How many years of maximizing a 401(k) does it take to become a millionaire?

IIt’s pretty hard to retire these days without at least $1 million in the bank, but saving that kind of money takes time. If you invest your money, you can get there much faster, especially if you max out your 401(k) each year. Here’s an overview of what it entails and how long it will take you to reach $1 million.

What does it mean to maximize your 401(k)?

For those of you who don’t know, the government limits the amount you can contribute to a 401(k) each year. In 2022, you are allowed to set aside up to $20,500 if you are under 50 or $27,000 if you are 50 or older.

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These limits change every year. In 2021, you could only contribute up to $19,500 if you were under 50 or $26,000 if you were 50 or older. So if you plan to max out your 401(k) each year, you need to be careful with these changing limits.

How long does it take to save $1 million when you max out your 401(k)?

The time it will take to save $1 million for retirement depends on the rate of return on your investment and the amount of your contributions. This chart shows approximately how many years it would take to become a millionaire if you consistently set aside $20,500 or $27,000 each year and earned an average annual rate of return of 6%, 8%, or 10% . All of these estimates assume you are starting from scratch.

401(k) annual fee

Average annual rate of return of 6%

Average annual rate of return of 8%

Average annual rate of return of 10%


24 years

21 years old

19 years


20 years

18 years old

16 years old

Data source: Author’s calculations. Estimates are rounded to the nearest whole year.

As you can see, even in the most optimistic scenario, you probably won’t retire in your 30s or 40s. A minimum of two decades is a reasonable estimate for most people, and if you’re not able to consistently max out your 401(k), you can expect it to take even longer.

But there are several ways to speed this up. First, as mentioned, 401(k) contribution limits can change over time. So if you increase your contributions when the government raises the annual limit, you might be able to hit $1 million even faster.

A 401(k) match can also make a huge difference in the time it takes to back up. If you qualify for a 3% dollar-for-dollar match on income of $60,000, that’s an additional $1,800 match in your 401(k) each year. And it doesn’t count against your annual contribution limit.

So if you contribute $20,500 on your own, your employer adds another $1,800, and you earn an average annual rate of return of 8%, you’re only looking at 20 years to become a millionaire instead of 21. years. And if you get a bigger match, you’ll obviously hit $1 million even sooner.

Finally, if you’re maxing out your 401(k) and still want to set aside more money for retirement, you can use another retirement account. An IRA allows you to set aside an additional $6,000 for your retirement in 2022 or $7,000 if you’re 50 or older. These limits may also change over time.

Or you can try a taxable brokerage account. These don’t have the same tax benefits as retirement accounts, but they also don’t have restrictions on your withdrawals. This makes it an excellent choice for those planning to retire before 59 1/2 – the age at which you can access most retirement account funds without penalty.

Remember that a million dollars might not be enough

So far we’ve talked about the path to $1 million, but it’s important to recognize that that might not be enough for some people. Those expecting to retire early or live a long life could easily spend 30 years or more in retirement. And it could cost some people $2 million or more.

That’s why it’s crucial to figure out how much you need for retirement rather than relying on arbitrary numbers like $1 million. Once you know how much you need to save, you can start figuring out how much you need to set aside per month to reach that goal. This will give you a much better chance of having a comfortable retirement than just aiming to become a millionaire.

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