Thoughts on the WSJ? 401(k)s Are Minting a Generation of ‘Moderate Millionaires’

[GoodLiving]

https://www.wsj.com/personal-finance/retirement/401k-millionaires-382f5c33

Some quotes from the article -

At Vanguard, the average deferral rate, or percentage of income that participants chose to contribute to their retirement plan, rose to 7.7% in 2024, a record.

UBS estimates that the number of such millionaires around the world has quadrupled since 2000 to 52 million this year. There were around a thousand of these moderate millionaires added every single day in the U.S. last year.

Spending like a “stereotypical millionaire” probably requires at least $5 million, he said.

[disneysteve]

I can't read the article due to the paywall but I have no doubt that the number of millionaires is growing steadily. With rare exception, workers are now responsible for their own retirement savings as pensions have become a thing of the past. I think the latest data is that only 10% of workers still have a pension. So 90% of people are on their own.

If you earn 50K starting at age 25 and save 15% for retirement, as recommended, and earn a 7% return, you'll break a million by age 59. And 50K is only $24/hr which is pretty low for any type of serious job. This projection also doesn't account for raises over time so the real million dollar point will be well before 59, and also if you average better than 7% which you probably should with an aggressive asset allocation.

It's truly not hard to become a millionaire today. The problem is that a million isn't what it used to be.

[LivingAlmostLarge]

it also doesn't account for company match. First company we're getting a serious match so most of our 401k has been non-matched or minimal matching. DH has contributed from 2005 want to see how it's played out?

2005 - $4,870 - 1st ever 401k
2006 - $24,580
2007 -$48,246
2008 $48,639
2009 $59,762
2010 $100,378
2011 $121,116
2012 $165,138
2013 $24,7078
2014 $244,399
2015 -$287,059 - left job and took year sabbatical
2016 - $320,533 - started at new company
2017 -$304,447
2018 -$389,662
2019 -$404,453
2020 - $542,361
1/2021- 668,634 - no more contributons just left it because we separated from company 2/2021
1/2022- $847,984
1/2023-$694,765
1/2024 - $852,245
1/2025 - $1,046,748
12/2025 - 1,225,176

So we stopped contributing in 2021. The maximum happened until then. We have a new 401k which I need to look at since I have no idea what's happened to it. what did we invest in? Total Stock Market Index 85% and 15% Foreign Index total world since 2016. Two MF with state street. Not even Vanguard, Fidelity, etc. Nope this was crappy investment choices there are like 10 and DH was like "should we even bother?" I was like of course just pick the least worst,. So i picked Total Stock market and Foreign Index fund and have let it ride ever since. We have contributed to $282,872 since 2005 and there was a 3% match for like years 2006-2015 and 2016-2021. That's it. According to fidelity its $86k is the company match. Rollover so rolled in 2016 the $320k has become $872k and the contributions from 2016 is pretax $270k.

So the earliest dollars from 2005 have worked very, very hard for us. Insanity. DH's roth has done even better.

[james.hendrickson]

it also doesn't account for company match. First company we're getting a serious match so most of our 401k has been non-matched or minimal matching. DH has contributed from 2005 want to see how it's played out?

2005 - $4,870 - 1st ever 401k
2006 - $24,580
2007 -$48,246
2008 $48,639
2009 $59,762
2010 $100,378
2011 $121,116
2012 $165,138
2013 $24,7078
2014 $244,399
2015 -$287,059 - left job and took year sabbatical
2016 - $320,533 - started at new company
2017 -$304,447
2018 -$389,662
2019 -$404,453
2020 - $542,361
1/2021- 668,634 - no more contributons just left it because we separated from company 2/2021
1/2022- $847,984
1/2023-$694,765
1/2024 - $852,245
1/2025 - $1,046,748
12/2025 - 1,225,176

So we stopped contributing in 2021. The maximum happened until then. We have a new 401k which I need to look at since I have no idea what's happened to it. what did we invest in? Total Stock Market Index 85% and 15% Foreign Index total world since 2016. Two MF with state street. Not even Vanguard, Fidelity, etc. Nope this was crappy investment choices there are like 10 and DH was like "should we even bother?" I was like of course just pick the least worst,. So i picked Total Stock market and Foreign Index fund and have let it ride ever since. We have contributed to $282,872 since 2005 and there was a 3% match for like years 2006-2015 and 2016-2021. That's it. According to fidelity its $86k is the company match. Rollover so rolled in 2016 the $320k has become $872k and the contributions from 2016 is pretax $270k.

So the earliest dollars from 2005 have worked very, very hard for us. Insanity. DH's roth has done even better.

Wow - you're 401(k) millionaires!

[disneysteve]

it also doesn't account for company match.

Great point. Using the same numbers, if I up the investment to 18% (15% from employee and 3% from company) you hit $1 million 2 years earlier at 57. And that's starting at 25. If you're able to find a good job right out of college and start at 21, you'll be a millionaire at 53 and at 65 would have $2.5 million. Again, that's on a steady 50K income not counting raises and with a 7% return. Add in raises and a higher return and the numbers get even better. Probably a millionaire before you hit 50.

[Fishindude77]

With the cost of housing in some areas these days, a million bucks isn't what it used to be.
Could easily have 1/3-1/2 or more of your $1mil net worth tied up in a home.

[LivingAlmostLarge]

With the cost of housing in some areas these days, a million bucks isn't what it used to be.
Could easily have 1/3-1/2 or more of your $1mil net worth tied up in a home.

totally. This is one 401k, we have a couple others and roths and brokerage. But i really like the fact we can actively see how it's growing without contributions. In theory the RMD says if we leave it alone to 75 for DH he'd have $6m and an RMD of $200k. I won't allow that i'll convert along the way but it's pretty crazy to thing we could be coasting on just one account. And we started late. He started in 2005 at age 28. If he didn't do a phd and started at 22 we'd have significantly more. That and a job with a better match and if we had not taken a year off. So many things we did that if we hadn't done we'd be further ahead.

[GoodLiving]

If you want to get behind the paywall http://archive.today/qC1cG