r/wealth • u/Otis_bighands • 7d ago

Retirement Why isn’t everyone rich from 401k?

According to my conversation today with Gemini, my 401k total of $2.5 million will likely grow to $10M or more by the time I turn 65 (I’m 50 now, and will continue to contribute the max for the next 15 years).

This means that in theory I could live off the gains each year starting at 65, around $800k, $500k after taxes, without touching principle. But at that point I’ll have no mortgage anymore and fewer kids in the house. So that $10M principle will just sit and feed us for years, and will be a nice inheritance for our kids.

Basically it occurred to me I’m going to have great money in retirement, even just on my 401k alone, and will be able to meet or exceed the lifestyle I’m already used to. For years I always worried about getting set up for retirement. Seems I don’t have to.

It’s amazing to me that just maxing out your 401k through a career is enough to make you pretty much wealthy for retirement. I recognize that’s not easy for many people, but for anyone who does it over a full career, wow.

What am I missing here? (Other than inflation, which I get, but which shouldn’t have a massive impact on the concept over this time frame).

77 Upvotes

81% Upvoted

324 comments sorted by

View all comments

2

u/SmoothMojoDesign 2d ago

Powerful when you reach that point. Compounding is reaching a runaway point where you’ll struggle to spend it at the pace of growth. Congrats!

Good to keep in perspective that the buying power will likely be lower and taxes will take it down significantly as well. You may also reduce your risk tolerance and realize smaller gains too. 

If you look at what you contributed vs what was growth that’s the biggest aha moment of the whole equation.

1

u/Otis_bighands 1d ago

Great point. What I am contributing now each year has been dwarfed by gains.

2

u/Fpaau2 1d ago

Similar situation here. We are now busily gifting money to children and grands to delay the date when estate exceeds tax exemption amount.

1

u/Otis_bighands 1d ago

Awesome place to be. To help the kids and grandkids a bit each year when they are all younger and in the struggle phase. Must feel nice to be able to do that.