401k millionaires

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fire_rebel
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401k millionaires

Post by fire_rebel » Thu Jan 25, 2018 10:59 am

The number of 401k millionaires hits an all-time high.

http://www.msn.com/en-us/money/savingan ... ocid=ientp

133,000 millionaires in just Fidelity alone.

Some of the early saver bogleheads might already hit 2 million milestone in 401K.

livesoft
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Re: 401k millionaires

Post by livesoft » Thu Jan 25, 2018 11:08 am

I saw a similar report a few weeks ago. My thought then is the same as now: Anybody who was contributing the maximum legal contributions from about age 30 to age 60 will have 7-figures in the total of their 401(k)/403(b) (and derived rollovers from them).

Basically, it was just a matter of time, inflation, and the contribution rules changing.
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onourway
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Re: 401k millionaires

Post by onourway » Thu Jan 25, 2018 11:11 am

I wonder what percentage of people with access to a 401k are maxing it out though? It's got to be low single digits.

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triceratop
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Re: 401k millionaires

Post by triceratop » Thu Jan 25, 2018 11:12 am

One can often roll over IRAs to 401(k). In fact if one wants to do Roth conversions this is recommended. I see too many other confounding variables to consider this stat much more than a curiosity.
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Jack FFR1846
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Re: 401k millionaires

Post by Jack FFR1846 » Thu Jan 25, 2018 11:12 am

I think it's a useless statistic.

I've been at my job for 2 years and have $65k in my Fidelity 401k. I didn't roll over into it because the choices are S&P 500 at an awesome 0.035% and a bunch of high priced garbage otherwise.

Outside the 401k, I've got a million two at Fidelity.
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livesoft
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Re: 401k millionaires

Post by livesoft » Thu Jan 25, 2018 11:18 am

onourway wrote:
Thu Jan 25, 2018 11:11 am
I wonder what percentage of people with access to a 401k are maxing it out though? It's got to be low single digits.
OK, but 133,000 is just 0.1% of 133 million workers. Sure, not every worker has a Fidelity 401(k), but you get the idea. And some of them get a company match. :)

What might be more interesting is to find all Fidelity 401(k) account holders that are age-matched and history matched to the 133,000 and compare their current 401(k) values. That is, what is exceptional about those millionaire 401(k) accounts? Do most account holders who are ages 60-65 and who have had 401(k)s for 30 years have a million dollars?
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Nate79
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Re: 401k millionaires

Post by Nate79 » Thu Jan 25, 2018 11:43 am

onourway wrote:
Thu Jan 25, 2018 11:11 am
I wonder what percentage of people with access to a 401k are maxing it out though? It's got to be low single digits.
The median household income in the US is ~$55k. As a family income there is no way most people can max out a 401k.

CnC
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Re: 401k millionaires

Post by CnC » Thu Jan 25, 2018 11:51 am

Nate79 wrote:
Thu Jan 25, 2018 11:43 am
onourway wrote:
Thu Jan 25, 2018 11:11 am
I wonder what percentage of people with access to a 401k are maxing it out though? It's got to be low single digits.
The median household income in the US is ~$55k. As a family income there is no way most people can max out a 401k.
Noone expects the "average" person to max out a 401k.


But the top 15% should be maxing at least 1 401k. That's about 140k+ per year.

onourway
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Re: 401k millionaires

Post by onourway » Thu Jan 25, 2018 12:06 pm

CnC wrote:
Thu Jan 25, 2018 11:51 am

Noone expects the "average" person to max out a 401k.


But the top 15% should be maxing at least 1 401k. That's about 140k+ per year.
I doubt whether more than a small portion of this 15% actually does that though.

FullYellowJacket
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Re: 401k millionaires

Post by FullYellowJacket » Thu Jan 25, 2018 12:09 pm

If I include my Rollover IRA that was built through a 401(k) plus my current 401(k), I am projecting an age 65 nominal balance of $3,902,828.13 given a 6% nominal growth rate and 2% inflation. That's $1,941,577.202 real (2018 dollars). If I include potential employee match it will be well over $4MM nominal. I'll never actually accumulate that much because I will retire long before then.
Given that I am expecting we will see articles in 15-20 years on super 401(k)s with near $10MM or over balances.

To make this actionable for myself, is there a point where it doesn't make sense to save in a 401(k) anymore because I am going to be causing myself to have a very high income in retirement?

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willthrill81
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Re: 401k millionaires

Post by willthrill81 » Thu Jan 25, 2018 12:11 pm

Nate79 wrote:
Thu Jan 25, 2018 11:43 am
onourway wrote:
Thu Jan 25, 2018 11:11 am
I wonder what percentage of people with access to a 401k are maxing it out though? It's got to be low single digits.
The median household income in the US is ~$55k. As a family income there is no way most people can max out a 401k.
Mr. Money Mustache, Justin from Root of Good, the 'Frugalwoods' family, and many others would dispute the validity of that statement.

Don't forget that millions of American households live on $35-$40k a year. If they can do it, a family making $55k can do it too.

The problem is that lifestyle inflation impacts people of all incomes, including those with very high incomes.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

onourway
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Re: 401k millionaires

Post by onourway » Thu Jan 25, 2018 12:13 pm

willthrill81 wrote:
Thu Jan 25, 2018 12:11 pm
Nate79 wrote:
Thu Jan 25, 2018 11:43 am
onourway wrote:
Thu Jan 25, 2018 11:11 am
I wonder what percentage of people with access to a 401k are maxing it out though? It's got to be low single digits.
The median household income in the US is ~$55k. As a family income there is no way most people can max out a 401k.
Mr. Money Mustache, Justin from Root of Good, the 'Frugalwoods' family, and many others would dispute the validity of that statement.

Don't forget that millions of American households live on $35-$40k a year. If they can do it, a family making $55k can do it too.

The problem is that lifestyle inflation impacts people of all incomes, including those with very high incomes.
$55k-$18,500-taxes and insurance is less than $35-40k.

FullYellowJacket
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Re: 401k millionaires

Post by FullYellowJacket » Thu Jan 25, 2018 12:15 pm

willthrill81 wrote:
Thu Jan 25, 2018 12:11 pm
Nate79 wrote:
Thu Jan 25, 2018 11:43 am
onourway wrote:
Thu Jan 25, 2018 11:11 am
I wonder what percentage of people with access to a 401k are maxing it out though? It's got to be low single digits.
The median household income in the US is ~$55k. As a family income there is no way most people can max out a 401k.
Mr. Money Mustache, Justin from Root of Good, the 'Frugalwoods' family, and many others would dispute the validity of that statement.

Don't forget that millions of American households live on $35-$40k a year. If they can do it, a family making $55k can do it too.

The problem is that lifestyle inflation impacts people of all incomes, including those with very high incomes.
MMM and RoG were making wayyyyy more than 55k per year while maxing out their retirement accounts.

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willthrill81
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Re: 401k millionaires

Post by willthrill81 » Thu Jan 25, 2018 12:19 pm

FullYellowJacket wrote:
Thu Jan 25, 2018 12:15 pm
willthrill81 wrote:
Thu Jan 25, 2018 12:11 pm
Nate79 wrote:
Thu Jan 25, 2018 11:43 am
onourway wrote:
Thu Jan 25, 2018 11:11 am
I wonder what percentage of people with access to a 401k are maxing it out though? It's got to be low single digits.
The median household income in the US is ~$55k. As a family income there is no way most people can max out a 401k.
Mr. Money Mustache, Justin from Root of Good, the 'Frugalwoods' family, and many others would dispute the validity of that statement.

Don't forget that millions of American households live on $35-$40k a year. If they can do it, a family making $55k can do it too.

The problem is that lifestyle inflation impacts people of all incomes, including those with very high incomes.
MMM and RoG were making wayyyyy more than 55k per year while maxing out their retirement accounts.
True, but they now both live on very low incomes. They sought out ways to maximize their income while they accumulated assets. Now they live on $35k annually or less, and RoG has three kids at home to boot and travels a lot.

When we were making $15k in grad school, we were paying our own way for everything (except some of our tuition) and still saved money. I know that it can be done.
Last edited by willthrill81 on Thu Jan 25, 2018 12:22 pm, edited 1 time in total.
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CnC
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Re: 401k millionaires

Post by CnC » Thu Jan 25, 2018 12:20 pm

FullYellowJacket wrote:
Thu Jan 25, 2018 12:09 pm
If I include my Rollover IRA that was built through a 401(k) plus my current 401(k), I am projecting an age 65 nominal balance of $3,902,828.13 given a 6% nominal growth rate and 2% inflation. That's $1,941,577.202 real (2018 dollars). If I include potential employee match it will be well over $4MM nominal. I'll never actually accumulate that much because I will retire long before then.
Given that I am expecting we will see articles in 15-20 years on super 401(k)s with near $10MM or over balances.

To make this actionable for myself, is there a point where it doesn't make sense to save in a 401(k) anymore because I am going to be causing myself to have a very high income in retirement?
As long as they continue to allow Roth conversions no. You will never cause harm to yourself.

Because the chances of getting to a 4 million 401k without making more than 160k is virtually non existent.

So the money you are saving in taxes will almost always be greater than your taxable burden in retirement. Roth conversions will allow you to further decrease that risk.

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willthrill81
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Re: 401k millionaires

Post by willthrill81 » Thu Jan 25, 2018 12:22 pm

onourway wrote:
Thu Jan 25, 2018 12:13 pm
$55k-$18,500-taxes and insurance is less than $35-40k.
Of course, but that $18.5k isn't taxed, so it's not an apples-to-apples comparison.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

onourway
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Re: 401k millionaires

Post by onourway » Thu Jan 25, 2018 12:24 pm

willthrill81 wrote:
Thu Jan 25, 2018 12:22 pm
onourway wrote:
Thu Jan 25, 2018 12:13 pm
$55k-$18,500-taxes and insurance is less than $35-40k.
Of course, but that $18.5k isn't taxed, so it's not an apples-to-apples comparison.
After the $18.5k (yes, un-taxed) 401k contribution that family would have $36.5k left to pay all expenses including taxes, insurance and any other items that come out of their paycheck. There isn't $35-40k left to live on.

MathWizard
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Re: 401k millionaires

Post by MathWizard » Thu Jan 25, 2018 12:27 pm

You know, I always hated the term 401K millionaires.

It seems as if it implies that they are not "real" millionaires

Yes, it is taxed when it comes out, but so would individual stocks with capital gains.

If you have the income and the ability contribute to tax advantaged accounts (without exorbitant fees)
what possible reason would you have not to use the tax advantaged accounts?

JBTX
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Re: 401k millionaires

Post by JBTX » Thu Jan 25, 2018 12:32 pm

.........
Last edited by JBTX on Sat Aug 04, 2018 1:47 pm, edited 1 time in total.

FullYellowJacket
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Re: 401k millionaires

Post by FullYellowJacket » Thu Jan 25, 2018 12:37 pm

I performed some quick excel analysis. It looks like a 28 year old making $55,000 just starting a 401(k) needs to contribute about $9,765 real per year until age 65, keeping up with inflation in order to have a $1MM 401(k). 4% real rate assumed. This assumes a 4.5% 401(k) employer match. This is about a 18% contribution rate, rounding up. It seems doable. Maxing out a 401(k) is not required.

Nominal it's $3,627 annually for a 7% savings rate to make it to $1MM, but a million 37 years from now isn't as impressive.

Snowjob
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Re: 401k millionaires

Post by Snowjob » Thu Jan 25, 2018 12:54 pm

Way to much bad data to do any concrete analysis but it does do a good job at reminding all of us that the goalposts keep moving. That's a massive increase in new millionaire accounts regardless! I was feeling good about myself but when you sit back and think about it -- the only thing that matters is how much you save relative to the rest of the population since we all using the sames stock ETF's to store our money :idea:

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Toons
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Re: 401k millionaires

Post by Toons » Thu Jan 25, 2018 1:01 pm

:happy :happy
Tax deferred,Tax Free compounding.
It Works.Contribute The Maximum
You Are On Your Way
Essential Tenet Of Wealth Creation
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

limeyx
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Re: 401k millionaires

Post by limeyx » Thu Jan 25, 2018 1:14 pm

Jack FFR1846 wrote:
Thu Jan 25, 2018 11:12 am
I think it's a useless statistic.

I've been at my job for 2 years and have $65k in my Fidelity 401k. I didn't roll over into it because the choices are S&P 500 at an awesome 0.035% and a bunch of high priced garbage otherwise.

Outside the 401k, I've got a million two at Fidelity.
Maybe we need a "Who has the lowest 401k:retirement funds ratio" Haha
Only 30K in 401 here because I truly hate the concept that someone else gets to choose how I invest my retirement

john4546
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TSP millionaires.

Post by john4546 » Thu Jan 25, 2018 1:16 pm


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Nestegg_User
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Re: 401k millionaires

Post by Nestegg_User » Thu Jan 25, 2018 1:20 pm

onourway wrote:
Thu Jan 25, 2018 12:06 pm
CnC wrote:
Thu Jan 25, 2018 11:51 am

Noone expects the "average" person to max out a 401k.


But the top 15% should be maxing at least 1 401k. That's about 140k+ per year.
I doubt whether more than a small portion of this 15% actually does that though.

the other problem is that, if one is high enough, they become HCE’s and can’t fund to the same extent.... we had that problem- me maxed out (full level) while spouse was HCE and limited to 10% and so was short of the legal max (and didn’t even have as good of a match)

we don’t individually have one mil in any 401k since we rolled over some to IRA’s while maxing out the current when we w@rked (so don’t know how we would be counted)- but I don’t believe that many of our cohort ever maxed theirs out but we were in the midwest, so generally lower salaries overall, but since we were in the 33% fed rate even after maxing what we could, it made sense for us. I would suspect that those on the coast, at the higher rungs, could more easily have maxed and become such millionaires.... a geospatial map of those I suspect would correlate to that.

sc9182
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Re: 401k millionaires

Post by sc9182 » Thu Jan 25, 2018 1:35 pm

Fidelity Investments report cited by the New York Times found that the typical "401(k) millionaire" was an American with a six-figure income — $287,700 for women and $354,600 for men.

.. Fidelity says there are 133,000 401(k) millionaires on its platform, which oversees retirement accounts for more than 15 million Americans.

Fidelity found that saving consistently and investing in the stock market were the keys for those who reached millionaire status while earning less than $150,000.

For those mid-level earners, women had a savings rate of nearly 25% — 18.1% of their salaries and 6.8% employer match. By contrast, men earning less than $150,000 who reached millionaire status saved 22.8% total. Still, men earned about $1,800 more than women annually, according to Fidelity

On average, women hit the milestone at age 58.5, while the average man became a millionaire at age 59.3.

.. held the majority of their savings — between 76% - 77%, — in stocks

.. Fidelity found it takes about thirty years of working and saving to reach the milestone..

Ref: http://www.businessinsider.com/how-to-b ... gs-2017-11

wrongfunds
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Re: 401k millionaires

Post by wrongfunds » Thu Jan 25, 2018 1:38 pm

I recall when Mitt Romney had many millions in his 401K, some of us tried to figure out if it would be even possible to have vast amount in 401K account given the historical max limits on the annual contribution. I recall the conclusion was we needed to have FANG type equities purchased at pre-IPO prices in the retirement account to do that and it was not possible with total market indexed funds.

Anybody willing to unearth that discussion?

wolf359
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Re: 401k millionaires

Post by wolf359 » Thu Jan 25, 2018 1:44 pm

willthrill81 wrote:
Thu Jan 25, 2018 12:11 pm
Nate79 wrote:
Thu Jan 25, 2018 11:43 am
onourway wrote:
Thu Jan 25, 2018 11:11 am
I wonder what percentage of people with access to a 401k are maxing it out though? It's got to be low single digits.
The median household income in the US is ~$55k. As a family income there is no way most people can max out a 401k.
Mr. Money Mustache, Justin from Root of Good, the 'Frugalwoods' family, and many others would dispute the validity of that statement.

Don't forget that millions of American households live on $35-$40k a year. If they can do it, a family making $55k can do it too.

The problem is that lifestyle inflation impacts people of all incomes, including those with very high incomes.
I maxed out my 401k from when I was first eligible to get one (at 20) and still do (at 50). This included a range from when I was single through married, no kids, though married with two kids. During that time my income ranged from below median, to median, to 3x median as my career progressed.

However, I do agree with the sentiment that most people can't max out a 401k. They're not willing to sacrifice today for the sake of tomorrow. What made it easy for me is that I started from the beginning. Going from a position of not maxing out to suddenly maxing out is too much of a lifestyle hit for most people. My co-workers thought I was crazy, until one point when I started lobbying for changes in the company 401k and the administrator listened to me because I had 1/5 of the assets in the plan (yes it was a small company, but I also wasn't paid all that much at the time.)

wrongfunds
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Re: 401k millionaires

Post by wrongfunds » Thu Jan 25, 2018 1:47 pm

By the way, I went to Fidelity and I could not find the original research on which the NYTimes article is based upon. On Fidelity site, I got the same NYTimes article after searching. Anybody has link to the original Fidelity research?

wrongfunds
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Re: 401k millionaires

Post by wrongfunds » Thu Jan 25, 2018 1:50 pm

I maxed out my 401k from when I was first eligible to get one (at 20) and still do (at 50). This included a range from when I was single through married, no kids, though married with two kids. During that time my income ranged from below median, to median, to 3x median as my career progressed.
Were you able to reach the magical number with 30 year maxing out? I don't believe I was able to do that even with extra catch-up contribution after getting "older".

ResearchMed
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Re: 401k millionaires

Post by ResearchMed » Thu Jan 25, 2018 1:51 pm

wrongfunds wrote:
Thu Jan 25, 2018 1:38 pm
I recall when Mitt Romney had many millions in his 401K, some of us tried to figure out if it would be even possible to have vast amount in 401K account given the historical max limits on the annual contribution. I recall the conclusion was we needed to have FANG type equities purchased at pre-IPO prices in the retirement account to do that and it was not possible with total market indexed funds.

Anybody willing to unearth that discussion?
I think Romney used an IRA, not a 401k type account, and I think he had a self-directed IRA.
(By self-directed, I don't mean the "brokerage option" type often referred to here for 401k/403b's.)

RM
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Nate79
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Re: 401k millionaires

Post by Nate79 » Thu Jan 25, 2018 1:57 pm

The other issue with this article is that it is only looking at a small subset of "millionaire" net worth. To be a millionaire means you have a net worth of $1m in total assets - total liabilities. This would include home and all accounts outside of an employer retirement funds as well as all liabilities.

There is no guarantee that someone with $1m in a 401k is a millionaire.

WhiteMaxima
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Re: 401k millionaires

Post by WhiteMaxima » Thu Jan 25, 2018 2:01 pm

Just remind market tide can change any moment without trig event. In 2009, many 401k account became 201k.

bada bing
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Re: 401k millionaires

Post by bada bing » Thu Jan 25, 2018 2:08 pm

Under the current rules and with the market tailwind of the last 9 years, you could have
done it (become a 401K millionaire) in just the last 9 years. Especially if the participant
was 50+ years old in 2009. The all sources limit went from $49K + $5.5K in 2009 up to
$55K + $6K in 2018. Quick seat of the pants estimate for a balance of a "maxed" 401K
invested in S&P500 since 2009 is $1,165,000. More than 1/2 of that total could potentially
be in Roth :shock:

Other than a few highly compensated execs and docs who got most of their contributions as
profit sharing, I doubt anyone actually did that (max'ed their after tax contribution out of
wages and invested 100% stock). Interesting theoretical corner case though.

I have been max'ing the all source limit for the last 4 years and I'd guess a few bogleheads
have been as well for at least that long. The clarification of mega-backdoor Roth rules makes
it more obvious today than it was in 2009. I'm not 100% stock and don't expect nearly a repeat
of the returns of 2009-2017 going forward though.

I do have (as of today) $550K in a 401K that was started in 2008 with no roll ins. As I said, the
last 4 years I've been max'ing the all source limit + catch up. Prior to 2014, it was just the deferred
limit + match.
Last edited by bada bing on Thu Jan 25, 2018 2:35 pm, edited 1 time in total.

Engineer250
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Re: 401k millionaires

Post by Engineer250 » Thu Jan 25, 2018 2:14 pm

wolf359 wrote:
Thu Jan 25, 2018 1:44 pm
I maxed out my 401k from when I was first eligible to get one (at 20) and still do (at 50). This included a range from when I was single through married, no kids, though married with two kids. During that time my income ranged from below median, to median, to 3x median as my career progressed.

However, I do agree with the sentiment that most people can't max out a 401k. They're not willing to sacrifice today for the sake of tomorrow. What made it easy for me is that I started from the beginning.
401(k) contribution limit in 1987 was $7,000 and the medium income was $26,061. Do you mean you made less than $26,061 in 1987 or less than $55k?

If you made less than $26k I am impressed with your ability to stash away > 27% of your income.
Where the tides of fortune take us, no man can know.

an_asker
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Re: 401k millionaires

Post by an_asker » Thu Jan 25, 2018 2:58 pm

bada bing wrote:
Thu Jan 25, 2018 2:08 pm
Under the current rules and with the market tailwind of the last 9 years, you could have
done it (become a 401K millionaire) in just the last 9 years. Especially if the participant
was 50+ years old in 2009. The all sources limit went from $49K + $5.5K in 2009 up to
$55K + $6K in 2018. Quick seat of the pants estimate for a balance of a "maxed" 401K
invested in S&P500 since 2009 is $1,165,000. More than 1/2 of that total could potentially
be in Roth :shock:

Other than a few highly compensated execs and docs who got most of their contributions as
profit sharing, I doubt anyone actually did that (max'ed their after tax contribution out of
wages and invested 100% stock). Interesting theoretical corner case though.

I have been max'ing the all source limit for the last 4 years and I'd guess a few bogleheads
have been as well for at least that long. The clarification of mega-backdoor Roth rules makes
it more obvious today than it was in 2009. I'm not 100% stock and don't expect nearly a repeat
of the returns of 2009-2017 going forward though.

I do have (as of today) $550K in a 401K that was started in 2008 with no roll ins. As I said, the
last 4 years I've been max'ing the all source limit + catch up. Prior to 2014, it was just the deferred
limit + match.
The way you are saying it, everyone has the option to do that. That is simply not true. Maybe all doctors (and other business owners) do, but though there are a lot of doctors here, I really doubt if they are the majority - I could be wrong, of course!

For one, I don't think there is any way I can contribute more than 18,000 per year in my 401(k) - not counting catch-up contributions if eligible.

an_asker
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Re: 401k millionaires

Post by an_asker » Thu Jan 25, 2018 3:04 pm

Engineer250 wrote:
Thu Jan 25, 2018 2:14 pm
wolf359 wrote:
Thu Jan 25, 2018 1:44 pm
I maxed out my 401k from when I was first eligible to get one (at 20) and still do (at 50). This included a range from when I was single through married, no kids, though married with two kids. During that time my income ranged from below median, to median, to 3x median as my career progressed.

However, I do agree with the sentiment that most people can't max out a 401k. They're not willing to sacrifice today for the sake of tomorrow. What made it easy for me is that I started from the beginning.
401(k) contribution limit in 1987 was $7,000 and the medium income was $26,061. Do you mean you made less than $26,061 in 1987 or less than $55k?

If you made less than $26k I am impressed with your ability to stash away > 27% of your income.
It shouldn't be all that difficult, really! Less than median income, most likely would be in a LCOL area. In the mid 1990s, I paid just over $400/month for a one-bedroom apartment in Central Florida. Assuming $500 for wolf359, that would be $6,000 per year for accommodation. Gas was about $1/gal., if you had a low maintenance life-style (cooked own food, did not party a lot, were generally frugal), all other expenses would likely be in the $6-10,000 range (at the max). I doubt taxes would be more than, say, $3,000 especially if you went all in into the 401k.

Bottom line, it is doable.

randomguy
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Re: 401k millionaires

Post by randomguy » Thu Jan 25, 2018 3:09 pm

wrongfunds wrote:
Thu Jan 25, 2018 1:38 pm
I recall when Mitt Romney had many millions in his 401K, some of us tried to figure out if it would be even possible to have vast amount in 401K account given the historical max limits on the annual contribution. I recall the conclusion was we needed to have FANG type equities purchased at pre-IPO prices in the retirement account to do that and it was not possible with total market indexed funds.

Anybody willing to unearth that discussion?
Romeny had like 100 million dollars. He got there by places undervalued investment partnerships (this was legal at the time). The question now is was that a good move (i.e. he avoided tax drag but now is paying OI taxes instead of LTGC) or not. Similiar tricks were used by people to get 100 million dollar ROTHs (i.e put you 10k shares of facebook with a value of .01 in a ROTH and if things work out you now have a 100 million bucks in your IRA).

Even with the 53k/year contribution limit for 401(k)s, you are not getting to 100 million without crazy (15%+ for 40 year) type returns.

Jack FFR1846
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Re: 401k millionaires

Post by Jack FFR1846 » Thu Jan 25, 2018 3:26 pm

I have to say that whatever math is being done to say it couldn't be reached is wrong. Looking at my 401k, and 2 IRAs that contain only rolled over 401k money, I'm at a million and a half. I've contributed to 401k's for 30 years. Some years, completely missed (forgot to sign up) and worked for plenty of employers who gave zero match. But I was lucky to have matches in other places and one company early on who wanted to encourage factory workers to open a 401k so gave bonuses in 401k money only. I was also considered a HCE for a few years. Market gains helped and ignoring my entire portfolio during the 08 and 00 time periods helped (one of which I had mistakenly had half in a stable value account). I would guess that if I had always been able to....and always did contribute to the max, I'd have double what I have now in these accounts....so 3 mil in 30 years. I'm an engineer outside Boston and have had to pay all the high costs for the area. It was never difficult saving.

My wife has smaller balances but stopped working 17 years ago with the kids. Her balance is not included above in my numbers.
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wolf359
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Re: 401k millionaires

Post by wolf359 » Thu Jan 25, 2018 3:36 pm

Engineer250 wrote:
Thu Jan 25, 2018 2:14 pm
wolf359 wrote:
Thu Jan 25, 2018 1:44 pm
I maxed out my 401k from when I was first eligible to get one (at 20) and still do (at 50). This included a range from when I was single through married, no kids, though married with two kids. During that time my income ranged from below median, to median, to 3x median as my career progressed.

However, I do agree with the sentiment that most people can't max out a 401k. They're not willing to sacrifice today for the sake of tomorrow. What made it easy for me is that I started from the beginning.
401(k) contribution limit in 1987 was $7,000 and the medium income was $26,061. Do you mean you made less than $26,061 in 1987 or less than $55k?

If you made less than $26k I am impressed with your ability to stash away > 27% of your income.
My first salary was $24,000. For the first few years, I shared a house with housemates, so had minimal living expenses. Shortly after, I bought a house, then had housemates who paid for all my housing expenses with their rent. By continuing to drive my college car, having little/no housing expenses, and maintaining a college lifestyle, expenses were extremely low.

You can do extreme things when you are young and single. They also didn't feel extreme at the time.

basspond
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Re: 401k millionaires

Post by basspond » Thu Jan 25, 2018 3:45 pm

All you have to do is start young and stay the course. It worked for me. 39 years of work, and saving, with an average salary of around $60k. Closer to $2M then $1M.

bhsince87
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Re: 401k millionaires

Post by bhsince87 » Thu Jan 25, 2018 4:13 pm

I'm at $1.2 million after maxing out for 18 years. I've had 2 years of the over age 50 bonus contribution. But what really helped was a 12%employer match.
Retirement: When you reach a point where you have enough. Or when you've had enough.

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Portfolio7
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Re: 401k millionaires

Post by Portfolio7 » Thu Jan 25, 2018 4:28 pm

I assume they grabbed only individual accounts > $1M? I imagine the number may be significantly higher if you include households and multiple accounts.
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elgob.bogle
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Re: 401k millionaires

Post by elgob.bogle » Thu Jan 25, 2018 4:28 pm

FWIW - here is an article https://www.rollingstone.com/politics/n ... e-20121012 that digs into M.Romney's IRA (near the bottom). Discussing it might be off topic, other than to point out that there are/were ways to take advantage of the wording of the applicable law(s)/rule(s).

elgob

jayk238
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Re: 401k millionaires

Post by jayk238 » Thu Jan 25, 2018 4:45 pm

CnC wrote:
Thu Jan 25, 2018 11:51 am
Nate79 wrote:
Thu Jan 25, 2018 11:43 am
onourway wrote:
Thu Jan 25, 2018 11:11 am
I wonder what percentage of people with access to a 401k are maxing it out though? It's got to be low single digits.
The median household income in the US is ~$55k. As a family income there is no way most people can max out a 401k.
Noone expects the "average" person to max out a 401k.


But the top 15% should be maxing at least 1 401k. That's about 140k+ per year.
is 140 really 85% percentile of workers?

livesoft
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Re: 401k millionaires

Post by livesoft » Thu Jan 25, 2018 4:46 pm

It's inspiring to read these personal stories from Boglehead 401(k) millionaires. The stories show that if there is a will, then there's a way. Also a 2-earner family can live as if they have only one income and really sock it away.
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downshiftme
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Re: 401k millionaires

Post by downshiftme » Thu Jan 25, 2018 5:13 pm

Fidelity Investments report cited by the New York Times found that the typical "401(k) millionaire" was an American with a six-figure income — $287,700 for women and $354,600 for men.
It would not be surprising if there is strong correlation to longevity at the same company to reach such a large 401k balance, and possibly that there is also strong correlation to being founder or executive level to achieve such longevity. Taken in isolation the rare 401k balance over $1 million doesn't give much insight. Unless it is a rare 401k with excellent investment options, most people would do better to roll 401k balances into IRAs instead of new employer 401k accounts when they change jobs.

wrongfunds
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Re: 401k millionaires

Post by wrongfunds » Thu Jan 25, 2018 5:14 pm

Me too; I am really impressed! I wish I had found BH earlier or at least knew about indexed funds. I am guessing that if I had not gambled my retirement money on the internet stocks of late nineties, I too would have had million in 401K. I have been maxing out since that time.

wrongfunds
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Re: 401k millionaires

Post by wrongfunds » Thu Jan 25, 2018 5:33 pm

Found something but a typical BH might just throw up reading this as it is specifically designed to sell advisory services. When I read it, it almost felt like I was stealing my opponent's game plan :-) However, this NOT study is NOT associated with the original topic.

“With the percentage of Gen X/Y millionaires using an advisor on the decline, the industry needs to take a step back and ask: What can we be doing to ‘tip’ these investors toward valuing advice?”

http://go.fidelity.com/millionaireoutlook2017

About the Fidelity Millionaire Outlook Study
The 2017 Fidelity® Millionaire Outlook Study was an online, blind study conducted during the period January 18 through February 13, 2017. The sample was provided by TNS, a third-party research firm not affiliated with Fidelity. The study focused on understanding affluent investors’ attitudes, goals, behaviors and preferences related to investing, wealth management, and advice. Six hundred and one participants were defined as “Millionaires” with $1 million or more in total investable assets, excluding 401(k) and real estate investments.

kksmom
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Re: 401k millionaires

Post by kksmom » Thu Jan 25, 2018 6:54 pm

wrongfunds wrote:
Thu Jan 25, 2018 1:38 pm
I recall when Mitt Romney had many millions in his 401K, some of us tried to figure out if it would be even possible to have vast amount in 401K account given the historical max limits on the annual contribution. I recall the conclusion was we needed to have FANG type equities purchased at pre-IPO prices in the retirement account to do that and it was not possible with total market indexed funds.

Anybody willing to unearth that discussion?

He did it by using self directed IRAs investing in alternative investments(presumably buying businesses as partnerships).
There were 300+ individuals who had more than 25 M in their IRAs in 2011.

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