Are you on your way to a millionaire retirement with just a 401 (k)?


Your 401 (k) can be an incredibly powerful tool if you want to achieve millionaire status when you retire. The big challenge with this is that it can be a little difficult to tell if you are on the right track to achieving that goal while you are still on that path. After all, getting there depends on both the amount of your contribution and the rate you earn on your investments along the way.

Knowing whether or not you are on the right track can make a huge difference to you. If you’re ahead of what you need to be, you can reduce your retirement savings to focus on your other priorities. If you’re late, it can be much easier to make a small adjustment quickly than to make a larger adjustment later or miss your goal altogether. With that in mind, read on to find out if you’re on your way to a millionaire retirement based solely on your 401 (k).

Image source: Getty Images.

Snapshots of where you need to be

Suppose you plan to retire at age 65 and think you can get 8% annualized returns on the stock market by then. The following table shows what your 401 (k) balance should be at different ages along the way, based on how much you spend each month on this plan.


$ 2,166.66 per month

$ 1,625 per month

$ 1,500 per month

$ 1,000 per month

$ 500 per month

$ 0 per month


N / A

$ 0.00

$ 0.00

$ 0.00

$ 0.00

$ 41,197.38


N / A

$ 0.00

$ 0.00

$ 0.00

$ 0.00

$ 61,377.75


N / A

$ 0.00

$ 0.00

$ 0.00

$ 23,301.63

$ 91,443.37


N / A

$ 0.00

$ 0.00

$ 6,671.99

$ 71,454.25

$ 136,236.52


N / A

$ 8,695.66

$ 23,639.95

$ 83,417.10

$ 143,194.24

$ 202,971.39


$ 75,675.47

$ 132,355.09

$ 145,435.16

$ 197,755.46

$ 250,075.76

$ 302,396.05


$ 271,944.13

$ 316,588.55

$ 326,891.24

$ 368,101.98

$ 409,312.72

$ 450,523.46


$ 564,354.17

$ 591,067.99

$ 597,232.79

$ 621,892.01

$ 646,551.23

$ 671,210.44

Data source: author.

If you are under 50 in 2021, you can typically contribute up to $ 19,500 per year ($ 1,650 per month) to your 401 (k). That number increases to $ 26,000 per year ($ 2,166.66 per month) if you are 50 or older. That’s why there are “N / A” along the left of this chart – people under 50 are just not allowed to spend that much in their 401 (k).

As for the $ 0.00 entries in this table: they are a sign that if you have anything in your 401 (k) at this age and actively saving that much, you have a good chance of reaching millionaire status at 65. Still, there’s no guarantee of investing, and this chart assumes you’ll continue to invest each month until you turn 65 and earn 8% annualized along the way.

With that in mind, this chart can remain a decent check on your progress throughout your journey. It can also provide information on the type of adjustments you can make along the way. For example, if you find yourself at 40 with around $ 150,000 in your 401 (k), you may be able to focus on your other priorities in life and end up becoming a 401 (k) millionaire by age 65. On the other hand, if you fall behind, the sooner you collect your contributions to close the gap, the better your chances of recovering.

Can you get there sooner?

Of course, if you want to achieve millionaire status before your 65th birthday, there are plenty of good reasons to give it a try. If you really want to get there sooner, your options are to invest more or get a higher rate of return. Achieving higher rates of return might be possible, but long-term market returns have been around 9% to 10% annualized. This makes it quite a challenge to overcome and an even greater challenge to rely on even faster returns above that rate.

Alternatively, investing more and / or starting to invest earlier can also help you achieve millionaire status faster. You can complete your 401 (k) at a younger age, which gives you a chance to get there at a younger age. As long as you are employed, you can also contribute to an IRA, which allows people under the age of 50 to contribute up to $ 6,000 and those 50 and over to contribute up to $ 7,000 each year. If you want – and are able – to save even more, there is no limit to what you can save in a regular taxable account.

The challenge of saving more and saving sooner, of course, is having the money available to do so. Most of us don’t have a few thousand dollars in reserve to invest each month. Instead, what we can do is save what we can and then look for opportunities to increase our savings over time as our income grows or our other obligations come to an end. This means that achieving millionaire status will remain a balancing act between time available, money available and achievable rates of return.

Start now to increase your chances of success

Balance or not, if the previous chart tells you anything, it’s that the sooner you get started, the less you have to burn out each month to have a chance of reaching millionaire status at a reasonable age. Your 401 (k) can be an amazing tool to get you there, but it doesn’t have to do it all on its own. Take advantage and supplement if you need to, but focus on the right path as soon as you can, to maximize your chances of success.


About Meredith Campagna

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