Updated: Nov 3, 2022
4 Tips To Become A 401(k) MIllionaire
401(k) millionaires are on the rise, in this article we highlight steps you must take to become one.
October 21, 2022
Who remembers that show? It was always nerve-wracking when you watched the contestants having to “phone a friend”!!! The hope of becoming a millionaire was in the realm of possibilities!!!!!!
Becoming a millionaire is not as far-fetched as you may think. We are going to review what it means to be a 401k millionaire and how you can get there!
What exactly is a 401k? It is simply a retirement plan offered by many employers. The name 401k comes from a subsection of the U.S. tax code...go figure!
Fidelity Investments reported that the number of 401(k) millionaires—investors with 401(k) account balances of $1 million or more—reached 233,000 at the end of the fourth quarter of 2019. In order to become a 401k millionaire, there are a few key things you should do.
Start contributing EARLY to your 401k! Time is on your side when you contribute early. This gives you time to grow your portfolio. If you are eligible to contribute, put some money in. If your company has a match, contribute at least the minimum that will allow you to obtain the match. 401k match = FREE MONEY. Don’t turn down free money.
Be consistent in your contributions. Contribute regularly. Time and Consistency make up the magic formula! Automating your contributions by having the money directly deposited into your retirement account is the best way to pay yourself first.
Maximize your contributions. Put in the max to your 401ks. Enough said.
Don’t forget your IRA (Individual Retirement Account). Even if you have a 401k or any other employer plan, you should also be contributing the maximum amount to your IRA. In 2022, the annual contribution limit is $6,000 if you are under 50 and $7,000 if you are 50 or older.
Know where your assets are. If you have a 401k plan from a prior employer, roll it over to an IRA. This will allow you to keep better track of your holdings.
Don’t be afraid! Take risks and be actively involved in making your investment choices. The stock market has been very volatile lately but now is not the time to stop investing! Investing in mutual funds and exchange traded funds can be a good way to diversify your portfolio and reduce risk.
Here is a helpful tool that can help you determine if you are on track to reaching your millionaire status. https://smartasset.com/retirement/401k-calculator If you are self-employed, you can also take advantage of similar retirement vehicles for YOU (SEP IRA, SIMPLE IRA, Solo 401k) where you can maximize your limits and also gain millionaire status. Becoming a millionaire takes discipline and planning. You too can be a millionaire with time, a little patience and consistency!
Need a little more guidance on what it takes to reach your million? Connect with a Financial Empowerment Partner at Empower Financial Wellness to schedule a free F.I.T. Session today.
About the Contributor
Myrna Lainé-Hyppolite has close to 30 years of experience in the world of finance ranging from corporate finance, private equity to investment banking. She is an ivy-league graduate with BA and MBA degrees from Dartmouth College. Ms. Lainé-Hyppolite has leveraged her finance knowledge over the years and is now the CEO of Empower Financial Wellness, a financial coaching company established with a mission to educate, encourage and empower individuals to reach their financial goals. As a financial coach, Ms. Lainé-Hyppolite helps individuals grow their net worth, find their money leaks, and learn the basics of confident stock investing. Join the Financial Empowerment Women's Facebook Group or follow Myrna on Linkedin.