Susan Tompor: Becoming A 401(k) Millionaire

By Susan Tompor
Detroit Free Press

WWR Article Summary (tl;dr) Here is something to think about…A 30-year-old saver who makes $40,000 a year and sets aside 11 percent of pay a year could hit $1 million in 35 years, assuming the 401(k) plan includes an employer match, the investor gets a 7 percent annual return on investments and a 2 percent annual salary increase.

Detroit Free Press

Steve Horaney has two kids in college, a home in South Lyon, Mich., and every other excuse people can roll out for not saving for retirement.

Except he’s still one of the country’s 401(k) millionaires.

Horaney, 50, says he’s learned to sock away money with every paycheck going back to his early 20s when he started a good job at Guardian Industries in 1990. It’s worked.

“I max out my 401(k),” he said. “I always took the philosophy of paying me first and spending the rest.”

Horaney has no plans to splurge or retire immediately from his job as a vice president of membership at the Original Equipment Suppliers Association in Southfield. He’s still writing rent checks for two children who are living in apartments near the schools they attend and wants to help his children to pay down student loans.

“I don’t think I’m anywhere I need to be to retire” yet, he said.

Hitting that $1 million retirement savings mark often takes the better part of any career. There are limits to how much you can save each year in a 401(k), and there is the potential downside of brutal bear markets, like the meltdown in 2008-09.

More time can mean more money.

A 30-year-old saver who makes $40,000 a year and sets aside 11 percent of pay a year could hit $1 million in 35 years, assuming the 401(k) plan includes an employer match, the investor gets a 7 percent annual return on investments and a 2 percent annual salary increase, according to a retirement calculator at Bankrate.com.

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