A successful retirement strategy requires commitment, focus, and a willingness to make some sacrifices along the way — an approach that more and more investors have embraced in recent years.
In fact, recent data from Fidelity Investments shows that nearly 500,000 retirement savers are now 401(k) millionaires. What’s equally encouraging is that among the roughly 48 million Fidelity accounts, the average 401(k) balance stood at $127,100 as of Q2 2024.1
What Are the Keys to Success?
Fidelity surveyed 1,000 these individuals to find out what has made their strategies so successful and found that many of their answers coincided with the core principles we strive to instill in our clients as fiduciaries.2
When we develop a client’s portfolio strategy, we consider all of their assets, including company-sponsored retirement plans. It’s important to note that your retirement strategy may evolve over time to adapt to changes in your finances, lifestyle, or long-term goals. If your situation has recently changed, speak with your financial advisor so that they can assist you in making any necessary adjustments and ensure you are taking advantage of the strategies that are available to you.
In most circumstances, once you reach age 73, you must begin taking required minimum distributions (RMDs) from your 401(k) or other defined contribution plan. Withdrawals from these accounts will be taxed as ordinary income and, if taken before age 59½, may be subject to an additional 10% federal income tax penalty, so be sure to account for this in your tax planning strategy as you identify your income sources in retirement.
Consult with a Professional
The recent rise in 401(k) millionaires underscores the importance of strategic planning, disciplined saving, and informed financial decision-making as essential elements of a successful retirement planning strategy.
As the investment landscape continues to evolve, it’s important to remain proactive regarding your financial approach. Consulting with a financial or tax professional can allow you to customize your strategy to better align with your unique goals and adapt to life’s changes, ensuring you stay on track towards achieving a secure and fulfilling retirement.
1InvestmentNews.com, August 28, 2024. “401(k) millionaires reach another record in Q2, says Fidelity”
2Fidelity Investments, 2024. “Five habits of 401(k) millionaires”