Quote:
Originally Posted by disneysteve
I was curious about the $1 million figure. If you were to max a 401k at the current limit of $17,000/year and earn an annual return of 7% it would take you 23 years to amass $1 million. Considering that the limit was just raised to 17K for 2012, doing it in the past would have taken even longer (unless you managed better returns). No surprise that only a tiny fraction of participants have achieved that milestone. Very few people even stay in the same job that long.
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Good point. 401k's only even became available in 1978 (33 years ago). The first generation of 401k-users are only just starting to reach retirement age. Assuming it takes 25-ish years of max'd contributions to amass $1M in a 401k, it's hardly a surprise that very few have gotten there. Add in low participation rates and not staying in the same company for an entire career (leading to IRA rollovers), the statistic becomes no surprise at all.
I've always found the $1,000,000 figure an interesting one... obviously, it means less than it did 20 or 50 years ago, and in the future, it will mean even less (speaking of inflation). Being a "millionnaire" is touted as an line denoting wealth and prosperity. Although it's certainly nothing to spit at, even today the coveted $1M figure provides only a marginal income in retirement ($40k-ish per year), approximately the median income in America.