{"id":6592,"date":"2024-10-25T07:10:21","date_gmt":"2024-10-25T07:10:21","guid":{"rendered":"https:\/\/finderica.com\/how-to-become-a-millionaire-by-maxing-out-your-401k\/"},"modified":"2024-10-25T07:10:21","modified_gmt":"2024-10-25T07:10:21","slug":"how-to-become-a-millionaire-by-maxing-out-your-401k","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=6592","title":{"rendered":"How to Become a Millionaire by Maxing Out Your 401(k)"},"content":{"rendered":"\n
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\"ScoreCard<\/p>\n

You know the story of the tortoise and the hare, right? It\u2019s a race where the fast bunny rabbit takes a huge lead, but the slow-and-steady tortoise ends up winning in the end.<\/p>\n

It\u2019s like that in investing, too. Slow and steady wins the race.<\/p>\n

Cryptocurrencies and NFTs were the fast bunny rabbit. Not so long ago, all those crypto bros were lecturing us that we should all be buying bitcoin, altcoins, stablecoins, whatever-coins. Then lots of those guys lost their shirts in the crypto crash of 2022, reminding us how risky it can be investing in totally unregulated things<\/i>.<\/p>\n

Meanwhile, a whopping 825,000 Americans have quietly become millionaires the old-fashioned way: by maxing out their retirement plans. That\u2019s it. That\u2019s all they did.<\/p>\n

They\u2019re the tortoises, and they\u2019re rich.<\/p>\n

The thing is, that means you can be rich too.<\/p>\n

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50 Effortless Methods to Boost Your Income This Week<\/h3>\n

If you needed extra money, like, yesterday, you\u2019ve come to the right spot.<\/p>\n

Our team has compiled a list of creative ways<\/a> you can fatten your bank account this week.<\/p>\n

This is a long list, so don\u2019t get overwhelmed. Go ahead and start now, but be sure to bookmark this post so you can easily return later. We\u2019ll keep it updated as offers changes or expire.<\/p>\n

Check it out!<\/a><\/p>\n<\/div>\n<\/div>\n

It\u2019s Not Flashy, But It Works<\/h2>\n

Welcome to the least glamorous way to become a millionaire. It\u2019s also the most realistic way to become a millionaire.<\/p>\n

Feed your retirement fund. Keep feeding it. Don\u2019t ever stop.<\/p>\n

As of mid-2022, more than 406,000 Americans have become millionaires through their employer-sponsored 401(k) plans. Nearly that many Americans \u2014 346,800 \u2014 have become millionaires through their IRAs, individual retirement accounts.<\/p>\n

And that\u2019s just with Fidelity Investments, the nation\u2019s largest provider of workplace retirement plans. Those numbers come from Fidelity\u2019s quarterly retirement analysis<\/a>.<\/p>\n

Not only that, but more than 72,200 people have become millionaires investing in the Thrift Savings Plan, the federal government\u2019s version of a 401(k), according to the Federal Retirement Thrift Investment Board.<\/p>\n

\u201cMany current millionaires are government workers, civil servants, educators, military service members (or retired military), managers or co-workers clocking in just like you, leaving at the end of a shift to run and pick up their kids from school,\u201d this Washington Post financial columnist wrote<\/a>. \u201cMany never earned six-figure salaries.\u201d<\/p>\n

\u201cThey\u2019ve been investing for nearly three decades, taking every dollar offered by their employers in matching retirement plan contributions. They also don\u2019t cash out their retirement savings when they change jobs.\u201d<\/p>\n

How to Make Your 401(k) Work for You<\/h2>\n

To max out your 401(k) plan, you need to be contributing enough money to get the full company match. It\u2019s common for employers to offer a match. Whatever you contribute, they\u2019ll throw in the same amount, up to a set percentage of your paycheck.<\/p>\n

How much will they kick in? There\u2019s no hard rule, but the most common 401(k) match is 50 cents on the dollar up to the first 6% you contribute \u2014 or 3%. In that situation, you\u2019d want to be contributing at least 6% of your paycheck to your retirement account. Otherwise, you\u2019re passing up free money.<\/p>\n

To make contributions, allot a certain amount of your paycheck to go straight into your 401(k). You can do this pre- or post-tax.<\/p>\n

It\u2019s up to you how much you want to put in, though the contribution limit for 2022 is $20,500 of your own money per year. That\u2019s up slightly from the 2021 limit of $19,500.<\/p>\n

Your 401(k) contributions get invested in stocks and bonds. Then, thanks to the sweet magic of compound interest, your money steadily grows over time.<\/p>\n

Don\u2019t Have a 401(k)? Open an IRA<\/h2>\n

If you\u2019re a full-time employee in America, you probably have a 401(k) plan. About two-thirds of all private sector employees in the U.S. have a retirement plan at work, according to the U.S. Bureau of Labor Statistics<\/a>.<\/p>\n

That still leaves one-third of all full-time employees high and dry, without an employer-sponsored retirement plan. Plus part-time employees. Not to mention the self-employed.<\/p>\n

If you don\u2019t have a 401(k) plan, what should you do? Open an individual retirement account, or IRA, pronto.<\/p>\n

Unlike a 401(k), an IRA is not affiliated with your employer. It\u2019s a retirement savings and investment account that you open on your own, all by yourself. Luckily, it\u2019s super easy to do this online with any number of reputable financial giants \u2014 or even through a robo investing app.<\/p>\n

With a traditional IRA, you put your money into the account before taxes are taken out. That money grows tax-deferred until retirement. You pay taxes on it when you withdraw the money at retirement age. If you withdraw money before you turn 59 \u00bd, you pay a 10% penalty.<\/p>\n

With a Roth IRA, you pay taxes up front, and when you reach age 59 \u00bd, you can withdraw your earnings tax-free.<\/p>\n

Procrastinating Will Cost You Money<\/h2>\n

The important thing is not to dawdle. Start investing in your 401(k) or IRA as early in life as you can. The longer your investments have to grow and compound, the more money you\u2019ll have when you retire.<\/p>\n

And you\u2019ve got to consistently feed that thing. Don\u2019t skimp on it. Don\u2019t cash out your retirement savings when you switch jobs. Don\u2019t submit to the temptation!<\/p>\n

Stay on track. That\u2019s what those 825,000 Americans who became 401(k) and IRA millionaires did. They took the long view.<\/p>\n

Remember the tortoise and the hare?<\/p>\n

Mike Brassfield ([email\u00a0protected]) is a senior writer at The SS. He is a tortoise.<\/i><\/p>\n

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The 8 Best Ways to Earn a Passive Income in 2024<\/h3>\n

You\u2019ve probably heard the term passive income. It sounds appealing right?<\/p>\n

According to the definition of passive, it would mean you\u2019re earning income without participating or having to do anything at all. Free money? Sign me up!<\/p>\n

If you\u2019re interested in establishing a flow of passive income, here\u2019s a guide to understanding the term and getting started.<\/p>\n

Check it out here!<\/a><\/p>\n<\/div>\n<\/div>\n

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