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Is Your 401(k) on Track for a Millionaire Retirement?

By Adam Levy – Aug 20, 2021 at 7:45AM

Key Points

  • Saving every year can get you to $1 million by retirement.
  • If you're behind, you have several options to still make it.
  • But only two options make sense to catch up.

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I did the math so you don't have to.

A 401(k) is one of the most popular ways for Americans to save for retirement. For some, it's the only form of retirement savings they have.

If you want to retire wealthy with over $1 million in your 401(k), you'll need to contribute more than your average worker. Here's how you can figure out if you're on track to retire a millionaire.

Person sitting across from two people pointing to a chart on a piece of paper.

Image source: Getty Images.

How much you should have at every age to reach $1 million

Here are some guideposts to help you figure out how much you should have at every age to easily achieve a $1 million portfolio by the time you reach age 65 and retire. 


Account Balance

















Data sources: Author, Bureau of Labor Statistics, and Vanguard.

These numbers are based on receiving a median salary, contributing a median percentage (6%) every year, and receiving a $0.50 match per dollar up to 6% of pay.

Importantly, these are just guideposts. They assume a constant rate of return on your investments, which isn't how the market works. You might expect a 7% average return from the stock market over the long run, but who knows what you'll get over the next year or even the next 10 years. There are even a couple 10-year periods with negative total returns. As such, take these numbers with a grain of salt.

If you're well ahead of those numbers, you may consider taking your foot off the pedal depending on what you expect your retirement income needs to be. Alternatively, you could keep saving aggressively and have the luxury of retiring early.

If you're behind those numbers, you have work to do. Let's look over your options for how to catch up with the guideposts.

Catching up to $1 million

There are really three options for how to catch up and get your 401(k) account to $1 million by retirement: increase your investment returns, earn more, or save more of your salary.

Increasing the return on your portfolio is possible if you take a more aggressive approach to investing. Unfortunately, most 401(k) plans are limited in their investment options, mostly forcing you into a handful of mutual funds or index funds, so you might not even have an option to get much more aggressive.

Furthermore, aggressive asset allocation in your 50s and 60s just as you're about to retire is inadvisable. You should be looking to preserve capital at that point to ensure you have enough for retirement. If the market works against you in your later years, you'll lose more by trying to be aggressive.

Importantly, trying to move the needle toward $1 million by eking out an additional 0.5% to 1% return per year isn't going to make nearly as big of a difference as saving more every year until you retire. And it's not going to do much of anything if you're really far behind, since you don't have as much principal to compound.

If you can find a way to earn more and save a larger percentage of your paycheck, you can catch up very quickly. You can start a side hustle, sell things you don't need, or simply work hard and get a promotion at your job. Alternatively, you can cut back on discretionary lifestyle expenses like restaurant meals, vacations, or that $200-per-month gym membership you barely use. Or you could do a combination of some or all of them.

A simple way to increase your savings rate is every time you get a raise, contribute half (or more) of it toward your 401(k). You'll never even notice it.

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