A recent report came out showing that more Americans than ever have $1 million in their 401(k). This is great news for retirement saving!
But when you look a little deeper, there still aren’t a massive amount of millionaires winning the game of retirement saving.
So, what does this all mean?
According to the report by Fidelity, the number of 401(k)-created millionaires increased by 9.5% — to about 550,000 people. Similarly, IRA-created millionaires increased by nearly 5% to about 418,000.
The report indicates that this is mainly due to market gains and retirement saving that took place early and consistently.
Saving in an IRA or 401(k) is one of the most popular ways to plan for retirement in the U.S. so this is good news. And it shows that consistent saving over a long period of time does pay off – even if you don’t save large amounts.
Starting retirement saving early means you get compounded returns – and failing to do so means you could be short of funds to retire.
Most people decide to retire in their mid-60s, when they can get Medicare benefits. So if you start retirement saving at age 25, that means you have 40 years to amass wealth.
By saving about $400 a month for 40 years at an average return of 7%, you could be a millionaire when you retire. If you wait even 10 years to start saving, you will have just shy of $500,000 – which is a big difference!
This is why we urge clients to start young when it comes to retirement savings – and always save a little more if you can.
Now is a great time to take a look at what you are saving – and learn all you can so you can meet (or even exceed) your retirement goals.
Do you still have questions?
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If you have other questions about retirement plan loans, email us or call 937.308.0758.
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