How to become a 401(k) millionaire

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The number of 401(k) and IRA millionaires reached an all-time high in the first quarter of 2021, according to Fidelity Investments. Retirement account balances have been steadily recovering in the year since COVID first emerged, even surpassing pre-pandemic levels. Today, more than 365,000 Fidelity investors boast seven-figure 401(k) balances, along with more than 307,600 IRA millionaires. A well-funded retirement account can afford you the financial security you need after your career ends. But to become a 401(k) millionaire, there are several steps you’ll need to follow.

 

financial advisor can help you handle your 401(k) so that you maximize your investment returns.

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There are 10 key moves a 401(k) investor should make to maximize his or her opportunity to retire as a 401(k) millionaire. Of course, there’s no guarantee that following these steps will turn you into a millionaire, but it’s unlikely you’ll reach such a level without making a number of the following moves.

Start Early

One of the most important factors for your retirement account — or really, any investment — is time. The earlier you begin contributing to your 401(k) savings account, the longer your money has to grow and the greater your returns can compound (or multiply).

 

By starting your retirement savings efforts as early as possible, you increase your chances of becoming a 401(k) millionaire and successfully funding your future. What if you’re getting a late start on your retirement savings, though? Do you still have a chance at meeting your goal?

In part, the answer to that depends on you how much you save each year from this point on, and how your retirement savings are invested. Starting today is still better than starting tomorrow (or a year from now), however, especially if you can save as aggressively as possible now.

Calculate What You Need

Saving a million dollars for your retirement is an exciting goal to set … but is it the right goal for funding the future lifestyle you have in mind?

 

Odds are that your current spending habits and budget are different from those of your coworkers, your best friend and even your siblings. Your plans for retirement probably differ, too. Some people plan to enter retirement debt-free , for instance, spending their years gardening and visiting the grandkids. Others want to finally travel the world in retirement or buy their dream home at the beach.

 

It’s important that you spend some time deciding what you want your retirement to look like, and how much that lifestyle will realistically cost.

 

In some cases, you may not even need a million dollars, especially if you have other assets to pull from. For others, though, having a million dollars in a 401(k) won’t be enough to last. Set your retirement savings goals accordingly, in order to properly fund the future you’re eyeing.

Contribute Regularly

One great thing about a workplace-sponsored 401(k) is that your contributions can be automated. Your employer can take the funds out of your paycheck before the deposit ever hits your account, ensuring that you “pay yourself first” every single month and meet your goals.

 

In some cases, though, your retirement savings may not be automated. If you’re a small business owner, for example, you may need to set up a SIMPLE 401(k) or a solo 401(k). In that case, you’ll be responsible for setting up your own contributions and meeting your own savings goals.

 

Be sure that whatever retirement savings vehicles you choose, you are contributing regularly and consistently.

Invest the Maximum

The more you save today, the more your retirement savings will grow and the better your chances of meeting your goals. Whether you want to be a 401(k) millionaire, are aiming for early retirement, or simply want to be financially independent, saving the maximum you can afford each month will get you there.

 

The IRS limits the amount you can save in your 401(k) each year; for 2021, this limit is $19,500 (if you’re over 50, you can deposit an extra $6,500 as a catch-up contribution). If your budget allows, try to max out your contributions to better your chances of savings success.

If $19,500 a year isn’t doable for you, simply invest the maximum that you can afford. Aim to save at least 10% to 15% of your income, and watch your balance grow.

Take Advantage of an Employer Match

An employer match on your retirement contributions is one excellent way to amplify your savings efforts. This is essentially free money, and you should avoid leaving it on the table if at all possible. If your employer is offering to match a portion of what you contribute to your retirement savings, you should ensure that you are depositing at least enough to max out this match. The maximum is usually a percentage of your salary (often between 3% and 5%).

 

Also note that the funds may be “vested.” This means that you only get the full match amount if you stay with your employer for a minimum amount of time; if you quit your job before that vesting period ends, you won’t get the full match.

Maximize Your Investment Potential

Your employer may offer multiple investment options for your 401(k). If this is the case, spend some time researching each option so you have the best chance of maximizing your returns.

 

Consider your risk tolerance and when you plan to retire. The further you are from retirement, the more risk you can afford and the higher your potential returns. Also be sure to weigh each fund option in terms of expenses.

Limit Your Fees

Your 401(k) will involve various fees and expenses, which will vary from one plan to the next. While these fees may seem small (often a fraction of a percentage point), they can really add up over time.

 

The fees on your 401(k) will be automatically deducted, so you may not even recognize how much your plan is costing you. Every dollar that you spend on retirement plan expenses is a dollar that can’t grow and compound for your future, though. Do your best to balance projected returns with plan costs and consider switching plans if there’s an opportunity to save on fees.

New Job? Roll Over Funds

Each employer will offer its own retirement plan options. When you change jobs, you may be offered a managed plan with your new employer, which may be better than the plan that’s currently holding your funds.

 

You have three primary options for your existing 401(k) savings when you change jobs. You can:

If you have enough money in that 401(k) – usually $5,000 or more – most plans will let you leave it alone, which could be a good decision if you are seeing great returns there and are happy with the plan’s expenses.

 

However, if you have less than $5,000 in there, aren’t moving to a new job just yet, or aren’t otherwise happy with the plan’s management or fees, a rollover is a better idea.

 

The first route to consider is rolling your money into a traditional IRA. This may be the best choice if your new employer doesn’t offer a 401(k), you don’t have another employer lined up, or you just want to have more flexibility with your account options. IRAs are offered by nearly every brokerage and give you a variety of options for your money.

 

The second option is to roll your savings into your new employer’s 401(k). If they offer better funds or lower fees and expenses on plans, this is probably your best move.

Leave the Money Alone

Whether you’re trying to reach 401(k) millionaire status or just want a successful retirement, there’s one important rule to keep in mind over your decades of saving: Don’t touch the money.

 

No matter what life throws at you, avoid the temptation to pull from retirement accounts. Early withdrawals can not only derail your progress exponentially but will also subject you to penalties and fees. In most cases, it’s not worth the added cost.

 

If an unexpected situation arises, consider the alternative options available before pulling from your retirement funds ahead of schedule. In many cases, a personal loan or home equity line of credit (HELOC) could meet your needs just as well.

Don’t Forget Other Retirement Savings

While a 401(k) is the most popular retirement account option, it’s not the only one. Depending on your savings strategy and how much you have to save, you may want to consider spreading out your retirement efforts across a variety of different savings avenues.

 

A traditional or Roth IRA can be another great option for retirement savings, especially if you’re already maxing out your 401(k) contributions. You may also choose to focus on a personal investment portfolio. There, you can invest in funds that your employer doesn’t offer or even individual company stocks.

 

You can also utilize real estate investments – such as rental property or REITs – to bolster your retirement cash flow. They won’t include the same tax advantages as 401(k)s or IRAs, but can be a great addition to any well-funded retirement strategy.

The Bottom Line

Saving for retirement is a decades-long journey, whether you’re aiming for a seven-figure balance or comfortable security. Of course, there’s no guarantee that following these 10 steps will turn you into a 401(k) millionaire. But by following them you’ll better your chances of reaching your retirement goals and feeling financially secure after you retire.

Tips on Retiring

  • Consider working with a financial advisor as you seek to maximize the returns from your tax-advantaged accounts. Finding a financial advisor doesn’t have to be hard. SmartAsset’s matching tool can connect you with several financial advisors in your area in just minutes, and at no costs to you. If you’re ready, get started now.
  • If your investments pay off, you may owe the capital gains tax. Figure out how much you’ll pay when you sell your holdings with our capital gains tax calculator.

This article originally appeared on SmartAsset.com and was syndicated by MediaFeed.org.

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The best county for retirees in every state

 

Retirement may be the time to move closer to family or put down new roots in a warm climate. Helping make that decision a bit easier is an index of the best places to retire in each of the 50 states, which was created by 24/7 Wall St.

Suggesting locales from Alaska’s majestic Kenai Peninsula to Arizona’s desert Pima County, the index weighed health costs, taxes and housing expenses, all significant for retirees likely to be living on fixed and reduced incomes.

“Because of the medical, social, and financial consequences of entering old age, life can change dramatically in retirement,” said 24/7 Wall St.

Among the best spots were Arkansas’ Baxter County in the Ozark Mountains; Chaffee County in the Colorado Rockies; and Park County, Wyoming, home to Yellowstone National Park.

Lovers of sun and sand could find a haven on the beaches of Delaware’s Sussex County, Florida’s Sarasota County or Beaufort County, South Carolina, and fishing fans might opt for Louisiana’s Jefferson Parish on the Gulf of Mexico or the lakes and ponds of Cumberland County, Maine.

The index took into consideration health factors such as the number of medical professionals per capita and access to exercise opportunities. Economic factors included median home values, the monthly cost of living and state and local taxes.

It only considered counties where the 65-and-over population grew at least as fast as the rest of the nation and was larger than the national average.

Demand for retirement locales will only grow bigger. The U.S. Census Bureau says by 2035, the number of adults age 65 and over will hit 78 million and outnumber children under age 18.

 

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2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

 

 

Christoph Strässler / Flickr

 

When it comes to retirement planning, our thoughts usually jump straight to finances. Do I have enough saved in my 401k? How will I manage healthcare costs? When should I start collecting Social Security?

All valid concerns, for sure. But Eric Thurman, author of Thrive in Retirement: Simple Secrets for Being Happy for the Rest of Your Life, says money is just one key factor to consider as you transition to this new life stage.

“Many people expect to live ‘happily ever after’ in retirement but haven’t thought much about how that will occur,” he says. He lists these areas as focus points for a happy retirement.

 

monkeybusinessimages/istockphoto

 

Thurman points to two key factors for keeping your mind healthy in retirement — cognitive strength and mental health. He says there are lots of options for maintaining a strong brain as you age, and he doesn’t think crossword puzzles and card games are enough. “You need to stretch. You need to be learning a foreign language or a musical instrument — something that’s forcing you to develop new skills,” he says.

Appreciating or creating art might help too. One study found that artistic activities boosted cognitive function in older people. And another study found that people predisposed to Alzheimer’s disease who were intellectually active delayed the start of the disease by nine years.

Your mental health needs attention, too. Thurman says that the unresolved hurts and losses that can surface in retirement may need attention. “If you’re raising children and busy with your career you can get distracted all of the time. Once you’ve got a lot of free time you can ruminate,” he says.

Counseling, support groups, or grief recovery programs could help. “Don’t let your mind be captive to old wounds that keep coming up,” he says.

 

simonapilolla/istockphoto

 

Your retirement years won’t be nearly as happy if you’re frail and unhealthy.Thurman thinks some people stop taking care of their health as they age because they may not realize how much longer they are likely to live. By 2050, a projected 19 million people in the US will be age 85 or older.

He encourages people to think about themselves in the future: “If you get to be 90, what kind of a 90-year-old do you want to be? Do you want to be stuck in a chair, or need help or a walker to get around? Or do you want to be able to do anything you want to do?”

You don’t have to train for a marathon, or eliminate cookies and potato chips. Just boosting the intensity of what you already do and adding more nutritious foods to your diet can help you stay fit and healthy.

 

interstid/istockphoto

 

“I have a friend who is a psychiatrist who says that the number one health issue in the U.S. and the world is loneliness,” Thurman says. “We can have hundreds of followers on Instagram or Facebook and not have that personal human contact necessary for wellbeing. We aren’t good about that.”

He says employment patterns in the last generation or two have increased isolation, since it’s more common for people to relocate for work and live further away from their families.

According to the National Institute on Aging, social isolation and loneliness are linked with high blood pressure, heart disease, obesity, reduced immune system function, anxiety, depression, cognitive decline, and Alzheimer’s disease.

 

jacoblund/istockphoto

 

Population: 203,360

65 and over %: 19.0% (15th of 67 counties)

Est. monthly expenses for family of 2: $4,343.67 (2nd out of 67 counties)

Median home value: $182,000

 

Chris Pruitt / Flickr

 

Population: 57,961

65 and over %: 14.8% (5th of 29 borough)

Est. monthly expenses for family of 2: $5,341.27 (14th out of 29 counties)

Median home value: $234,600

 

Christoph Strässler / Flickr

 

Population: 1,007,257

65 and over %: 18.1% (7th of 15 counties)

Est. monthly expenses for family of 2: $3,876.65 (14th out of 15 counties)

Median home value: $166,300

 

Gillfoto / Flickr

 

Population: 41,093

65 and over %: 30.5% (1st of 75 counties)

Est. monthly expenses for family of 2: $3,478.55 (39th out of 75 counties)

Median home value: $124,400

 

Sweetmoose6 at en.wikipedia / Public domain

 

Population: 18,724

65 and over %: 25.8% (4th of 58 counties)

Est. monthly expenses for family of 2: $4,201.70 (32nd out of 58 counties)

Median home value: $228,900

 

Ken Lund / Flickr

 

Population: 18,818

65 and over %: 24.1% (10th of 64 counties)

Est. monthly expenses for family of 2: $4,197.89 (37th out of 64 counties)

Median home value: $313,200

 

Jeffrey Beall / Flickr

 

Population: 897,417

65 and over %: 16.2% (4th of 8 counties)

Est. monthly expenses for family of 2: $4,257.11 (8th out of 8 counties)

Median home value: $235,300

 

almdesign/pixabay

 

Population: 215,551

65 and over %: 25.2% (1st of 3 counties)

Est. monthly expenses for family of 2: $4,249.98 (3rd out of 3 counties)

Median home value: $242,900

 

Nicholas A. Tonelli / Flickr

 

Population: 404,839

65 and over %: 34.8% (4th of 67 counties)

Est. monthly expenses for family of 2: $4,156.50 (19th out of 67 counties)

Median home value: $215,300

 

Ebyabe / Flickr

 

Population: 11,173

65 and over %: 33.6% (1st of 159 counties)

Est. monthly expenses for family of 2: $4,103.24 (49th out of 159 counties)

Median home value: $197,900

 

John Trainor / Flickr

 

Population: 196,325

65 and over %: 18.5% (1st of 5 counties)

Est. monthly expenses for family of 2: $4,848.14 (5th out of 5 counties)

Median home value: $316,000

 

W Nowicki / Flickr

 

Population: 10,104

65 and over %: 24.6% (6th of 44 counties)

Est. monthly expenses for family of 2: $3,917.45 (11th out of 44 counties)

Median home value: $256,000

 

Charles Knowles from Meridian Idaho, USA / Wikipedia

 

Population: 198,134

65 and over %: 16.1% (80th of 102 counties)

Est. monthly expenses for family of 2: $3,979.79 (66th out of 102 counties)

Median home value: $136,100

 

Larry D. Moore / Flickr

 

Population: 61,581

65 and over %: 16.1% (57th of 92 counties)

Est. monthly expenses for family of 2: $3,990.13 (6th out of 92 counties)

Median home value: $158,100

 

Nyttend / Public domain

 

Population: 20,575

65 and over %: 18.7% (61st of 99 counties)

Est. monthly expenses for family of 2: $4,143.31 (8th out of 99 counties)

Median home value: $161,500

 

Karen Noecker / Flickr

 

Population: 34,683

65 and over %: 18.4% (63rd of 105 counties)

Est. monthly expenses for family of 2: $3,864.68 (72nd out of 105 counties)

Median home value: $120,000

 

Steve Meirowsky / Flickr

 

Population: 99,258

65 and over %: 16.2% (73rd of 120 counties)

Est. monthly expenses for family of 2: $3,649.43 (57th out of 120 counties)

Median home value: $123,200

 

W.marsh / Flickr

 

Population: 437,038

65 and over %: 15.6% (25th of 64 parishes)

Est. monthly expenses for family of 2: $4,036.27 (19th out of 64 counties)

Median home value: $176,000

 

dbking / Flickr

 

Population: 289,173

65 and over %: 16.8% (15th of 16 counties)

Est. monthly expenses for family of 2: $4,721.10 (1st out of 16 counties)

Median home value: $259,400

 

Ken Lund / Flickr

 

Population: 51,559

65 and over %: 26.2% (2nd of 24 counties)

Est. monthly expenses for family of 2: $4,171.72 (16th out of 24 counties)

Median home value: $252,100

 

Famartin / Flickr

 

Population: 161,197

65 and over %: 15.3% (10th of 14 counties)

Est. monthly expenses for family of 2: $4,639.86 (9th out of 14 counties)

Median home value: $272,700

 

Massachusetts Office Of Travel & Tourism / Flickr

 

Population: 32,978

65 and over %: 20.2% (33rd of 83 counties)

Est. monthly expenses for family of 2: $3,849.82 (29th out of 83 counties)

Median home value: $171,100

 

Royalbroil / Flickr

 

Population: 5,270

65 and over %: 26.1% (2nd of 87 counties)

Est. monthly expenses for family of 2: $4,284.08 (23rd out of 87 counties)

Median home value: $241,400

 

Norstrem / Flickr

 

Population: 78,221

65 and over %: 15.7% (45th of 82 counties)

Est. monthly expenses for family of 2: $3,620.78 (65th out of 82 counties)

Median home value: $88,500

 

Dudemanfellabra / Flickr

 

Population: 999,539

65 and over %: 16.9% (79th of 115 counties)

Est. monthly expenses for family of 2: $3,897.75 (74th out of 115 counties)

Median home value: $181,100

 

 

Nicolas Henderson / Flickr

 

Population: 66,290

65 and over %: 16.6% (44th of 56 counties)

Est. monthly expenses for family of 2: $4,290.89 (9th out of 56 counties)

Median home value: $220,600

 

Robstutz / Flickr

 

1. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

 

:Ivan Nadaski / iStock

 

Population: 4,318

65 and over %: 26.7% (5th of 93 counties)

Est. monthly expenses for family of 2: $4,311.88 (41st out of 93 counties)

Median home value: $62,300

 

Ammodramus / Flickr

 

Population: 47,632

65 and over %: 25.4% (4th of 17 counties)

Est. monthly expenses for family of 2: $4,277.85 (9th out of 17 counties)

Median home value: $311,400

 

Patrick Nouhailler / Flickr

 

Population: 89,280

65 and over %: 18.8% (5th of 10 counties)

Est. monthly expenses for family of 2: $4,092.95 (6th out of 10 counties)

Median home value: $215,600

 

Jet Lowe / Public domain

 

Population: 125,717

65 and over %: 16.5% (4th of 21 counties)

Est. monthly expenses for family of 2: $5,346.02 (1st out of 21 counties)

Median home value: $393,800

 

JERRYE and ROY KLOTZ MD / Flickr

 

Population: 18,031

65 and over %: 17.2% (20th of 33 counties)

Est. monthly expenses for family of 2: $3,934.80 (4th out of 33 counties)

Median home value: $285,300

 

SPONSORED: Find a Qualified Financial Advisor

1. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

 

Aaron Zhu / Flickr

 

Population: 64,701

65 and over %: 20.3% (5th of 62 counties)

Est. monthly expenses for family of 2: $4,330.03 (23rd out of 62 counties)

Median home value: $192,800

 

Mobilus In Mobili / Flickr

 

Population: 252,268

65 and over %: 18.4% (49th of 100 counties)

Est. monthly expenses for family of 2: $4,329.91 (37th out of 100 counties)

Median home value: $209,800

 

Warren LeMay / Flickr

 

Population: 11,574

65 and over %: 18.8% (33rd of 53 counties)

Est. monthly expenses for family of 2: $3,703.54 (51st out of 53 counties)

Median home value: $130,400

 

Andrew Filer / Flickr

 

Population: 1,257,401

65 and over %: 17.0% (43rd of 88 counties)

Est. monthly expenses for family of 2: $3,458.20 (78th out of 88 counties)

Median home value: $123,900

 

Pixabay

 

Population: 62,421

65 and over %: 15.2% (60th of 77 counties)

Est. monthly expenses for family of 2: $3,882.56 (64th out of 77 counties)

Median home value: $104,000

 

Kiddo27 / Flickr

 

Population: 363,471

65 and over %: 17.7% (23rd of 36 counties)

Est. monthly expenses for family of 2: $4,034.99 (29th out of 36 counties)

Median home value: $232,800

 

Visitor7 / Flickr

 

Population: 18,302

65 and over %: 20.1% (20th of 67 counties)

Est. monthly expenses for family of 2: $4,378.06 (16th out of 67 counties)

Median home value: $173,800

 

Jakec / Flickr

 

Population: 49,028

65 and over %: 19.1% (2nd of 5 counties)

Est. monthly expenses for family of 2: $4,451.59 (2nd out of 5 counties)

Median home value: $341,300

 

Angusdavis/Public Domain

 

Population: 179,316

65 and over %: 24.9% (3rd of 46 counties)

Est. monthly expenses for family of 2: $4,702.03 (1st out of 46 counties)

Median home value: $283,800

 

Ken Lund / Flickr

 

Population: 17,572

65 and over %: 15.6% (50th of 66 counties)

Est. monthly expenses for family of 2: $3,814.69 (62nd out of 66 counties)

Median home value: $173,400

 

Jeffrey Beall / Flickr

 

Population: 126,437

65 and over %: 17.1% (62nd of 95 counties)

Est. monthly expenses for family of 2: $3,609.55 (82nd out of 95 counties)

Median home value: $152,800

 

Brian Stansberry / Flickr

 

Population: 25,939

65 and over %: 28.7% (8th of 254 counties)

Est. monthly expenses for family of 2: $3,750.25 (125th out of 254 counties)

Median home value: $269,900

 

Larry D. Moore / Flickr

 

Population: 155,577

65 and over %: 19.9% (3rd of 29 counties)

Est. monthly expenses for family of 2: $4,040.76 (14th out of 29 counties)

Median home value: $240,300

 

Tony Webster / Flickr

 

Population: 36,054

65 and over %: 21.4% (2nd of 14 counties)

Est. monthly expenses for family of 2: $4,641.36 (10th out of 14 counties)

Median home value: $208,600

 

Daniel Case / Flickr

 

Population: 27,516

65 and over %: 15.2% (97th of 133 counties)

Est. monthly expenses for family of 2: $4,005.88 (73rd out of 133 counties)

Median home value: $226,200

 

AgnosticPreachersKid / Flickr

 

Population: 75,138

65 and over %: 17.6% (22nd of 39 counties)

Est. monthly expenses for family of 2: $3,839.28 (16th out of 39 counties)

Median home value: $256,400

 

Jon Roanhaus / Flickr

 

Population: 42,906

65 and over %: 20.2% (18th of 55 counties)

Est. monthly expenses for family of 2: $3,779.52 (54th out of 55 counties)

Median home value: $114,800

 

Jon Dawson / Flickr

 

Population: 73,427

65 and over %: 19.2% (28th of 72 counties)

Est. monthly expenses for family of 2: $3,754.34 (51st out of 72 counties)

Median home value: $127,700

 

TheCatalyst31 / CC0

 

Population: 29,276

65 and over %: 20.4% (5th of 23 counties)

Est. monthly expenses for family of 2: $4,269.06 (11th out of 23 counties)

Median home value: $236,200

This article originally appeared on Considerable.com and was syndicated by MediaFeed.org.

 

halfuur / Flickr

 

 

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Featured Image Credit: Prostock-Studio / istockphoto.

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