Million Dollar Retirees
Here’s some good news for all us working stiffs: more retirees are making over a million dollars with their employer’s retirement plans than ever before.
Enrollees in 401(k) plans who have attained millionaire status has increased in the last year from 180,000 to 196,000, while the number of IRA retirees who have reached millionaire status is also the highest its ever been, encompassing 179,700 participants. And both those numbers seem to keep growing.
This is in addition to the millionaire participants in the TSP, or Thrift Savings Plan, which is the 401(k) like the package that the government offers exclusively to federal employees, which had a few hiccups earlier in the year before a quick turnaround in the stock market. Over time, the TSP millionaires seem to be rising steadily each year by 38 percent.
Of course, not everyone participating in these programs can obtain millionaire status, but it still is worth looking into the methods they used to achieve it, to see how they might be applicable in your situation.
The biggest provider of 401(k)s in America is a company named Fidelity. Looking at their data, it takes the average retired millionaire 28 years of contributions to get there, with a quarter of those people making less than $161,000 a year.
Extrapolating from that, it seems the trick is to keep investing, even in lean times, when the market is in upheaval, and to use as many resources as are available to them through their individual plans. Investing in the market is where most of these millionaires put their equity, with 16.2 percent of their paychecks getting put into stocks at a ratio of 75 percent. Fear of a recession and acting conservatively because it can make you miss out on the uptick once the market recovers. Changing course on substantial investment just because of market turmoil more often than not leads to worse returns than just riding out the ups and downs. That is because, with a diversified retirement account, you should be less focused on the changing value on the day to day basis, but the longer-term trends, over many years.
Even with a million dollars in your retirement fund, there is still the question of is it enough for you depending on what your lifestyle needs are. But looking at the trend, with more millionaires than ever, it should be a good sign for all retirees regardless if you have a million dollars in the bank or not.
It takes time to reach the million-dollar mark and a sound investment strategy. You can start by contributing the maximum you’re allowed, which is currently 19,000 dollars, except for those over 50, who are allowed to contribute an additional 6,000 dollars to catch up. Start saving today, and be a millionaire tomorrow.
