Newsletter

How to save $1 million

Hellmich, Nanci

2014

Overview

A: Last year we did a study of 401(k) millionaires in Fidelity-administered plans, and one of the key things they did to save their way to a million dollars was to take full advantage of their employer 401(k) match and profit sharing. About 28% of their 401(k) balances came from their employer. That includes their employers' contributions and the growth on those contributions. The 401(k) millionaires we studied held an average of 75% of their assets in company stock and stock mutual funds and achieved a median annual return of 4.8% in their 401(k) over the 12-year period that we looked at. This annual return, combined with our millionaires' contributions and their employer contributions, brought their average account growth rate to 8.75%. Finally, when changing jobs, don't cash out. The average tenure of our 401(k) millionaires with their current employer was 34 years, so most of them likely never had the option to cash out. But even if you don't end up staying that long in your job, you can imitate the behavior of our 401(k) millionaires by keeping your retirement savings invested for the long run by either keeping it in the plan, rolling it to the new 401(k) or rolling it over to an IRA.

• Publisher: USA Today, a division of Gannett Satellite Information Network, Inc
• Subject: Hellmich, Nanci