How to retire with $1 million in your retirement fund

How to retire with $1 million in your retirement fund


One general rule of thumb many Americans work towards when it comes to saving for retirement is that you should have roughly a million dollars saved to comfortably fund your golden years. But is it even possible to cross over into retirement with that much money if you don’t have a substantial inheritance coming from a rich relative or a trust fund waiting to be opened? We’re here to tell you it is. And no, you don’t have to win the lottery to do it.

4 tips for growing your retirement nest egg

1. Save, save, SAVE!

This tip may seem obvious, but if you want the chance to retire with a significant 401(k) balance, you need to put money into it. And the more you contribute, the better. If your employer offers a 401(k) match, contribute at least enough to get the full amount of the match—that’s free money! Keep in mind that many employers require you to work there for a minimum number of years before you are fully vested, so make sure you stay with the company long enough to acquire the full match.

2. Contribute early and often

Tax-deferred, compounding interest can dramatically increase your investment portfolio growth potential when you start saving early in your career, increasing the likelihood of achieving your retirement goals. Create the habit of consistently increasing your contributions as your income rises, and contribute on a regular basis regardless of how the market is performing. It’s important to resist the urge to “cash out” if the market takes a downswing because remember, saving for retirement is more like a marathon than a sprint.

3. Treat your 401(k) as “off limits” money

Taking out unnecessary loans or distributions of funds isn’t a great idea, even in times of hardship. But why? Aren’t you essentially just borrowing from your future self? When you withdraw a loan from your 401(k), you take the risk of re-buying stocks and bonds back at a higher rate, while also missing out on potential growth when that money is not in your account. Even worse is taking a distribution of funds before retirement age. You will not only pay taxes on that money, but you’ll also pay a 10 percent penalty for accessing the funds before age 59 ½. Once the money is in your 401(k), consider it unavailable for use until retirement.

4. Invest wisely

When you’re younger or are trying to grow your 401(k) balance, you may want to be more aggressive with your investments to allow for greater returns. But as you get closer to retirement, it might make more sense for you to reduce your risks and make more conservative choices. However, the exact times and ages for these changes is different for everyone, so be sure to consult with a financial professional before changing your portfolio model.

The truth is that most people won’t reach that $1 million mark by the time they retire. In fact, the Employee Benefit Research Institute reported that less than one percent of 401(k) savers have at least a million dollars in their account. But that doesn’t mean you should be worried about not having enough money to survive in your golden years. The AARP suggests focusing less on reaching a specific number and focusing more on factors that will affect how much money you’ll need in retirement, such as how long you’d like to be retired, where your current health stands, and where in the world you are going to retire [2]. And above all, if you are smart about investing and are committed to saving, you are on the right track.


Paul Novitski, CPFA - Financial Services Representative – panovitski@pai.com - 800.236.7400 Ext. 3340

Paul is a subject matter expert on 401(k), retirement savings, participant advice, small business 401(k), investments, education on options.