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3 of the Best Strategies for Becoming a 401(k) Millionaire

Ellen Chang | FEB 11, 2019

The average American’s 401(k) balance as of the third quarter of 2018 is $106,500, according to recent data from Fidelity. 

While that may not sound like enough to retire on, Fidelity also announced that the number of 401(k) millionaires increased over 40% from 2017. In fact, over 187,000 Americans now have over $1 million saved in their 401(k) accounts.

3 Ways to Start Saving Like a 401(k) Millionaire

Here’s how to catch up on your retirement savings so you can become a 401(k) millionaire or get close to the finish line.

1. Maximize Savings Throughout Your Career

Increase your contributions when you get a raise, even if you have student loans and credit card debt to pay off. 

Long-term 401(k) savers reap the rewards, according to a Fidelity survey. Employees who have been contributing to their 401(k) for 10 consecutive years had an average account balance of $286,700. Workers who have been socking away money for 15 years had an average balance of $387,100.

2. Take Advantage of Employee Matches 

Many companies routinely match 3% to 5% of your salary as an incentive for you to contribute more of your salary to your 401(k) plan. Others opt to match up to a dollar amount instead. Either way, it can result in thousand of dollars more per year and help you reach your savings goal more quickly.

3. Devise a Plan With a Financial Advisor

Work with a financial advisor to discuss all your retirement planning options, especially lowering the amount of taxes you owe each year. Many people pair their 401(k) with a traditional IRA or Health Savings Account (HSA) to increase their tax savings. A Roth IRA can also be beneficial because contributions are taxed at your current tax rate rather than when you begin withdrawing funds.

How to Find the Right Advisor for You

Chances are, there are several highly qualified financial advisors in your town. However, it can be daunting to choose one. 

This new tool makes it easy to find the right financial advisor for you. Now you can get matched with up to three local fiduciary investment advisors that have passed a rigorous screening process.

1. Simply enter your ZIP code below.

2. After you enter your ZIP code and answer questions about your financial goals, you can compare up to three top advisors local to you and decide which to work with.

3. Enjoy a better financial future!

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SmartAsset - copyright 2018

SmartAsset - copyright 2018

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