Fidelity Reveals the Secret to Becoming a Retirement Millionaire

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Fidelity Investments recently decided to examine the saving habits of people who had managed to amass more than $1 million in their 401(k)s. The goal: To determine the secret to becoming a retirement millionaire.

As it turns out, there is no big secret. You just have to start saving earlier, throw a whole bunch of money at your retirement accounts, and stay in equities for a long time.

Fidelity VP Jeanne Thompson looked at the behavior of more than 5,500 Americans over the course of 12 years. She limited the study to those with an annual salary under $150,000, as she wanted to focus on people who had been able to buff up their retirement accounts without being filthy rich to begin with.

The biggest factor was how much they contributed to savings: The 401(k) millionaires were deferring an average of 14 percent of their total paycheck. That was complimented by an average employer contribution of 4.8 percent, for a total of close to 20 percent savings rate.

They started early, too. On average, the millionaire savers already had upwards of $400,000 in their accounts by their late 40s, which ballooned to $1.2 million by their late-50s.

"We recommend individuals start at age 25," says Thompson. "Really, as soon as you're eligible to start saving, that's when we recommend."

But saving to the degree that Fidelity recommends will likely be difficult for your typical 25-year-old. Most 20-something won't be able to spare 14 percent of their paychecks, nor are they likely to see such a generous employer match. Still, young savers are advised to save at least as much as is necessary to take full advantage of their company's matching policy.

Finally, about that $1 million figure: It's a nice, round number, but is it an arbitrary amount to set as your retirement goal?

Thompson says that a good goal is to retire with eight to 10 times your final salary; given that the average worker in this survey retired making close to $120,000, a million is indeed a good goal to maintain their usual standard of living. Yours might be lower, of course; if after years of work you end with a salary of $80,000, then you might be fine if your retirement savings total somewhere in the vicinity of $750,000.

That's why the important figure is not the $1 million, but the rate at which you save. Putting 14 percent of your savings in your 401(k) might seem extremely ambitious, but come retirement you'll be a millionaire -- or at least, you'll feel like one.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at, and follow him on Twitter at @Brownellorama.

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Great article! This site also has relevant info on mortgage loans .

November 26 2013 at 5:52 AM Report abuse rate up rate down Reply

If you want to have a comfortable retirement, become a politician.

November 18 2013 at 10:19 AM Report abuse +5 rate up rate down Reply

At some point these writers will wake up to the fact that in the post-prosperity economy, the vast majority of Americans are living paycheck to paycheck and surviving at all by piling up credit card debt. I'll probably make something close to the targets recommended here, because I am single, have an advanced degree, a full time job with a real 401k plan, free-lance income, receive royalties, and run a home business. The "average" American? Doesn't have a prayer. Globalization, which both major parties support like lemmings, is a fast-track to Third World status.

November 17 2013 at 11:25 PM Report abuse +4 rate up rate down Reply
1 reply to drmike15's comment

They are liberals and libs don't have a clue.

November 18 2013 at 12:35 PM Report abuse rate up rate down Reply
1 reply to betty_brock's comment

Putting it mildly Betty. I'd label them closet Communist as they want to rob the haves and give it to the have nots. I honestly feel they know what they're doing and don't want the average person to know.

November 18 2013 at 9:55 PM Report abuse rate up rate down

Hmmm??? 14% and how much does the government take away in SS? 15%! and instead of being millionaires.....we get $1,700 a month.

November 17 2013 at 10:25 AM Report abuse rate up rate down Reply

The formula is.... Savings+ compound interest+time.

Its so simple but so few will but forth the effort.

November 17 2013 at 10:20 AM Report abuse +1 rate up rate down Reply

I find this to be total \"Do-Do\". The wife and I have been in a 401k of some form since 1974 and put away 25% of our income for the majority of thoses years. We recently retired with just close to half a million. We were told that when we started to save, we would retire with a million, too. Didn\'t happen. Far more downs in the market and economy than ups!

November 17 2013 at 7:51 AM Report abuse +1 rate up rate down Reply
1 reply to's comment

You are right, Sir! Wall street is not made for the little guy with a 401K or 457 account. We are small-fry in a big pond . Still, I'm glad I put some money into it and I'll bet you are too. So many do not have much else but Social Security. Not much fun living like that.

November 17 2013 at 7:28 PM Report abuse +1 rate up rate down Reply

Don't let anyone else invest your own hard earned or inheirted money nowdays, which is full of cheap talks, broken promises.

November 16 2013 at 11:41 PM Report abuse +4 rate up rate down Reply
2 replies to IN MY OPINION ONLY's comment

Bingo RouteUS66. My buddy was fussing about the low interest now and I told him to pull some out of the bank and invest it into the stock market. His rate of return on dividend alone is 4 times the interest the banks are paying plus his investment has grown 30% in 6 months.

November 17 2013 at 12:36 AM Report abuse -2 rate up rate down Reply

Jealous mlly469? I sent both of my kids through college by investing. A false sense of security belongs to people who say it can't be done.

November 17 2013 at 9:12 PM Report abuse +1 rate up rate down Reply

Hillary Clinton makes Obama look like a saint. SHe could teach Obama quite a lot about lying.

November 16 2013 at 10:19 PM Report abuse +2 rate up rate down Reply
2 replies to gotmilk50's comment

you are 100% correct..... But,,,old Hillary learned to lie from Wild Bill.

November 16 2013 at 11:36 PM Report abuse -2 rate up rate down Reply

She's a liar, liar pantsuit on fire.

November 17 2013 at 3:03 PM Report abuse -1 rate up rate down Reply

Evan has a new alias, I see. Demsrule must be his 50th.

November 16 2013 at 9:29 PM Report abuse -6 rate up rate down Reply

Hey Oprah, it isn't racist to object to Socialism/Communism. You know Obama is Socialist/Communist don't you?

November 16 2013 at 7:20 PM Report abuse -9 rate up rate down Reply
1 reply to betty_brock's comment

betty-brock,,,,yes,,,,America does know,,but,,seems like they do not care.!!!

November 16 2013 at 8:57 PM Report abuse -8 rate up rate down Reply
1 reply to pdbliz's comment

Our place will be somewhere near the bottom.

November 16 2013 at 9:01 PM Report abuse -8 rate up rate down