Are These 3 Habits Stopping You From Retiring a Millionaire?

If your goal is to retire with $1 million or more to your name, you're in good company. A recent survey by Northwestern Mutual found that Americans think it will take $1.27 million on average to be able to retire comfortably.

That might seem like a massive amount of money -- a sum you're not capable of ever amassing. But you may be surprised at how feasible it is to become a millionaire provided you manage to break free from these costly habits.

1. Spending money on interest

Any time you carry a balance forward on a credit card, you lose money to interest. And the same holds true when you let a loan drag out.

In some cases, paying interest is unavoidable. Most people can't buy a home outright and therefore need a mortgage to finance one.

But if you want to retire a millionaire, you should make a point to steer clear of debt as much as possible, and also, to do your best to pay off existing debt quickly. If you're giving your credit card company $500 a year in interest, for example, that's $500 you're not investing.

2. Giving up tax breaks

When it comes to saving for retirement, you have choices. You could stick to a taxable brokerage account so your money isn't restricted. But a better bet may be to save for retirement in an IRA or 401(k). These accounts give you a tax break on your money in one shape or form.

With a traditional IRA or 401(k), your contributions are tax-free. With a Roth IRA or 401(k), investment gains in your plan are tax-free, and so are withdrawals. Sticking to a regular brokerage account could mean losing lots of money to taxes needlessly through the years, making it harder to meet your goal.

3. Steering clear of stocks

Some people are afraid to invest their money in stocks because they know the market is very volatile. But if you don't invest in stocks, you run another risk -- growing your money at too slow a pace to reach millionaire status in your lifetime.

One thing you should remember about the stock market is that it's proven its ability to reward investors who have stuck with it for a long time. In fact, over the past 50 years, the stock market has delivered an average return of 10% before inflation, as measured by the performance of the S&P 500.

But to be clear, there were plenty of down years during that time. In fact, 2022 was hardly a good year for stocks, but many people have already seen their portfolios recover since taking a hit last year.

Now, let's say you manage to invest $250 a month in an IRA over a 40-year period. If your portfolio generates an average annual 10% return, you'll be looking at a total balance of about $1.33 million. That's totally in line with the aforementioned $1.27 target (though to be clear, it's actually best not to fixate on a single number like that, but rather, figure out how much money you'll need to pull off your dream retirement).

Retiring a millionaire is something that can be done even if you don't earn a six-figure income. But if it's a goal of yours, do your best to steer clear of debt, choose the right home for your long-term savings, and push yourself to invest in stocks, even if that's outside your comfort zone.