Recently came across this article about the study released by Fidelity on 401(k) Millionaires. Since we advise our clients on their 401(k) plans and how to maximize this benefit, wanted to share some thoughts…
This article discusses the debate as to whether $1 Million is an attainable goal in your 401(k), and how, with discipline, it’s a goal that can be reached. The Fidelity study uncovered 300,000 401(k) millionaires at their firm. That’s just one brokerage firm. If your budget allows, maximizing the annual pre-tax contribution and staying in a disciplined, risk appropriate portfolio is key! Even small changes can make a huge difference. For example:
In a recent meeting with a client, I uncovered 2 things: my client was not contributing the maximum amount his budget allowed, and was not capturing his company’s full match. A very small change to his paycheck will generate an additional $300,000 in his retirement nest egg. Very little sacrifice on his part will set him up for life. If such a small change can generate $300,000, there is no doubt $1 Million is a reachable goal.
We often lay out an action plan for our clients:
- Increase your contribution by 1% (every year if possible)
- Switch some of your contribution to a Roth 401(k)
- Understand your company match and vesting schedule (don’t lose out on free money)
- Look for low-cost investment options that are offered
- Rebalance your allocation once per year
With discipline and a well laid out plan, the typical tax-deferred savings vehicle can easily hit $1 Million – Mathematically speaking. Check out the article below from financialplanning.com…
Click here: Can you become a 401(k) Millionaire?
Contact us if you need a 401(k) review to get you on the right path!