3 Secrets to Retiring Rich -- Without Making Yourself Miserable Along the Way

As of 2022, the typical American aged 65 to 74 had $200,000 in retirement savings, according to the Federal Reserve. Recent stock market gains have likely boosted the median retirement plan balance since.

The point, however, is that older Americans aren't exactly rolling in money. Many, in fact, rely heavily on Social Security just to make ends meet.

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Your goals for retirement may be very different, though. You may be hoping to close out your career with a heaping pile of money in your individual retirement account (IRA) or 401(k) plan.

Now, you're probably aware that the more frugal you are, the easier it might be to retire with lots of money. But living too frugally could mean giving up the things you love -- and not enjoying life the way you deserve to.

In fact, a lot of people push themselves to save every penny for retirement and end up pretty unhappy on the road to getting there. Rather than go to that extreme, here are three steps you can take to retire rich.

1. Start early

The more time you give the money in your IRA or 401(k) to grow, the more wealth you stand to accumulate by the time retirement rolls around. That's why it's important to begin contributing to a retirement account early on -- even if it's just a small amount.

You can, and should, boost your savings rate as your income allows. But starting early could be your ticket to ending up with a lot of money.

Let's say you save $400 in a retirement plan over 30 years, all the while having your portfolio generate a yearly 8% return, which is a bit below the stock market's average. That could leave you with around $544,000, which isn't shabby.

But watch what happens when you extend your savings window by 10 years. Saving $400 a month over 40 years results in a nest egg worth about $1.243 million, assuming that same 8% return.

2. Invest your money wisely

The 8% return used in the example above is a reasonable one for a stock-heavy portfolio. But if you invest your IRA or 401(k) too conservatively, you may end up with lower returns -- and a lot less retirement income.

If you want to retire with a sizable nest egg, you'll need to be prepared to take on some risk. That doesn't mean you can't protect your portfolio to some degree, though.

One important thing to always do is diversify. You can achieve that by loading up on stocks across a range of market segments or by owning shares of a total stock market or S&P 500 ETF.

Another important thing to do is stay the course during stock market downturns. It can be scary to see your portfolio balance take a dive when the market tumbles. But if you avoid reacting to volatility, you're more likely to ride out market declines unscathed.

3. Choose your splurges carefully

Cutting back on all the fun things life has to offer is a great way to boost your retirement savings. But it's not a particularly enjoyable way to live.

Rather than do that, choose your splurges mindfully. If you're someone who values experiences, spend money on travel. But in that case, drive a boring car that costs less than a vehicle that's loaded with extra features.

Similarly, you may be someone who loves to dine out for the social benefit and change of scenery. You can go out to dinner every Friday night if it makes you happy. But in that case, you may want to brew your own coffee instead of spending $5 or $6 on a latte every morning.

Retiring rich doesn't have to mean denying yourself every single thing that makes you happy. Choose your splurges with care and let your money do a lot of the heavy lifting by investing it at a young age and choosing the right assets for your portfolio. With any luck, you'll end up with a nest egg that allows for a retirement that's comfortable and worry-free.

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