why do so few people have two million dollar 401ks/IRAs?

[Anonymous]

Anonymous wrote:

Anonymous wrote:You understand that most people don't have retirement accounts, and most of those who do cannot max them out, and many of them take withdrawls, right?

Op is talking to the DCUM crowd NOT most people. I like the question.

Then they should say that

"Most people in my demographic"

"Most people with jobs like mine"

Etc

If you say "so few people" and refer to data surveys of the general population, you are implicitly comparing yourself to the general population. Which certainly seems like OPs point by their tone- to make themselves feel better than the average person.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Looking at charts anywhere from 5-10 percent of people have one million in their retirement accounts. But very few have two million or greater. Why is that?

With compounding, catch-ups for over 50, higher RMD ages and higher contribution limits I would imagine moved from one million to two million should happen rapidly. Money doubles from a range of 7-12 years depending how conserative your are in allocation. So lets say 10 years for a 45 year old who has one million Even if conserative and stopped putting a nickle more in it grows to two million by 55 and four million by 65 and eight million by 75 when RMDs start

So why so few two million and up savings Do people hit one million and start taking out all the money.

And there is no age limit on 401ks. If you work till 70 to get max SS from 65 to 70 not only are you not taking from 401k you are still putting in. I would imagine in 10 years a 5 million dollar 401k will be common. Or will it not be cause when people hit a certain number they start taking out?

401k always underperform the market because the individual chases the latest ho stocks, just does not pay attention and/or get screw on the vesting. Most people do not earn enough to accumulate a million dollars in a 401k. Also do not think you are smart because we had a great market return. It can all go away in a few months or the return can below inflation.

The big thing is you really should not have a million plus in a 401k or IRA because you are forced to withdraw as you age and there are penalties to early withdrawal. After 68 your spending declines rapidly. It stupid to have that much money with restrictions on it.

Restrictions? You can start withdrawing from a 401(k) at age 59 1/2. we do, and never touch the principal 5m.

Talk to a financial planner. If you are planning to have your kids inherit your 401K and they are in a higher tax bracket than you, you should touch the principal. Ask me how I know.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Looking at charts anywhere from 5-10 percent of people have one million in their retirement accounts. But very few have two million or greater. Why is that?

With compounding, catch-ups for over 50, higher RMD ages and higher contribution limits I would imagine moved from one million to two million should happen rapidly. Money doubles from a range of 7-12 years depending how conserative your are in allocation. So lets say 10 years for a 45 year old who has one million Even if conserative and stopped putting a nickle more in it grows to two million by 55 and four million by 65 and eight million by 75 when RMDs start

So why so few two million and up savings Do people hit one million and start taking out all the money.

And there is no age limit on 401ks. If you work till 70 to get max SS from 65 to 70 not only are you not taking from 401k you are still putting in. I would imagine in 10 years a 5 million dollar 401k will be common. Or will it not be cause when people hit a certain number they start taking out?

401k always underperform the market because the individual chases the latest ho stocks, just does not pay attention and/or get screw on the vesting. Most people do not earn enough to accumulate a million dollars in a 401k. Also do not think you are smart because we had a great market return. It can all go away in a few months or the return can below inflation.

The big thing is you really should not have a million plus in a 401k or IRA because you are forced to withdraw as you age and there are penalties to early withdrawal. After 68 your spending declines rapidly. It stupid to have that much money with restrictions on it.

Restrictions? You can start withdrawing from a 401(k) at age 59 1/2. we do, and never touch the principal 5m.

Talk to a financial planner. If you are planning to have your kids inherit your 401K and they are in a higher tax bracket than you, you should touch the principal. Ask me how I know.

Childfree here. All assets are going 100% to various charities. We will dip into principal for another property or LTC, but don’t need to for everyday expenses/entertainment. Also already have healthcare for life and pension. 50s here and retired. Also, have other liquid assets besides 401k. Life is good.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You understand that most people don't have retirement accounts, and most of those who do cannot max them out, and many of them take withdrawls, right?

Op is talking to the DCUM crowd NOT most people. I like the question.

Then they should say that

"Most people in my demographic"

"Most people with jobs like mine"

Etc

If you say "so few people" and refer to data surveys of the general population, you are implicitly comparing yourself to the general population. Which certainly seems like OPs point by their tone- to make themselves feel better than the average person.

Op does not have to be that specific. I knew what audience the op was referring to because they posted on DCUM.

[Anonymous]

Anonymous wrote:When I was 25 and switching jobs I cashed out my measly $4k 401 k… I used it to pay off a credit card … I had horrible personal finance skills. I often wonder what I would have now had I not done that. I started saving again at 29. I had an employer match til 39, and have worked for myself for the past 18 years and now have $1.2m.

Same here except I had no debt but I needed the money to pay for living expenses when I got laid off. I also started saving at 28. Also was self employed for 15 years so didn't have a lot of employee match growth. Now have 1.5mil at 56. Being self employed with an llc or s corporation means you can contribute both as the employee and employer. At one point I was able to save 60k per year.

[Anonymous]

There really needs to be cap on assets in a 401k. After 750k the tax breaks need to go away and totally stop by a million. There is no reason why the general population needs to subsidize someone with that amount of wealth.

[Anonymous]

I am 55 and have a few cents less than $1.1 million in my 401K. I have always contributed but I haven't always been able to hit the max as I didn't earn enough to max out AND save for emergencies AND pay the mortgage etc. I have always done enough to get the match, though, never less than that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I can relate to the above poster. Mine are in various places.

take time to consolidate it. You just have to fill out a form.

it is a little more than that, usually they convert to cash and send a check so you have to reinvest.

i always keep in a single place but got hosed once , had to migrate during 2021/covid and lost out on some big gains that happened during the 2 weeks it took to mail the check and then get new brokerage to receive and then to re-invest.

Be careful consolidating - some places still send you a live check and according to a recent article you don't have a lot of protection if a fraudster intercepts the check and steals your money. Craziest thing is that if you are the victim of fraud and someone steals your money, you may owe the IRS for the penalties from taking the money out early.

https://www.nytimes.com/2025/05/17/business/paychex-401k-rollover-checks.html

My last roll over in 2024 they mailed me a check from old 401k then I had to take that check and mail it to current 401k. That seems risky but was only way allowed

Same for me in 2023. And it took a long time. I was stressed until that money was finally in my account

[Anonymous]

Anonymous wrote:There really needs to be cap on assets in a 401k. After 750k the tax breaks need to go away and totally stop by a million. There is no reason why the general population needs to subsidize someone with that amount of wealth.

Why stop at $750K? Most people think you need closer to $1.25mil to retire comfortably, and that's an average, so it includes lcol areas.

https://www.cnbc.com/2025/04/21/magic-number-to-retire-comfortably-is-1point26-million-in-2025-report.html

[Anonymous]

Anonymous wrote:

Anonymous wrote:When I was 25 and switching jobs I cashed out my measly $4k 401 k… I used it to pay off a credit card … I had horrible personal finance skills. I often wonder what I would have now had I not done that. I started saving again at 29. I had an employer match til 39, and have worked for myself for the past 18 years and now have $1.2m.

Same here except I had no debt but I needed the money to pay for living expenses when I got laid off. I also started saving at 28. Also was self employed for 15 years so didn't have a lot of employee match growth. Now have 1.5mil at 56. Being self employed with an llc or s corporation means you can contribute both as the employee and employer. At one point I was able to save 60k per year.

Well, I have two kids, one with special needs and spent a lot of my salary on OT, PT, Speech and social therapy and I never made more than $100k. So saving 60k was out of the question.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When I was 25 and switching jobs I cashed out my measly $4k 401 k… I used it to pay off a credit card … I had horrible personal finance skills. I often wonder what I would have now had I not done that. I started saving again at 29. I had an employer match til 39, and have worked for myself for the past 18 years and now have $1.2m.

Same here except I had no debt but I needed the money to pay for living expenses when I got laid off. I also started saving at 28. Also was self employed for 15 years so didn't have a lot of employee match growth. Now have 1.5mil at 56. Being self employed with an llc or s corporation means you can contribute both as the employee and employer. At one point I was able to save 60k per year.

Well, I have two kids, one with special needs and spent a lot of my salary on OT, PT, Speech and social therapy and I never made more than $100k. So saving 60k was out of the question.

Sure, but why can't you just be rich?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When I was 25 and switching jobs I cashed out my measly $4k 401 k… I used it to pay off a credit card … I had horrible personal finance skills. I often wonder what I would have now had I not done that. I started saving again at 29. I had an employer match til 39, and have worked for myself for the past 18 years and now have $1.2m.

Same here except I had no debt but I needed the money to pay for living expenses when I got laid off. I also started saving at 28. Also was self employed for 15 years so didn't have a lot of employee match growth. Now have 1.5mil at 56. Being self employed with an llc or s corporation means you can contribute both as the employee and employer. At one point I was able to save 60k per year.

Well, I have two kids, one with special needs and spent a lot of my salary on OT, PT, Speech and social therapy and I never made more than $100k. So saving 60k was out of the question.

well, sure, not all of us can save that much. I do feel fortunate. BTW, I grew up to poor immigrant parents who don't speak any English, so it's not like I had a leg up, either. DC has some LD and other emotional issues, and we spent thousands last year on DC's therapies.

[Anonymous]

I will be honest and say life has been easy for me. My parents paid for my college, helped me buy my house cash and gave me $200k to start investing. I make $145k at my job.

How many Americans are privileged like me? Not many. It's easy to criticize or to find 100 possible ways to tell a less fortunate America how they can be 401k millionaire.

Count your blessing if you are a 401k millionaire.

[Anonymous]

I've been poor and I've been rich. Low wage or minimum wage is not what keeps people from investing in 401k. It's like #11 on the list of reasons I could think of. I experienced 9 of them.

[Anonymous]

Is this because these reports take into account individual amounts? I consider dh and mine together. We’re still youngish but each have 400k in each account. I’ve always put in the max. I’m not sure my individual account will hit 2m? Our combined account will.