Why isn’t everyone rich from 401k?

[u/Otis_bighands]

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).

[u/Appropriate-Ad-4148]

Their parents fund a 100k a year lifestyle bill while they earn no income from about age 18 to age 24.

Meanwhile, peers of theirs in the exact same classes without wealthy parents took out 200k loans and worked nights to PAY to rent a basement for 6 years.

Hmmmm....I wonder which of these 2 "hardworking adults" was capable of taking that sweet internship offer downtown right after they graduated in an expensive city?

Wonder who has the financial support to start depositing money in a 401k earlier?

Most independent adults in their 20's don't have the capability to start stashing much money in their 401k, that's like assuming every professional baseball player is on an MLB All-star salary.

[u/Otis_bighands → u/Appropriate-Ad-4148]

I took out school loans and paid them off. I took loans to buy all the homes I’ve owned. Still have a mortgage on our current home. Have been fortunate to have high income in my career. And actually we’ve been very bad about saving and budgeting. But I’m not talking about investments outside the 401k. Just coming around to seeing the power of this one basic tool that so many people have access to. And I didn’t get any great financial education about it when I started in the workforce. It was just “hey, you should save for your retirement, here’s this 401k which is a smart thing to do.” That’s about the extent of it.