While there are hundreds of thousands of 401(k) millionaires at Fidelity alone, far fewer people have accumulated over $10 million in their retirement accounts. As time goes on and the stock market continues its historic rise, I expect we will see many more people become decamillionaires in their retirement accounts.
There are three main components to becoming a retirement decamillionaire: time, savings and investments. Without all three, you will not reach financial freedom or build a ten-million-dollar 401(k).
There are an estimated 24 million American millionaires according to Yahoo Finance. Various estimates put the global number of people with a net worth of $10 million at around 2.5 million. This wealth category includes assets beyond your 401(k). As time goes on, I expect to see exponentially more Americans reach the milestone of becoming a decamillionaire, and quite a few build a $10 million retirement portfolio. Keep reading as this financial planner shares what it takes to get there.
The more time you have, the greater your chances of becoming a 401(k) decamillionaire. With the 2026 401(k) employee contribution limit of $24,500, you would need around 39 years to become a decamillionaire, assuming a 10% net annual return. Yes, I am aware that very few people can max out their 401(k) contributions at the beginning of their careers. Even so, with the magic of compounding interest, you can still build a sizable net worth if you give yourself enough time.
ForbesFinancial Planner Explains Coast FIRE Vs. Financial Freedom
Do you know what it takes to actually build a $10 million dollar 401(k)? Financial Planner LA David Rae outlines the steps to become a 401(k) decamillionaire.
getty
Saving anything into your 401(k) may feel onerous as the cost of living continues to rise. There are a few ways to make building your retirement nest egg a little easier. First off, when contributing to a traditional 401(k), you won't owe income taxes on the funds contributed. Essentially, a chunk of money you contribute to your 401(k) would be going to the IRS if you weren't putting it into your retirement.
Second, you may be able to get an employer match or profit-sharing contribution. The match could yield an immediate 50-100% return on your money, even more after taxes. The profit-sharing contribution also helps you build wealth faster and more tax-efficiently.
The basic rule is to save 10-15% of your income for a secure retirement—more if you start later, less if you start early. To build a $10 million 401(k), max out your retirement plan each year. This likely means saving $24,500 to your employer portion and increasing contributions after age 50 with 401(k) catch-up contributions.
The road to becoming a 401(k) decamillionaire may be easier for successful business owners. Business owners can potentially contribute up to $72,000 to their 401(k) in 2026 (as both the employee and employer). This shortens the time it takes to build a 10-million-dollar 401(k) by over a decade to 28 years. Still a long time, but manageable.
If your spouse also works in the business and you both maximize your 401(k) contributions, you could potentially build a $10 million retirement nest egg in approximately 21 years. This scenario demonstrates the significant effect of coordinated retirement planning within a family business.
If your income is above $500,000 as a business owner, you should consider adding a Cash Balance Plan to your retirement planning mix. This will allow for much larger contributions and speed up your pace to reaching financial freedom. Over the years, I've built a Cash Balance/401(k) combo plan that puts over $500,000 per year into the business owner’s family retirement account, not to mention the hundreds of thousands of dollars in tax savings.
The biggest problem I see with a $10 million 401(k) is the tax hit you would take from required minimum distributions. If you are smart enough to have built a $10 million 401(k), you are likely already working with a financial advisor who is good at building wealth. As you turn your life savings into retirement income, make sure you are working with a tax planning-focused Certified Financial Planner(CFP®) professional who can help you implement tax strategies to keep more of your hard-earned money out of the hands of the IRS.
Whether you are on track to become a 401(k) millionaire or a 401(k) decamillionaire, make sure you have a clear plan to convert your life savings into a reliable retirement income stream. While working toward financial freedom is important, remember to balance saving for the future with enjoying your life today. Set saving goals to ensure you reach financial independence but also allow yourself to use some of your resources along the way to enjoy the success you are building.
Yes a $10 million 401(k) sounds nice, but will it actually be enough to fund your dream retirement?
Do you know what it takes to actually build a $10 million dollar 401(k)? Financial Planner LA David Rae outlines the steps to become a 401(k) decamillionaire.
getty
此内容由惯性聚合(RSS阅读器)自动聚合整理，仅供阅读参考。 原文来自 — 版权归原作者所有。