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Have you ever seen an eagle’s nest? It’s an amazing piece of architecture. How these nests are made is just as fascinating. An eagle will choose a location in the upper portion of a mature tree where large, thick branches meet the trunk. Then, the bird will gather sticks and twigs for the outer structure. Sometimes, it will even grab larger branches and carry them in its talons—often for over a mile. When the outer framework is complete, an eagle will then line the inner portion of the nest with softer materials so the newborn babies are snug and safe.

Building nest egg for your future is a lot how an eagle builds a nest. It’s a step-by-step process that takes planning, hard work and diligence. But like an eagle’s nest that can grow in size from year to year, you can create your own hefty retirement account over time.

Step 1: Build a Budget

A budget is like finding a tall tree with thick branches—it’s the foundation of your nest egg. Without a budget, your money will fly away quicker than a feather on a windy day. If you’re in debt, you need to create a budget that will get you out of the red as soon as possible. Once you’re debt-free except the house, your budget needs to focus on building wealth. And when you stop working, you’ll still need a budget, only this budget will help you maintain and protect your wealth over the long-term. There will never be a time when you don’t need a budget. Remember, it’s the foundation of your financial stability.

Step 2: Grow Your Nest Egg with Automatic Savings

Once you’re out of debt, you need to put 15 percent of your income toward building wealth. If your company offers a Roth 401(k), just bank your 15% in that fund. You’re done. If it’s a traditional 401(k), invest up to the match your company offers. Then, max out the Roth IRA option. If you still haven’t put away 15 percent of your income toward your next egg, go back to the 401(k) to finish off. One thing to remember is the catch-up contribution. If you’re 50 or older, you can put extra money in your 401(k) ($6,000 extra) and your IRA ($1,000 extra).

Whenever you start investing, make sure you meet with a financial advisor, even if your company offers a retirement plan. You need to know exactly what you’re investing in. These guys are pros at what they do, and you’ll usually earn more money by working with one, so they earn their keep.

Step 3: Pay Off the House Early

Once you’ve started investing your 15%, you need to get serious about paying off your mortgage early. I know, that means you’ll have to make sacrifices. But nothing good ever happens without making those hard choices. Think about it this way: Can you imagine how much you could be earning for your future if that house payment were going toward investing instead? That’s a game-changer, for sure!

Now, here’s where I need to lay down some truth: If you’re in your 50’s or 60’s and don’t have enough saved for retirement, you may need to downsize. Sell the house and pay off the mortgage. Then pay cash for a smaller, less expensive place and use the rest of the money to reinforce that nest egg. You may have a lot of memories attached to that house, but those memories won’t pay the electric bill.

Step 4: Add to the Nest Egg Every Year

Most people increase their lifestyles to match the increases in their salary. A bigger salary means a bigger home or a better car or nicer wardrobe. Instead, put that pay increase toward your nest egg. Adding 2-3 percent extra to your retirement accounts every year can make a huge difference in your financial security in the long-term.

Let’s say you’re 35, make $40,000, and start putting away 15% of your income. After that first year, you’d have $6,600, assuming a 10% rate of return. If you got a 3 percent pay increase every year and increased your investing amount to match, you’d have over $100,000 in ten years. If you kept that up until age 65, you’d have well over $1 million. And if you saved until age 70 (or started saving at age 30), you’d pass the $2 million mark.  That extra three percent a year matters.

An interesting thing about eagles is that they often return to the same nest year after year. And each year, the birds add twigs to their nest to reinforce and enlarge the structure. In fact, the eagles’ nests can weigh upwards of a ton.

You get the parallel, don’t you? By building and adding to your nest egg little by little every year, you’ll retire with a one-ton retirement fund. And with your financial future on the line, the bigger the nest egg, the better!

If you need help setting up an investing portfolio, check out our SmartVestor Pros. These guys can help you build the nest egg of your dreams!

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