How Many Years of Maxing Out a 401(k) Does It Take to Become a Millionaire? | Smart Change: Personal Finance



It’s pretty difficult to withdraw these days without at least $1 million in the bank, but saving that kind of cash takes time. If you invest your money, you can get there a lot faster, especially if you max out your 401(k) every year. Here’s a closer look at what that entails and how long it’ll take you to get to $1 million.

What does it mean to max out your 401(k)?

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

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These limits change annually. 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) every year, you need to pay attention to these changing limits.

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

How long it’ll take to save $1 million for retirement depends on your investment rate of return and how much you’re contributing. This table 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 a 6%, 8%, or 10% average annual rate of return. All of these estimates assume you’re starting from nothing.

Annual 401(k) Contribution

6% Average Annual Rate of Return

8% Average Annual Rate of Return

10% Average Annual Rate of Return


24 years

21 years

19 years


20 years

18 years

16 years

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

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

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

A 401(k) match can also make a huge difference in how long it takes to save. If you qualify for a 3% dollar-for-dollar match on a $60,000 income, that’s an extra $1,800 match going into your 401(k) every year. And this doesn’t count against your annual contribution limit.

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

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

Or you could try a taxable brokerage account. These don’t have the same tax advantages as retirement accounts, but they don’t have restrictions on your withdrawals, either. This makes them a great fit for those who plan to retire before 59 1/2 — the age at which you can access most retirement account funds penalty-free.

Remember that $1 million might not be enough

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

That’s why it’s crucial to figure out how much you need for retirement rather than relying upon arbitrary figures like $1 million. Once you know how much you need to save, you can begin to figure out how much you must set aside per month to achieve that goal. Doing this will give you a much better shot at a comfortable retirement than just aiming to become a millionaire.

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