401k Millionaires
“Yes, Virginia, you can save more than a million dollars in your 401K!” So says Jeremy Olshan in his article about 401k millionaires at Smart Money.
A Million Bucks-In Your 401k?Confirms this article at Smart Money. The author, Jeremy Olsham, interviewed several brokers who managed money for clients that had amassed more than 7 figures in their 401K.
Most experts feel 401k savings are a failure-that many in our country will be hurtin’ for certain at retirement….
Though the savings plan could use a few tweeks, the failure is OUR FAULT, yes us, the public rather than the plan’s.
Why do they fail?
Cause we don’t use ‘em. I’ll leave it up to you to decide why, though I have strong opinions….
401K Success Stories
In this article, what were the consistent findings for those who saved the most in their 401k?
As usual, it’s not shocking, no not surprising, and certainly not scintillating.
These retirement plan millionaires didn’t have inside information, they didn’t cheat the 99%ers, they didn’t walk all over the middle class.
Nope, they did what every self-respecting financial planner recommends you do to maximize your retirement account.
They participated.
- They put in as much as they could afford.
- They put money in every pay period, every month, every year for long periods of time.
Boring….but effective. You can laugh at ‘em, but they are the ones having a comfortable retirement, while you spent your money on that new truck you couldn’t afford….
What didn’t they do?
- They didn’t use their 401k as an ATM….borrowing money for golf clubs, or braces.
- They didn’t try to time the market, stopping their contribution during down markets (fear) and increasing at market tops (irrational exuberance).
Not rocket surgery as Yogi was known to say….
Included in the article cited above, is a discussion about how employees with modest incomes could be 401k millionaires, with the math and everything. Where have you heard that before???? (hint: see the name of this blog….)
Breaking 401k rules
Some of those interviewed had broken a few standard rules. The most common was having their 401k invested 100% in company stock. {This precaution only applies to those of you working at a publicly traded company who allow company stock purchases in your account.} My employees can’t buy company stock and most of my nurse readers work at facilities with 403b plans. They can’t buy company stock in their plan.
Experts advise that you not keep all your money in one stock-whether in a retirement plan or any account. Failed companies such as Enron, Lehman, Worldcom and Bear Stearns come to mind. If their employees only invested their 401k holdings in company stock, their accounts went to zero overnight. Damn depressing to think about-sorry you guys…
If you worked at Apple or Google and 20 years ago you put all your retirement savings in those company stocks, you are sitting on easy street right now. 20 years from now though, who knows whether even those tech titans will still be here.
In summary, the tried and true is confirmed once again.
If you want to have a large bucket of money in your retirement account at the end of your career, put money into it. Every pay period, every month, every year, for years and years.
And you should learn what and where you are investing, but that’s for another post. I’m sure you’re on the edge of your seat!
Reader Questions:
Do you think you will be a 401k millionaire? Check out this post and survey at Retire by 40 on net worth at retirement goals, and read the comments, very enlightening.
{photo credit: surburbandollar c.c.}
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