Your 401(k) can be your vehicle to millionaire status! It promises a lot, doesn’t it? The popular message is that if you begin contributing to your individual account while in your 20s and continue doing so until traditional retirement age, you would become a millionaire and multi-millionaire. The Financial Samurai created a chart illustrating how much you can potentially save in your lifetime. How do you like the numbers?
Yet, navigating the 401(k) process can be complex. Anyone telling you the 401(k) plan is the easiest way to save for retirement still has lots of homework to do. While your employer takes care of some things for you once you opt in, you still need to do a lot on your part to truly maximize the plan’s benefits. If you are willing to put in the time, the work is manageable. You also have access to a lot of free resources and support (such as your HR/employer, your investment brokerage, personal finance books and Online publications).
For many people, having access to a 401(k) plan through an employer might be their first exposure to investing. How can you make such major, long-term decisions when you don’t have much of a clue what the plan is or what choices you have?