people who see digitallyaltered images of themselves asseniors are willing to save morefor retirement than those whodon’t. One study found hypo-thetical paycheck contributionsrose from 5.2% to 6.75%. In an-other, people exposed to theirfuture selves were willing toput almost twice as much intolong-term savings. So go to theAgingBooth app or click on face-retirement.merrilledge.com tosee the future—and fix it.

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NOTES: Balances are median figures based on a wide array of Monte Carlo simulations. Assumes annual pay increase of 2.5%. Stocks based onS&P 500 and predecessor index. Bonds based on total returns for U.S. Treasuries. SOURCE: Spencer Jakab, Heads I Win, Tails I Win

The Risk of Not Taking RisksIf you aren’t aggressive with stocks early on, you may not be able to play it as safe later.

Keep most of your money in stocks in your 20sand trim your equity exposure one point a year.

Maintain a moderate mix with 60% instocks throughout your life.

$1.7MILLION $1.3MILLION

85% 15%

46%54%

60%40%

60%40%

Stocks Bonds

Medianbalance

at 64

Assetallocation

at 24

Assetallocation

at 64

SCENARIO NO. 1 SCENARIO NO. 2