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Most of them are quoted as investing their 401Ks in low-cost index funds and maxing out their 401K contributions since the beginning and and they hit the $1 million mark and more. Seems like they're doing just what most people are doing (low cost index funds and maxing out) yet their 401K balance is significantly better than most people doing the same thing. I can understand how the 65-year olds might have that much but hard to see how the 49-year old and early 50s people could accumulate that much given the annual contribution limitations unless it was something not generally reproducible like company match in the form of stock that skyrocketed or a lot of deferred compensation above the contribution limits. It would have been nice if the CNN article had gone into more detail on how they did it.
Barbosa will contribute the federal maximum to his 401(k) this year. On top of that, he has around $2,500 automatically deducted from his bank account each month to go into an Individual Retirement Account and other investment accounts
The other accounts are taxable account. He probably also saves more as he can when he can
Most of them are quoted as investing their 401Ks in low-cost index funds and maxing out their 401K contributions since the beginning and and they hit the $1 million mark and more. Seems like they're doing just what most people are doing (low cost index funds and maxing out) yet their 401K balance is significantly better than most people doing the same thing. I can understand how the 65-year olds might have that much but hard to see how the 49-year old and early 50s people could accumulate that much given the annual contribution limitations unless it was something not generally reproducible like company match in the form of stock that skyrocketed or a lot of deferred compensation above the contribution limits. It would have been nice if the CNN article had gone into more detail on how they did it.
When the market is good, much is possible. I've surprised myself how well our 401K has done. If you have two spouses earning an income in a household and you try to save a large portion of the spouses income (up to contribution limits) that plus a good market can work wonders in a few years.
I'm your typical boomer.
Had a good paying white collar job (software engineer).
As I got raises over the years I put more in my 401K and investment portfolio.
I saw my peers though "move up" to higher priced homes and more expensive cars and taking more expensive vacations.
While people at work went out to lunch everyday to nice restaurants I only joined them once per week (Friday).
They went to Hawaii for 2 weeks and I drove up to Disney for 5 days.
I described myself as a blue collar person in a white collar job.
You cannot think about retirement at 45 or 50.
You think about retirement at 21 and always pay yourself first..always.
You get a raise you can easily squirrel 50% or more of that away because that is new money you never had before so it's not money that will be missed.
The current mindset is "If I make more I can spend more" rather than "If I make more I can save more".
I can certainly see how someone with even a modest income can get to $1m by the time they retire.
Particularly if you start at the beginning of your working life and always contribute throughout your working career.
We have 2 college age children and I am helping them get accounts set up so that they can start contributing to them now so that by the time they get into the working world they will see what it can do.
Both are responsible kids and will have better careers in their 20's than I did so they hopefully won't have as late of a start as I did on hitting the savings hard.
My wife and I just hit a million at 55. How? A college class in finance in my 20's and a professor who opened my eyes up to making educated choices with my money. I read everything I could and made my money work for me. Too many people I know invest in their 401k's blindly , not looking at expenses. performance, or diversification. They can't be bothered.
I also learned how to do a lot of things for myself. We've had 3 houses. I improved each one with my own sweat equity. Our current house is 9 years old. I was there every day doing projects while it was being built. I probably saved $50,000 in labor costs.
The key to being successful is to educate youself. Learn about investing, taxes, insurance, and every part of your finances. Even if you chose a financial planner later, you'll at least be able to tell if it right for you or not. I met with exactly one. After about a half an hour of listening to him, I realized he was looking for commisions and not for my best interests. I made a plan and stuck to it, only rebalancing occasionally and keeping up with financial news. Whether you'll get to million or not is up to you, but the more you know, the better your chances!
Barbosa will contribute the federal maximum to his 401(k) this year. On top of that, he has around $2,500 automatically deducted from his bank account each month to go into an Individual Retirement Account and other investment accounts
The other accounts are taxable account. He probably also saves more as he can when he can
I was just wondering how they became 401K millionaires by age 50 given the contribution limits that apply to everyone and took a closer look at the article and they refer to "other retirement/investment accounts" so as you point out, that makes the CNN title misleading, the 50 year olds are not likely to be 401K millionaires yet; the CNN report is basically adding up all their 401K and taxable accounts so it is a net worth figure, so they are portfolio millionaires, of which the 401K is probably a large percentage of their net worth but not a million dollars by itself. that clears things up for me; good job to them and they are on a good track and are good examples.
My wife and I just hit a million at 55. How? A college class in finance in my 20's and a professor who opened my eyes up to making educated choices with my money. I read everything I could and made my money work for me. Too many people I know invest in their 401k's blindly , not looking at expenses. performance, or diversification. They can't be bothered.
I also learned how to do a lot of things for myself. We've had 3 houses. I improved each one with my own sweat equity. Our current house is 9 years old. I was there every day doing projects while it was being built. I probably saved $50,000 in labor costs.
The key to being successful is to educate youself. Learn about investing, taxes, insurance, and every part of your finances. Even if you chose a financial planner later, you'll at least be able to tell if it right for you or not. I met with exactly one. After about a half an hour of listening to him, I realized he was looking for commisions and not for my best interests. I made a plan and stuck to it, only rebalancing occasionally and keeping up with financial news. Whether you'll get to million or not is up to you, but the more you know, the better your chances!
Great story and I agree with everything you say. But just to be clear, you have a million net worth, and your 401K is a significant hunk of it, but your 401K does not have a million in it, right? It may seem like splitting hairs, but I'm just wondering if there any 50-year olds who are true 401K millionaires who have $1 million in their 401K, like I thought the CNN headline meant.
Great story and I agree with everything you say. But just to be clear, you have a million net worth, and your 401K is a significant hunk of it, but your 401K does not have a million in it, right? It may seem like splitting hairs, but I'm looking for 50-year olds who are true 401K millionaires who have $1 million in their 401K, like I thought the CNN headline meant.
I thought he said he hit $1m in retirement $.
I think we will end up close to $1m by 50 but it will be a bit of a stretch. Unfortunately for us, we didn't start hitting it hard until I was 30. Then at 41 I went self employed and had a few years of zero contributions. Even though the wife has been ramping hers up each year.
I'm your typical boomer.
Had a good paying white collar job (software engineer).
As I got raises over the years I put more in my 401K and investment portfolio.
I saw my peers though "move up" to higher priced homes and more expensive cars and taking more expensive vacations.
While people at work went out to lunch everyday to nice restaurants I only joined them once per week (Friday).
They went to Hawaii for 2 weeks and I drove up to Disney for 5 days.
I described myself as a blue collar person in a white collar job.
You cannot think about retirement at 45 or 50.
You think about retirement at 21 and always pay yourself first..always.
You get a raise you can easily squirrel 50% or more of that away because that is new money you never had before so it's not money that will be missed.
The current mindset is "If I make more I can spend more" rather than "If I make more I can save more".
Well, no one can save $17,000 a year if they only make $20,000.
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