One out of every six retired Americans is a millionaire in US dollars.

In fact, in Australian dollars the average retirement balance for Americans is about $A1 million.

Average wealth for American retirees is $US752,000 — which converts to $A999,000.

That amount has more than doubled since 1989, according to a new report by US online investing company United Income.

The rate of retired millionaire Americans has more than doubled in the last 30 years. (Though the median retirement amount is much lower at $US200,000, suggesting the US has a significant wealth imbalance problem.)

Fewer people are retiring in poverty in the US and relying on minimum wage than ever before. The report says “the percentage of retirees living on the minimum wage or less dropped in half over the past 30 years”.

Still, the median wealth for US retirees is just over $US200,000 – and people are living longer and costs are increasing.

Australia’s peak superannuation industry body ASFA recommends a retirement balance of $545,000 for singles and $640,000 for couples.

In Australia, average suprannuation balances at retirement are $292,500 for men, $138,150 for women and $355,000 for households.

Retiring as a millionaire may seem like a difficult goal to accomplish. However, there are tricks that can help you get over the line so you can enjoy seven-digit wealth when you stop working.

Here are some of the ways American millionaire retirees achieve that seven-digit figure according to Matt Fellowes, the CEO of United Income:

1. Save

One of the most common financial mistakes is not saving any money or not saving enough. Fellowes said that increasing your savings rate is “the single biggest thing you can do to increase the size of your nest egg in retirement”.

Many factors can determine how much you should be saving, but it should be a significant amount if you expect to retire comfortably.

Fellowes said that the “optimal savings rates vary depending on your income, expected returns, retirement date, and desired lifestyle in retirement, but most people need to save 10-20 per cent of their income for a comfortable retirement.”

2. Invest in the stock market

Investing obviously has a huge impact on future earnings and can be a major source of income in retirement. Finding the right investment mix is crucial to balance the right amount of risk with promise of high returns.

Fellowes recommends an investment portfolio weighted more in stocks than bonds. He notes that stocks have more risk, but by looking at the entire asset allocation and not just a single account, investors can use stocks to earn higher returns for retirement.

3. Don’t try to beat the market

“Buy an index fund,” Fellowes said.

Investing can be a major part of a robust retirement plan, but actively trying to outperform the market can spell trouble. Fellowes mentioned that from 2012-2017, 84 per cent of professional money managers didn’t outperform their benchmark indices.

For him, index funds are a good way to grow your finances with the market without the headache of actively trading.

4. Build an emergency savings fund

One of the most common pieces of financial advice – for people of any age or goal – is to create an emergency fund.

To retire as a millionaire, people should “build an emergency savings fund with enough money to sustain a car breakdown, illness, or three months of no income”, Fellowes says.

5. Automate your savings

“Make inertia work in your favour by setting up automatic transfers to your retirement accounts that coincide with your paychecks,” Fellowes said.

This simple one-time task will turn into easy savings come every paycheck. Fellowes said that “you’re virtually guaranteed to save more this way, as the task of deciding when and how much to save each month has been shown to be a major deterrent to saving at all.”

Other tips included taking advantage of tax-advantaged accounts, maximising employer superannuation contribution matching when possible and making a budget.

Budgeting was “a very effective way to identify and reduce unnecessary spending, and deciding on a savings rate is much easier with the 10,000-foot view of a yearly budget than the street-level view of a pay cheque”, Fellowes said.

Budgeting will help you retire as a millionaire because “you’ll find money you didn’t know you had, and your future retirement account balance will thank you”.


This article first appeared on Business Insider Australia, Australia’s most popular business news website. Read the original article. Follow Business Insider on Facebook or Twitter.