Title: How to become a 401K millionaire?
In this episode, you will:
- How to save money towards your retirement.
- Factors that can help you become a 401k millionaire.
- What you need to do to attain a 401k millionaire status.
Click to listen:
In case you don’t know it. In the USA, the 401K plan is an employer-sponsored retirement plan that eligible employees may make tax-deferred contributions from their salary to on a pre-tax basis. That means you aren’t gonna pay any tax until the money is withdrawn from your account. Most of the time, employers often make matching contributions on behalf of the employees to help fund their retirement.
For example, some employer may match dollar for dollar up to a certain percentage of the employee’s annual salary. Some employers contribute $50 for every $100 that an employee contributes, also up to a certain percentage of the employee’s income. That’s free money for the employees that if properly invested in suitable investments, will go tax-deferred, and the employee can start withdrawing during retirement.
The 401(k) plan became law in 1978 and is named after the subsection of the Internal Revenue Code that established it. As of Sept. 30, 2017, 401(k) plans accounted for roughly $5.3 trillion of the $27.2 trillion in total retirement-plan assets in the United States, The IRS imposes contribution limits per year, although limits for 401(k) plans are more generous than those for other plans: $19,000 in 2019, up from $18,500 in 2018. This increases to $25,000 if you’re age 50 or older.
The topic for today is how to become a 401K millionaire:
One thing that I love doing very well is that I love to give you actionable tips that you can help you to achieve your goals. So for today, I will be sharing five tips that you need to follow to achieve the goal of becoming a 401K millionaire.
Achieving this status depends on four main factors:
- Age you are starting.
- The amount you contribute
- The frequency of contribution
- The returns you get on your investment.
Here are some statistics you should know:
– The average 401K balance among participant is $104K
– 71% of the portfolio has exposure to equities.
– The total amount held in all 401K account is $5.3 trillion
– The average savings rate is 8.6%
– According to fidelity, there are over 157,000 401K millionaires in America. There are other 148,000 people who have saved $1 million or more in an IRA.
– The average age to attain that status is 56 years old. (No sudden millionaire. It takes time. It takes careful planning. It takes coming up with strategies).
How to become a 401K millionaire:
1. Start Early
2. Max out your contribution
3. Pick up good investments
4. Be consistent & Stay persistent
5. Give it time