n over four decades of working with clients, I have learned some of the enduring principles of what it takes to become a millionaire. Our clients with 401(k) balances of more than $1M, followed some of the  following approaches to saving:  

  1. Start early. The sooner you can contribute to your retirement accounts, the more time you have to take advantage of compound interest. Recent studies show the average 401(k) millionaire began saving early and invested for at least 30 years. How old will you be in 30 years? What would your retirement look like if you had the financial freedom to support your best years?  
  2. Maximize contributions. The average 401(k) millionaire contributes a minimum of 10% to 15% of their income year after year. Excluding any potential employer match, employees can contribute a maximum of $22,500 to 401(k) accounts in 2023.  
  3. Max outmatching. The average account of 401(k) millionaires includes significant contributions from employers. Over a quarter of the account contributions – 28% to be exact – came from employers. Every year, employer contributions increased the average 401(k) millionaire’s savings by nearly $4,600.  
  4. Asset allocation matters. One of the most important determinants of your portfolio’s performance is its asset allocation. This is another reason why starting early is so important; growth-oriented investment strategies have more time to make a significant impact on your portfolio the sooner you begin contributions.  
  5. Stay the course. It’s important to keep your long-term retirement goals in mind. If you happen to change jobs, there are other options besides cashing out your 401(k) balance. Early withdrawals come with tax penalties. Therefore, trust the process and do not abandon your strategy during a temporary turbulent market.  

What does this mean for you?   Let’s review your portfolio and 401(k) if it has been a while. Now would be a great time to check your  401(k) balance and performance and make adjustments as necessary. We can discuss if the asset allocation is aligned with your retirement savings goals, striking the delicate balance between your growth expectations and risk tolerance.  Please let us know what we can do to support you toward the retirement of your dreams. We are here for any of your questions.  

Any opinions are those of the author and not necessarily those of Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of the strategy selected, including asset allocation and diversification. Past performance is not indicative of future results.