Secrets of the 401(k) Millionaires
hose hoping to occupy Easy Street in retirement may want to follow the lead of the 0.2%: the topmost tiny fraction of savers who have managed to sock away more than $1 million in their 401(k)s.
That figure, based on data from the Employee Benefit Research Institute, may depress those with sums closer to the median 401(k) balance of roughly $60,000 -- and for good reason. Even among employees 55 and up who have been contributing to the same 401(k) plan for more than 20 years, just 2% are estimated to have cracked the $1 million mark, says Jack VanDerhei, EBRI's research director.
To some, the other 98% of savers over 55 who haven't cracked $1 million show that the 401(k), the principal vehicle for American retirement savings, is at best inadequate, and at worst, a colossal failure. Even Ted Benna, the man credited with developing the first 401(k) plans out of an IRS tax loophole in 1981, now concedes that they've grown overly complex, with too many options, too high fees, and too many ways to cash out one's nest egg.
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Though many savers may be scarred by the past decade of lousy returns, getting to $1 million over the course of a 40-year career should be a manageable goal -- even for some lower-income employees, says Greg Burrows, vice president of Principal Financial. Someone who earns $35,000, saves 12 to 13%, including a company match, gets an annual raise of 3.5%, and annual returns of 7% would save a million dollars. And despite the current volatility, many may still do that, he says. "One thing you have to keep in mind, is that the 401(k) hasn't been around long enough for us to see people take full advantage of it over the course of an entire career."
Of course, those who earn big salaries are more likely to have big balances in their 401(k), says Mike Alfred, CEO of Brightscope, which monitors and rates retirement plans. And the recession not only wiped out many 401(k) balances, but its fallout has hampered saving -- particularly among the middle class, he says. "There are a lot of families who have to simply stop saving because of a job loss or major health-care issue," he says.
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http://www.smartmoney.com/retirement/planning/secrets-of-the-401k-millionaires-1326152038448/?cid=djem_sm_WeekontheStreet_h
Seems like a lot of ifs to me...if you save 12-13%, if one gets a 3.5% raise every year and if you make an annual return of 7.5%. The only thing that has consistently got me that is my PM's that BTW is not in a 401K. The casino is rigged and those of us that pay attention have noticed. this is a
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They are trying to sucker you in again. I had the sig line for a along time by Will Rogers....The only way to double your money is to fold it and put it back in your pocket.
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