This Overlooked 401(k) Statistic Will Make You See Retirement (And Millionaires) Completely Different

You might expect that you need to inherit money or benefit from another huge windfall to become a millionaire. However, a 2024 study shows that's a misconception. According to the National Study of Millionaires by Ramsey Solutions, founded by personal finance expert Dave Ramsey, 80% of millionaires surveyed say that investing in their 401(k) plans was an important factor in becoming a millionaire. This notion is supported by 2024 data from Fidelity Investments, which reported a record 497,000 401(k) millionaires — or 401(k) accounts with balances of at least $1 million.

Ramsey Solutions' report also illustrates that it's totally possible to become a millionaire without the traditional hallmarks of wealth, with 79% of survey participants stating they didn't inherit any money. Moreover, most didn't earn big salaries or come from wealthy families. In short, habits like budgeting and living below their means, which are both signs that you're wealthier than the average American, went a lot further for many millionaires than any financial circumstance beyond their control. Overall, consistently contributing to their 401(k)s was common among those surveyed. Fidelity agrees that this practice can be extremely helpful for building up a retirement fund, and suggests that many Americans who save 15% of their income can realistically rack up $1 million in 30 years or less. With regular contributions, even a lackluster return on investment could still make your 401(k) a key contributor to your journey to saving $1 million.

Instead of putting their money in a bank account, many upper-class Americans prioritize contributing to their 401(k)s and brokerage accounts — and the study by Ramsey Solutions illustrates just how effective that practice can be. 75% of the survey participants stated they invested for the long term and earned little to no money from single-stock investments. In other words, staggering returns on investment aren't necessarily essential to building up a seven-figure retirement fund — SoFi notes the average annual rate of return for a 401(k) ranges from just 5% to 8%.

Using similar rates of return, we have demonstrated through two scenarios how retiring with $1 million in your 401(k) is doable. For instance, a 25-year-old who contributes 10% of $70,000 per year in income — which the Social Security Administration reports was roughly the average wage index for Americans as of 2024 — could have $1,115,834 by age 65. This figure was reached using Calculator.net's 401(k) Calculator and assuming a 6% rate of return. Meanwhile, that 25-year-old could accumulate $1,131,559 by 65 by contributing 6% of that same salary and achieving an 8% return per year. While they can fluctuate, paying attention to your 401(k)'s rate of return can provide valuable insight into how your investments are performing and whether adjustments to your 401(k)'s portfolio are needed. Notably, both those figures were also calculated without factoring in potential salary increases or employer matches, let alone Fidelity's suggested 15% income contribution, which only further underscores how attainable a $1 million 401(k) balance is for many Americans.