If Creating A Million Dollar 401k Is So Realistic, Wouldn’t More Of Us Be Rich?
Does anyone else feel like there’s been a flood of “become a millionaire” articles from finance-related outlets? I can’t seem to scroll through my Facebook page without reading about how us millennials can become millionaires by investing in our 401k. Don’t get me wrong, it’s an awesome concept, and a wonderful mindset to have. But exactly how realistic is it for today’s professional?
While I’m certainly am no financial expert or guru, I do my best to stay abreast of recommendations and save what I can. Working for myself, I have my own individual 401k that allows me to choose my own investment platforms, which can be a daunting but rewarding task. Given there’s no company match (it’s just me, myself and I), I invest at least 10 percent of my monthly income in my growing nest egg. My husband, who also works from home, has been with his company for a decade and invests a similar amount with his company, matching seven percent. He’s also enrolled in the pension they no longer offer to newer employees.
We don’t consider ourselves “rolling in the dough” but think we do okay with what we have. We pay down our debts as much as possible in efforts not to owe anyone, are saving for our children’s educational future through 529 college saving plans and continue to build up our savings, which includes purchasing a home in the next couple of years.
No matter how much we try to do, I’m not entirely sure we’ll hit the million dollar mark–at least not with our 401k alone.
I don’t want to sound like a Debbie Downer (I’m a pretty hopeful person), but can’t imagine growing a million dollar portfolio is that easy. There’s just too many variables: high student loans, unequal pay, company layoffs and non-existent raises that seem to make it really hard for the average person to put away a big chunk of their income for retirement, just to name a few.
Don’t get me wrong, there are some of us who would rather spend what little riches they have on frivolous things instead of thinking about their financial future. I know quite a few professionals who talk about what they don’t have, but drive fancy cars and wear designer clothing. News flash! You aren’t going to reach any goal by putting away two percent of your income each month–at least not one where you don’t have to work during your golden years. Sometimes we need to make a few sacrifices right now in order to enjoy a better life down the road.
One thing that’s pretty clear throughout many of these articles is the importance of starting early. In fact, most examples use young professionals in their 20s to help steer their point. While the laws of compounding interest are true, what happens to those millennials in their 30s who–for whatever reason–didn’t start saving in their early years? Obviously certain invest recommendations wouldn’t apply as they would need to play catch with their contributions.
While I’m not exactly sold on the numbers, I am hopeful my family and I are headed in the right direction. One can only hope it pays off!
What are you doing to save for your financial future? Here are some tips to help you on your journey.