15 Secrets To Become a 401(K) Millionaire

Want to be a 401(k) millionaire? Here’s how.

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Updated May 28, 2024
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According to data from Empower, 9.1% of 401(k) accounts have topped $1 million. This number has been growing in recent years, despite the volatility in the market.

Are you an aspiring 401(k) millionaire? Here are a few tips on how to build wealth and reach that status as quickly — and painlessly — as possible.

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Start early

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The earlier you start investing, the more likely you are to reach millionaire status. If you look at the exponential growth curve of investments, the first few years are lackluster. The sooner you get those years behind you, the sooner you can see more exciting growth.

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Don’t try to time the market

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This is Investing 101. Timing market dips and jumps is a fool’s errand. Studies show that time spent with your money in the market trumps timing the best days in the market. Pick a good investing strategy and let it ride.

Don’t try to beat the market

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This is another well-known investing adage. Matching market gains is a much more reasonable expectation than picking the magic winning stocks for your 401(k). Even most active fund managers can’t do it. A smart bet is to try to match the market instead with index funds or similar investments.

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Set up automatic contributions

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Putting your 401(k) contributions on autopilot is a surefire way to ensure you don’t forget about saving. It also dissuades you from deciding other things are more important than saving for the future.

Get your full employer match

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If your employer offers to match your 401(k) contributions, contribute enough to get your full match. Every dollar your employer contributes to your salary is money you don’t have to.

Maximize your contributions

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As of 2024, you can contribute $23,000 per year to your 401(k). If you contribute the $23,000 maximum each year and receive an 8% return, you’ll be a millionaire in just under 20 years.

Take advantage of catch-up contributions

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If you’re late to investing, note that employees age 50 and over can contribute an additional $7,500 each year in a 401(k). That might not seem like much, but it’s $112,500 (not including any gains) between ages 50 and 65.


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401(k)s can hold a variety of assets, including stocks, ETFs, mutual funds, bonds, and cash. Making sure your funds are spread across an appropriate mix of assets is called diversification. It reduces the risk of losing money when your proverbial eggs are not all in one basket.

Take appropriate risks

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Diversification can reduce the unnecessary risk of loss from a single stock or bond, but not every risk is bad. When you have many years left to invest, you can choose assets with greater potential returns because you can handle the ups and downs of the market and trust that it will gain over time. When you approach retirement, it’s wise to shift funds to less risky investments.

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Be mindful of tax implications

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401(k) accounts reduce your taxable income when you contribute, but there are also tax implications during retirement. At age 73, you must begin taking required minimum distributions from your 401(k), which can alter your tax bracket and taxable income.

Don’t forget about old accounts

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Do you have an old 401(k) lingering with an employer you no longer work for? Roll it over to your current employer’s plan or an independent IRA so you can better manage your money. You may be able to keep it with your former employer, but independent plans may have a better range of investment options.

Don’t rely on target date funds

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Target date funds are designed for the set-it-and-forget-it investor who has neither the time nor the inclination to create their own portfolio. These funds tend to have higher fees than index funds and don’t typically perform as well as a balanced 50/50 split between stocks and bonds.

Mind your fees

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Some fees are inevitable; the people who support 410(k) plans want to get paid too. However, choosing funds with low fees may help you maximize your investment returns. A 0.5% fee might not seem like much, but compounded over decades, it can make a substantial dent in your investments.

Try index funds

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Unlike actively managed mutual funds, index funds don’t attempt to beat the market’s returns. Instead, they seek to track a preset index (such as the S&P; 500) and match its performance. Since there is no fund manager to pay, fees for these funds are often very low.

Increase your contributions with your raises

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One way to up the amount in your 401(k) without feeling the pinch is to devote a percentage of each raise you get to retirement. Each time your pay increases, your 401(k) contributions will too. Since you didn’t have the extra money before, paying it to your retirement account before you see it will make it much easier to sock away.

Bottom line

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Becoming a 401(k) millionaire may not be easy, but it is simple. Focus on a diversified strategy that is appropriate for your time horizon. Contribute as much as you can consistently and watch compounding interest and dividends work their magic so you can build wealth while you sleep.


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  • Earn more interest on your uninvested cash with 5.00% APY (as of April 12, 2024)
  • Get up to $50K of your deposits instantly, so you can jump on investment opportunities faster
  • Borrow money to increase your buying power with margin investing at 8% (as of Nov. 15, 2023) APY for Gold members
Join Robinhood Gold here

Author Details

Jenni Sisson

Jenni Sisson is a freelance writer and editor who focuses on personal finance, real estate, and entrepreneurship. She has been published in Business Insider and The Ways to Wealth. In addition to writing, Jenni hosts the Mama's Money Map podcast to help fellow stay-at-home moms on their journey to financial freedom.