401k millionaires

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DrGoogle2017
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Re: 401k millionaires

Post by DrGoogle2017 »

One of the companies I’ve worked for allowed me to contribute more than the max. I’ve read online it could be legit up to $53k at the time. I know I was able to contribute after the max, but only up to the limit was tax deductible.
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willthrill81
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Re: 401k millionaires

Post by willthrill81 »

DrGoogle2017 wrote: Thu Jan 25, 2018 6:06 pm One of the companies I’ve worked for allowed me to contribute more than the max. I’ve read online it could be legit up to $53k at the time. I know I was able to contribute after the max, but only up to the limit was tax deductible.
Nice!

Also, if your employer requires 401k contributions (my current employer does), those contributions made by you do not count toward the $18.5k voluntary contribution limit, and all of the contributions are deductible. Due to this, plus having access to a 457 plan, my total available tax-advantage space (including IRAs) is over $72k. :D
Last edited by willthrill81 on Thu Jan 25, 2018 6:26 pm, edited 1 time in total.
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DrGoogle2017
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Re: 401k millionaires

Post by DrGoogle2017 »

willthrill81 wrote: Thu Jan 25, 2018 6:24 pm
DrGoogle2017 wrote: Thu Jan 25, 2018 6:06 pm One of the companies I’ve worked for allowed me to contribute more than the max. I’ve read online it could be legit up to $53k at the time. I know I was able to contribute after the max, but only up to the limit was tax deductible.
Also, if your employer requires 401k contributions (my current employer does), those contributions made by you do not count toward the $18.5k voluntary contribution limit. Due to this, plus having access to a 457 plan, my total available tax-advantage space (including IRAs) is over $72k. :D
Wow!
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Re: 401k millionaires

Post by CryingHawaiian »

Nate79 wrote: Thu Jan 25, 2018 10:43 am
onourway wrote: Thu Jan 25, 2018 10:11 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.
Just for fun:

Let's say that the median household is able to save 15% and put it towards a 401k. Let's say they didn't find out about bogleheads or sound investment strategies until later in life when they were 30 years old. They would need a 7.09% rate of return to be a 401k millionaire by the average U.S. retirement age of 62. There should be a lot more 401k millionaires in the U.S. than currently exist...
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Re: 401k millionaires

Post by 2Birds1Stone »

I am about to hit $100k right before my 31st Birthday.

The only way I will ever see $1M in there is through compounding. Which over the course of 3 decades, should End up somewhere between $500-750k in today's dollars.
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Re: 401k millionaires

Post by FedGuy »

I joined the two comma club about two and a half years ago but doubt I will ever be a 401(k)--or, in my case, a TSP--millionaire. Most of my money is in a brokerage account and Roth IRA (most of which, admittedly, was originally 401(k) money from previous jobs). I use the G Fund for my fixed income allocation, and my TSP, which recently passed the quarter million dollar mark, is 100% invested in the G Fund. I'm still short of my desired fixed income allocation and, despite maxing out my TSP/G Fund contribution every year, the stocks I hold outside the TSP have been growing so much during the last 5-7 years that my G Fund shrinks as a percentage of my total assets every year. In any case, unless interest rates rise dramatically, it's hard to imagine my G Fund assets quadrupling in value before I retire in about 20 years.
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Re: 401k millionaires

Post by White Coat Investor »

I have three 401(k)s and not a single one has a million bucks in it. I guess I'm not a 401(k) millionaire. If I don't change jobs I could be there in a few years with one of them. Shouldn't take that long for a high earner with a 401(k)/PSP with a $55K limit.
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Re: 401k millionaires

Post by White Coat Investor »

FedGuy wrote: Thu Jan 25, 2018 11:13 pm I joined the two comma club about two and a half years ago but doubt I will ever be a 401(k)--or, in my case, a TSP--millionaire. Most of my money is in a brokerage account and Roth IRA (most of which, admittedly, was originally 401(k) money from previous jobs). I use the G Fund for my fixed income allocation, and my TSP, which recently passed the quarter million dollar mark, is 100% invested in the G Fund. I'm still short of my desired fixed income allocation and, despite maxing out my TSP/G Fund contribution every year, the stocks I hold outside the TSP have been growing so much during the last 5-7 years that my G Fund shrinks as a percentage of my total assets every year. In any case, unless interest rates rise dramatically, it's hard to imagine my G Fund assets quadrupling in value before I retire in about 20 years.
Same problem. TSP now 100% G and I'm going to have to figure out this year what else I'm going to do for nominal bonds. Probably the VG Tax-exempt intermediate in taxable.
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celia
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Re: 401k millionaires

Post by celia »

livesoft wrote: Thu Jan 25, 2018 10:08 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.
Yeah, but when I read this, I think of how many will not be aware of what their RMDs will be at age 70.5.

We better ramp up to help another 100,000 people! :oops:
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Re: 401k millionaires

Post by youdiditr2 »

2Birds1Stone wrote: Thu Jan 25, 2018 8:02 pm I am about to hit $100k right before my 31st Birthday.

The only way I will ever see $1M in there is through compounding. Which over the course of 3 decades, should End up somewhere between $500-750k in today's dollars.
my 401(k) was $120k in 2009, after it dropped from $200k from 2008.

It's now $700k. Compounding is crazy!
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Re: 401k millionaires

Post by 22twain »

I contributed to my TIAA 403(b) plan for 32.5 years. I was at the contribution limit for only the last 7 of those years. My contributions were always allocated 50% to CREF Stock and 50% to TIAA Tradtional (my "fixed income" component). I never rebalanced, so the actual % of stock has varied between a high of 66% and a low of 41%. This is rather conservative by the standards of many posters here. Nevertheless, the plan balance passed $1 million last September, several months after I retired and stopped contributing.
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Re: 401k millionaires

Post by rob »

I think the term "millionaire" needs to be inflation adjusted, as it used to mean wealthy beyond reasonable comprehension :oops:
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Re: 401k millionaires

Post by willthrill81 »

22twain wrote: Fri Jan 26, 2018 12:30 am I contributed to my TIAA 403(b) plan for 32.5 years. I was at the contribution limit for only the last 7 of those years. My contributions were always allocated 50% to CREF Stock and 50% to TIAA Tradtional (my "fixed income" component). I never rebalanced, so the actual % of stock has varied between a high of 66% and a low of 41%. This is rather conservative by the standards of many posters here. Nevertheless, the plan balance passed $1 million last September, several months after I retired and stopped contributing.
You don't hit any 'home runs' with TIAA Traditional, but those consistent, high by today's standards returns are envied by many.
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Re: 401k millionaires

Post by willthrill81 »

rob wrote: Fri Jan 26, 2018 12:33 am I think the term "millionaire" needs to be inflation adjusted, as it used to mean wealthy beyond reasonable comprehension :oops:
Adjusted to what time period?
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Re: 401k millionaires

Post by OnTrack »

willthrill81 wrote: Fri Jan 26, 2018 12:34 am
rob wrote: Fri Jan 26, 2018 12:33 am I think the term "millionaire" needs to be inflation adjusted, as it used to mean wealthy beyond reasonable comprehension :oops:
Adjusted to what time period?
Maybe 1953?
https://en.m.wikipedia.org/wiki/How_to_ ... illionaire
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Re: 401k millionaires

Post by willthrill81 »

OnTrack wrote: Fri Jan 26, 2018 12:38 am
willthrill81 wrote: Fri Jan 26, 2018 12:34 am
rob wrote: Fri Jan 26, 2018 12:33 am I think the term "millionaire" needs to be inflation adjusted, as it used to mean wealthy beyond reasonable comprehension :oops:
Adjusted to what time period?
Maybe 1953?
https://en.m.wikipedia.org/wiki/How_to_ ... illionaire
That'd be about $9.3 million today. Few indeed ever reach that level, even among Bogleheads.
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Re: 401k millionaires

Post by OnTrack »

MathWizard wrote: Thu Jan 25, 2018 11:27 am 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?
However, for stocks in a taxable account (1) taxes are only due on the gains and (2) capital gains tax rates are often less than the rate due on 401k withdrawals.
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Re: 401k millionaires

Post by IowaFarmBoy »

One thing worth mentioning (IMHO) is that this article refers to people with a million or more in one single Fidelity 401k. I think most Bogleheads have money spread over several accounts- one or more 401ks, IRAs , taxable accounts, etc. So there are probably a lot more millionaires than a study like this would indicate.
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Re: 401k millionaires

Post by Dottie57 »

onourway wrote: Thu Jan 25, 2018 11:06 am
CnC wrote: Thu Jan 25, 2018 10:51 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.
Just remeber that contribution limits have not been at 18k trhough out the years.

The limit in 1987 was 7k
In 1997 it was 9k
In 2007 it was 15.5 k.

Since 1992 I have been putting in 15% of income and since 1997 I have made more than median. But never had the high flying incomes we see here in this forum. So having 1m in 401k is do-able with persistence and time. It is a Slow. grind.
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Re: 401k millionaires

Post by jackal »

triceratop wrote: Thu Jan 25, 2018 10:12 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.
Hmmm....
If one does that, is it considered a part of the 401k? Does the legal benefit of a 401k apply to the transferred ira? Any drawbacks of doing this?
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Re: 401k millionaires

Post by JoMoney »

It's been a blessing for anyone able to contribute the 'overall maximum' [ 415(c) limit ] contribution to a 401k over the past decade.
Not easy, but completely feasible for a dual-income couple or a single professional earning something close to $100k whose employer doesn't cap contributions at the pre-tax limit, and were able to keep their cost of living low.
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Re: 401k millionaires

Post by Ostentatious »

triceratop wrote: Thu Jan 25, 2018 10:12 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.
Can you elaborate on this? Why go from IRA to 401k to Roth, when you can simply go from IRA to Roth?
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Re: 401k millionaires

Post by livesoft »

Ostentatious wrote: Fri Jan 26, 2018 8:10 am
triceratop wrote: Thu Jan 25, 2018 10:12 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.
Can you elaborate on this? Why go from IRA to 401k to Roth, when you can simply go from IRA to Roth?
triceratop left out a lot. See this wiki article: https://www.bogleheads.org/wiki/Backdoor_Roth_IRA and the "Caution" section.
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Re: 401k millionaires

Post by MrNewEngland »

downshiftme wrote: Thu Jan 25, 2018 4:13 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.
I was thinking the same thing... I will never hit that magical $1M in any one of my accounts but plan to pass that total before I retire. I have a traditional IRA, a Roth IRA, a 401k, and a 457k. I also have a pension fund and an HSA. My IRAs are the biggest accounts right now because I rolled old 401ks into them even though I contribute far more to my 401k & 457k.

I’d be willing to bet a lot of people are in the same situation as I am.
Last edited by MrNewEngland on Fri Jan 26, 2018 9:14 am, edited 2 times in total.
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Re: 401k millionaires

Post by JW-Retired »

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Re: 401k millionaires

Post by triceratop »

livesoft wrote: Fri Jan 26, 2018 8:12 am
Ostentatious wrote: Fri Jan 26, 2018 8:10 am
triceratop wrote: Thu Jan 25, 2018 10:12 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.
Can you elaborate on this? Why go from IRA to 401k to Roth, when you can simply go from IRA to Roth?
triceratop left out a lot. See this wiki article: https://www.bogleheads.org/wiki/Backdoor_Roth_IRA and the "Caution" section.
I mean, yes I left it out, but that's not really the point of this topic though. :)
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Re: 401k millionaires

Post by TwstdSista »

401k millionaire? Hysterical! The husband and I have a grand total of one 401k between us. Current value = $0.
GetMeToRetirement
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Re: 401k millionaires

Post by GetMeToRetirement »

I am 35, and my 401(k) balance hit $460k this week. I have been contributing 10% (not including my employer's 1.5% match and 2-4% "profit sharing") per year to my 401(k) since I was first eligible in 2008. This year will be the first year that my 10% contribution gets me to the contribution limit of $18.5K, and I am super excited in the nerdiest of ways. Perhaps most importantly, whenever a market correction does happen, I'll keep contributing to the max and should have plenty of years to ride the wave back up, and someday will become a fellow 401k millionaire!

I also just started contributing to an HSA ($500/mo) based upon a few posts I've seen here and elsewhere, will max it out next year, and hopefully won't have to touch that account until retirement.

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lazydavid
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Re: 401k millionaires

Post by lazydavid »

an_asker wrote: Thu Jan 25, 2018 1:58 pm 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.
Truth. Many companies (mine included) do not permit contributions of any kind outside of payroll deductions (so no mega backdoor roth), and cap those at the legal limit.

This year, I can't even do that. My wife and I will both will be capped at around $12-13k. :annoyed
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Re: 401k millionaires

Post by Faith20879 »

livesoft wrote: Thu Jan 25, 2018 10:08 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.
I think this is a good assessment.

A few years ago there was talk of capping the 401k/IRA and the sort. Kiplinger ran an opinion poll. Majority of the sentiment was that 401K/IRA are only for the wealthy and that whoever hit the cap must be the uber riches. I was tempted to write something back but didn't. You said it better than I could've.
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Re: 401k millionaires

Post by deltaneutral83 »

You really shouldn't see too many 401k millionaires from a whole lot of folks because the chances of them staying at the same job more than 10 years are just slim these days. The day after you leave your company you should be rolling that to a traditional IRA. If you roll old 401ks into new 401k's, well that's just most likely not a great option, going to be hard to beat the <10 bps I pay in a tIRA or rIRA at Schwab/Fidelity/TDA/Merrill/Etrade/Scott/VG.
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Re: 401k millionaires

Post by drk »

deltaneutral83 wrote: Fri Jan 26, 2018 10:13 am You really shouldn't see too many 401k millionaires from a whole lot of folks because the chances of them staying at the same job more than 10 years are just slim these days. The day after you leave your company you should be rolling that to a traditional IRA. If you roll old 401ks into new 401k's, well that's just most likely not a great option, going to be hard to beat the <10 bps I pay in a tIRA or rIRA at Schwab/Fidelity/TDA/Merrill/Etrade/Scott/VG.
I rolled all my pre-tax money into my current MegaCorp employer's 401k because I have access to investment trusts with ERs less than half their equivalent Admiral rates. That also got me started with the backdoor Roth. So, don't discount the plan-to-plan rollover. 8-)
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celia
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Re: 401k millionaires

Post by celia »

Another thing we've forgotten so far is that many 401Ks are owned by retirees who have been drawing them down or converting.

So this "statistic" is not useful unless they break it down by account owner age:
# owners with $1M under age 30
# owners with $1M age 30-39
# owners with $1M age 40-49
# owners with $1M age 50-59
# owners with $1M age 60-69
# owners with $1M age 70-79
# owners with $1M over 80

I would guess 70-79 would have the most since the account would compound as long as the withdrawals are less than the growth, but many will/should have a very conservative AA at the upper ages so the growth will then slow down. Those at younger ages could be Inherited.


Or, maybe fewer people have $1M in 401Ks than are expected due to having investment choices with high fees.
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Re: 401k millionaires

Post by livesoft »

@celia

401(k) plans have only been around since the early 1980s, so I suspect that age cohorts past age 60 probably don't matter that much.

https://www.learnvest.com/knowledge-cen ... ed-and-why

Now 403(b) plans have been around much longer, particularly TIAA-CREF.
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Re: 401k millionaires

Post by lazydavid »

drk wrote: Fri Jan 26, 2018 10:28 am
deltaneutral83 wrote: Fri Jan 26, 2018 10:13 am You really shouldn't see too many 401k millionaires from a whole lot of folks because the chances of them staying at the same job more than 10 years are just slim these days. The day after you leave your company you should be rolling that to a traditional IRA. If you roll old 401ks into new 401k's, well that's just most likely not a great option, going to be hard to beat the <10 bps I pay in a tIRA or rIRA at Schwab/Fidelity/TDA/Merrill/Etrade/Scott/VG.
I rolled all my pre-tax money into my current MegaCorp employer's 401k because I have access to investment trusts with ERs less than half their equivalent Admiral rates. That also got me started with the backdoor Roth. So, don't discount the plan-to-plan rollover. 8-)
I'm not at a megacorp and didn't have anything to roll in, but I would have if I did. Here's what my 3-fund looks like:

Total market: FSKTX 0.03%
International: FSPNX 0.05%
US Bond: FXSTX 0.035%

In all, a third of my investment choices are less than 10bp, and the most expensive fund on offer is 75bp.
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Re: 401k millionaires

Post by IlliniDave »

Well, I am not a 401k millionaire but I've needed a pair of commas for net worth for over a year now a recently got a second for the total of all my investment accounts.

If I ever get to be a 401k millionaire it will be many years after I retire (planning on checking out at 55) and before RMDs start drawing me down. I think I could get there if I worked an extra 10 years to 65, and the financial markets treated me benignly.

Unfortunately "millionaire" is a loaded word. I graduated HS in 1982. $1M today is < $400K that year (the first of my legal adulthood). That's a decent sum, but not the million bucks I dreamed of.
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Re: 401k millionaires

Post by DrGoogle2017 »

Deca millionaire is the new “millionaire”.
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Re: 401k millionaires

Post by Grt2bOutdoors »

^^First world problems.
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Re: 401k millionaires

Post by OnTrack »

drk wrote: Fri Jan 26, 2018 10:28 am
deltaneutral83 wrote: Fri Jan 26, 2018 10:13 am You really shouldn't see too many 401k millionaires from a whole lot of folks because the chances of them staying at the same job more than 10 years are just slim these days. The day after you leave your company you should be rolling that to a traditional IRA. If you roll old 401ks into new 401k's, well that's just most likely not a great option, going to be hard to beat the <10 bps I pay in a tIRA or rIRA at Schwab/Fidelity/TDA/Merrill/Etrade/Scott/VG.
I rolled all my pre-tax money into my current MegaCorp employer's 401k because I have access to investment trusts with ERs less than half their equivalent Admiral rates. That also got me started with the backdoor Roth. So, don't discount the plan-to-plan rollover. 8-)
Also:
7 Reasons Not To Roll Your Orphan 401(k) To An IRA
https://www.forbes.com/sites/financialf ... 82f73b2a67
Including: Stronger protection against personal lawsuits.
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Re: 401k millionaires

Post by MathWizard »

OnTrack wrote: Fri Jan 26, 2018 12:44 am
MathWizard wrote: Thu Jan 25, 2018 11:27 am 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?
However, for stocks in a taxable account (1) taxes are only due on the gains and (2) capital gains tax rates are often less than the rate due on 401k withdrawals.
1)
Yes, you are taxed only on the gains, but you paid taxes upfront on the principal amount, because
the taxable account is not tax-deferred. The comparison there would be with your portion of the contributions in
a ROTH 401K, in which you would pay no tax, versus capital gains on the stock earnings (and regular income tax on
any dividends as they occurred.) For decades long investing, I certainly expect the gains to far outweigh the principal,
so non-taxable gains would be very important.
The portion that corresponds to the match in a ROTH401K is just tax-deferred, but that was "free money" anyway, which
you don't get in a taxable account anyway.

2)
That is a fair point, especially if you are in the 15% (now 12%) bracket where you have 0% for capital gains. Of course, again
for any higher tax bracket, you have paid the taxes up-front on the principal, so comparing with the ROTH401K, where
none of your gains (not counting the match) are not taxed, LTCG is still worse, not to mention dividends.

One point would be that taxable has no contribution limits, unlike 401K's, but if you are investing more than the ROTH 401K can hold,
then you are going to be a 401K millionaire anyway, and perhaps a "taxable" millionaire as well.
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Re: 401k millionaires

Post by Dottie57 »

JW-Retired wrote: Fri Jan 26, 2018 8:37 am
Dottie57 wrote: Fri Jan 26, 2018 5:47 am Just remember that contribution limits have not been at 18k through out the years.

The limit in 1987 was 7k
In 1997 it was 9k
In 2007 it was 15.5 k.

Since 1992 I have been putting in 15% of income and since 1997 I have made more than median. But never had the high flying incomes we see here in this forum. So having 1m in 401k is do-able with persistence and time. It is a Slow. grind.
Yes, and do-able slow or not depends heavily on the stock market. I can definitely say if you were contributing the limit to a good 401k through the investing friendly 80's & 90's, then it can get to $1M pretty fast. I've kept records and mine hit that number in 2003. It was something of shock!
JW
My salary was quite low (40k or less). but I put in full 15% by 1992.
Last edited by Dottie57 on Fri Jan 26, 2018 4:23 pm, edited 1 time in total.
CnC
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Re: 401k millionaires

Post by CnC »

jayk238 wrote: Thu Jan 25, 2018 3:45 pm
CnC wrote: Thu Jan 25, 2018 10:51 am
Nate79 wrote: Thu Jan 25, 2018 10:43 am
onourway wrote: Thu Jan 25, 2018 10:11 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?
Not of workers, of household incomes.

Individual workers are much lower.



If your household is making 140k combined before tax you are better off than 85% of Americans and you are well within the top 1% in the world.
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bligh
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Re: 401k millionaires

Post by bligh »

CnC wrote: Fri Jan 26, 2018 3:45 pm
jayk238 wrote: Thu Jan 25, 2018 3:45 pm
CnC wrote: Thu Jan 25, 2018 10:51 am
Nate79 wrote: Thu Jan 25, 2018 10:43 am
onourway wrote: Thu Jan 25, 2018 10:11 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?
Not of workers, of household incomes.

Individual workers are much lower.



If your household is making 140k combined before tax you are better off than 85% of Americans and you are well within the top 1% in the world.

$140K household income is comfortably upper middle class. I would expect a household making $140K to be able to max out two 401Ks living in a high cost of living area with two kids. Even living on $100K pre tax they would be comfortably upper middle class.
Dottie57
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Re: 401k millionaires

Post by Dottie57 »

bligh wrote: Fri Jan 26, 2018 4:01 pm
CnC wrote: Fri Jan 26, 2018 3:45 pm
jayk238 wrote: Thu Jan 25, 2018 3:45 pm
CnC wrote: Thu Jan 25, 2018 10:51 am
Nate79 wrote: Thu Jan 25, 2018 10:43 am

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?
Not of workers, of household incomes.

Individual workers are much lower.



If your household is making 140k combined before tax you are better off than 85% of Americans and you are well within the top 1% in the world.

$140K household income is comfortably upper middle class. I would expect a household making $140K to be able to max out two 401Ks living in a high cost of living area with two kids. Even living on $100K pre tax they would be comfortably upper middle class.
Quick look on internet says 140k is NOT middle class income. Upper class.
livesoft
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Re: 401k millionaires

Post by livesoft »

I contributed the maximums legally allowed to a 401(k) from 1994 to 2015 while working for the same employer. That's 22 years of contributions. That 401(k) did not have a million dollar value when I left and it does not have million dollar value today even though there have been no withdrawals from it.
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DrGoogle2017
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Re: 401k millionaires

Post by DrGoogle2017 »

Contribution limits were never high in the 90s. Here is the link from FS.
https://www.financialsamurai.com/histor ... 4Q9QEIDjAA

I know my family paid a lot of tax in the 90s because we couldn’t contribute much, per couple it’s like $20k max, very small amount compare to our income. But we did save in after tax account because you can save more. No limits.
bradshaw1965
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Re: 401k millionaires

Post by bradshaw1965 »

White Coat Investor wrote: Thu Jan 25, 2018 11:22 pm I have three 401(k)s and not a single one has a million bucks in it. I guess I'm not a 401(k) millionaire. If I don't change jobs I could be there in a few years with one of them. Shouldn't take that long for a high earner with a 401(k)/PSP with a $55K limit.
That was my reaction as well, not the dollar amount but the length of time necessary. My current 401k with Fidelity and maxed out every years since 2002 (including a couple of years of catch-up) has well less then a million with a Bogleheadish asset allocation. Might be a lot of rollovers into the one account as well.
Bacchus01
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Re: 401k millionaires

Post by Bacchus01 »

onourway wrote: Thu Jan 25, 2018 11:13 am
willthrill81 wrote: Thu Jan 25, 2018 11:11 am
Nate79 wrote: Thu Jan 25, 2018 10:43 am
onourway wrote: Thu Jan 25, 2018 10:11 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.
Not much less.
Grt2bOutdoors
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Re: 401k millionaires

Post by Grt2bOutdoors »

bligh wrote: Fri Jan 26, 2018 4:01 pm
CnC wrote: Fri Jan 26, 2018 3:45 pm
jayk238 wrote: Thu Jan 25, 2018 3:45 pm
CnC wrote: Thu Jan 25, 2018 10:51 am
Nate79 wrote: Thu Jan 25, 2018 10:43 am

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?
Not of workers, of household incomes.

Individual workers are much lower.



If your household is making 140k combined before tax you are better off than 85% of Americans and you are well within the top 1% in the world.

$140K household income is comfortably upper middle class. I would expect a household making $140K to be able to max out two 401Ks living in a high cost of living area with two kids. Even living on $100K pre tax they would be comfortably upper middle class.
Not in NYC. Not even close to upper middle class.
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flybynite
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Re: 401k millionaires

Post by flybynite »

drk wrote: Fri Jan 26, 2018 10:28 am
deltaneutral83 wrote: Fri Jan 26, 2018 10:13 am You really shouldn't see too many 401k millionaires from a whole lot of folks because the chances of them staying at the same job more than 10 years are just slim these days. The day after you leave your company you should be rolling that to a traditional IRA. If you roll old 401ks into new 401k's, well that's just most likely not a great option, going to be hard to beat the <10 bps I pay in a tIRA or rIRA at Schwab/Fidelity/TDA/Merrill/Etrade/Scott/VG.
I rolled all my pre-tax money into my current MegaCorp employer's 401k because I have access to investment trusts with ERs less than half their equivalent Admiral rates. That also got me started with the backdoor Roth. So, don't discount the plan-to-plan rollover. 8-)
+1, I rolled over small/megacorp->megacorp->megacorp. Currently all housed with Vanguard, my 401k and after tax provider. Main reason to avoid IRA's - can continue to backdoor IRA.
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