4 Ways to Save $1 Million in Your 401(k)

fidelity just released a study and the number of people that have a million dollars or more in their 401k or their ira absolutely skyrocketed last year is that you and if it's not you what's the path to get you there i got that more coming up [Music] my name is mike bernard i'm the host of the wise money show i'm also one of the certified financial planners right here at corehorn financial group make sure you hit that subscribe button turn on notifications and smash that thumbs up button and check out this chart here if you would have told me a year ago that you know in march of 2020 that in the year 2020 at the by the end of the year the number of people that have a million dollars or more that have saved up a million bucks or more in their 401k or in their ira was going to absolutely skyrocket be an all-time high was going to surge especially to the end of the year i would have said are you crazy are you feeling okay i mean there's no way that would be possible and yet it is i mean look at look at that data that is unbelievable that's a survey from fidelity of their accounts and it's absolutely surged to an all-time high obviously there's some question about sustainability with that and why and how can that happen we've done lots of videos about that and fed manipulation possibly a permanent change in monetary policy all sorts of all sorts of concerns there but still it's been unbelievable last year was an unbelievable year for for the average investor and so what if that's not you what what if you're trying to reach that million dollar milestone how do you get there what's what's the path for you to take and i'm going to lay out four of them today that can help you go from wherever you're at to getting to that millionaire status within your 401k or your ira and all is going to relate back to when are you starting okay how how long a time do you have to get from where you are to that millionaire status so let's dive into it all right so let's say you've got 10 years to build up that million bucks or maybe that's a goal of yours within 10 years i want to i want to have a million dollars saved or you're in the home stretch of retirement and for some reason time's just gotten away from you like it does so easily to so many people and you look and you say i don't have much saved and i got about 10 years before i'm gonna retire and for whatever reason you feel like i've got to get to a million bucks or you're working with your cfp and that's the number you you've got to get to so you've got 10 years okay in this first path you've got 10 years to save up and at this point it's going to be absolutely crucial that you get a market type rate of return and and if you look back over history stock market does about 10 per year on average now is that every single year of course not is that the next 10 years will it average that i have no idea but i can i mean the the best thing i can tell you is over history what's the market average at 10 and if you're if you've got 10 years to get to a million bucks you've got to make sure you're getting market type returns okay gotta you you don't have control over that but you have to have an investment approach philosophy that gives you that opportunity that chance so if you've got 10 years and you can get market type returns how much do you need to be saving in order to become a millionaire within those 10 years and that's a lot it's about 4 80 bucks i'm rounding a little bit but that's a serious commitment um to to be saving up in those 10 years in order to get to a million bucks but that's a serious goal as well you're not giving yourself much time here for compound interest so you've got to be saving a lot this is a serious commitment now i would tell you this could be a huge financial planning blessing if you could free this up something i joke around and call the bernard paradox is uh the more you spend the more you need to have saved up but it's harder to spend a lot when you're saving a lot it's harder to save a lot when you're spending a lot right and so the opposite is true as well so if you don't if you need to save up a million bucks within 10 years and you don't have anything saved up right now that means your money's been either spent or going towards debt or other things well if you can carve out almost five grand a month to save up for retirement it's possible you've adjusted your lifestyle in such a way that you know retiring with a million bucks and social security and whatever might really work so work with your cfp on that but it's a big commitment to go from nothing to millionaire in 10 years with market rate returns that's five grand a month all right let's say you've got 20 years 20 years to save up that's your goal you want to save up a million bucks in your 401k or ira over 20 years if you can get that 10 percent market rate return that's great obviously you have a better chance of doing that over 20 years because it smooths out the big drops the big peaks there's i mean that that's a longer time period to help achieve that that return if you have the discipline to stick with it so over 20 years getting that market rate returned how much do you need to be saving each and every month why a good news it's about thirteen hundred bucks about thirteen hundred bucks that's a mortgage payment a mortgage payment going into your 401k um your retirement accounts to build up to a million bucks over those 20 years now uh one of my colleagues kevin corehorn who's the founder of of cohort financial group one of my co-hosts on our weekly talk show here on wise money talks about how the the mortgage that's unpaid okay that that for folks that have the retirement crisis you've heard the statistics where many people are don't have adequate savings for retirement over the years as they've worked they've paid their mortgage but they haven't paid their other mortgage which is their 20-year loan or the 20-year opportunity for them to build up their retirement savings 20 years of the 30 years that it would take so most mortgages are 30 years some you know 15 that 20-year time frame so he talks about this now that that lines up with a mortgage payment that's a sacrifice no doubt it's all a sacrifice but notice that even though you can double the time it's it's less than half that you need to save that's compound interest okay so that's 20 years what about 30 years you give yourself 30 years so this is you graduate from college you take care of some student loan debt you clean some things up you get your life started but pretty quickly right you know around 30 32 35 you start saving and you say all right let's we've gotten our life together here we've paid off debt we've bought the cars we're into a starter house let's start saving the right amount um it's pretty encouraging that's pretty encouraging 442 dollars a month let me let me say that differently you and your spouse if you're if you're married by that time could you eat save 220 bucks a month yeah i'm assuming you can it would take some sacrifice yes in order to say yes to this you got to say no to something else you got to say no to that pizza or that subscription or whatever but you're saying yes to a million bucks over time okay so 30 years and again you'll have a better opportunity to overall average that that market rate return 442 bucks a month now what about you that are really a bit ambitious and as as we say you know you start you give yourself as much time as possible so start saving from your very first paycheck so you're in college you graduate 22 years old and you start saving okay and you've got 40 years of a career to save up and hopefully then be retired for 30 years right i mean that's that's what it takes and guys again better opportunity to give yourself that 10 rate of return how much do you need to be saving on a monthly basis just 158 bucks a month this is partly why right now the reddit stuff and the speculation the gambling by so many young investors and and the speculation that's happening right now i just don't get i just i just don't get this this is a manageable amount of money for the average person that's your cell phone bill um that's a man you're going to say yes to your cell phone because of course i want all those those features well don't you also want to say yes to the millionaire you out there in retirement and all those features that that life can have and so say yes to this you don't need to speculate on on on you know gamestop and risk you know crushing this but also losing all of your money you don't need to speculate in order to get these returns um so if you're aiming for something higher than a million and if you've got 40 years from now you ought to be saving up to have more than a million but work with your certified financial player on that but guys that commitment that commitment is manageable it's more than double if you wait 10 years it's more than double if you wait 20 years again right doubles again and again it more than doubles again if you're down to just 10 years so those are your paths i would argue okay so are some easy and some hard absolutely of course you you know numbers that yes this one's hard this one seems easy right they all just take a level of commitment and i would tell you i've been doing this for 20-some years and we've got a large team serve a lot of folks each of these i've seen happen they're all possible and we all have a different uh different circumstances in life and we've made different choices and we've received different outcomes but you're a choice away you're one choice away from an upward spiral spiral in your financial life so work with your certified financial planner figure out is it a million bucks you need to be striving towards is it something more is it something less what's your situation entail and can you is it is it appropriate for you to be aggressively saving for retirement right now and if so how much so that you can get on with whether it's one of these four paths or your own that helps you get to be where you want to be in your finances so work with your cfp on that if you don't have a cfp on your team call one on my team you can find us online corehorn.com that's core horn with k wisemoneyshow.com you can find us there as well or like i said give us a call y step in 574-247-5898 financial life

Channel: Wise Money Show

Views: 834

Keywords: 401k millionaire, how to become a millionaire, how to save for retirement, how to save for retirement at 40, dave ramsey 401k millionaire, 401 k balances over 1 million, retirement planning, money tips for young people, becoming a millionaire roth ira vs 401k, how to become a millionaire in 10 years, 4 ways to save 1 million in your 401k, wise money show

Id: MTTiNDXCGyY

Length: 10min 59sec (659 seconds)

Published: Mon Mar 01 2021