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.
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).
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?
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.
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.
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.