How to Save $1 Million In Your 401(k)

  • By Andrea Coombes, MarketWatch
  • March 31, 2015

Got $1 million in your 401(k)? Some savers might be surprised how feasible that savings goal is if they put their mind — and their money — to it.

Of course, if you don’t have $1 million saved, you’re definitely not alone.

Just 0.42 percent of all 401(k) participants in the Employee Benefit Research Institute’s database had $1 million or more in their account at the end of 2013. EBRI’s data covers 26.4 million savers.

Similarly, just a tad more than 72,000 retirement savers, or 0.56 percent of the 13 million plan participants in its database, had $1 million or more in their 401(k) account at the end of 2014, according to Fidelity Investments’ analysis of the plans it manages.


Then there is the very worrisome data on the other side of the coin:

  • About 31 percent of Americans have no retirement savings and no pension, according to a recent study by Center for American Progress, citing data from the Board of Governors of the Federal Reserve System.
  • Most people who’ve saved some money haven’t saved much: Among households aged 55 to 65 who have retirement accounts, the median account balance was $104,000, according to the Center’s report.

But this story is aimed at those who have a comfortable salary — those who may not realize that a little focus on their retirement savings could get them to $1 million without too much trouble.

Having time on your side helps. Say you make $75,000, and enjoy a 3 percent pay raise every year. If you can get a 7 percent annual return on your money, plus your company gives you a 50 percent match on the first 6 percent you contribute to your 401(k) — a not-uncommon company match — then getting to $1 million requires contributing just 7.3 percent of your paycheck every year for 30 years, said Jason Hull of Hull Financial Planning in Fort Worth, Texas.

If your salary is less, or you get a smaller company match, don’t enjoy a 7 percent return or have less time, you’ll have to save a higher percentage of your money. To play with these numbers, visit the 401(k) calculator on

‘Work Your Way Up’
Saving $1 million may not be easy. But for many Americans, it’s not impossible. It does, however, require a focus on current spending and future goals.

Saving $1 million “is certainly doable, but to do it people really need to have clarity on what their goals are,” said Jeff Gorton, a certified financial planner and founder of the Gorton Financial Group in Oklahoma City.

That means thinking long and hard about where your money is going now, whether that’s the best use of your money or whether it makes more sense to stash that money away

“If you don’t sacrifice some of your lifestyle now, then what you’re really doing is sacrificing your future lifestyle,” Gorton said.

Maybe you can’t contribute the annual maximum of $18,000 ($24,000 if you’re 50 or older) to your 401(k). That’s OK. “Start where you’re at and work your way up,” Gorton said.

Here’s some inspiration for you: Gorton knows a mechanic — an employee in his early 60s – who is currently contributing $24,000 to his 401(k).

That’s half of his salary.

“He is not making a lot of money, but he’s putting in his $24,000,” Gorton said. “He’s been a mechanic for more than 30 years. He’s trying to beef up his retirement as much as he can. Every time he gets a raise, he tries to put at least half of the raise into his 401(k).”

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