When Can You Start Taking Money Out Of 401k

According to Fidelity Investments, one of the largest 401(k) providers in America today, the number of 401k millionaires reached roughly 180,000 in 2021 thanks to a prolonged bull market.

In addition to the record number of 401(k) millionaires, the average 401k balance for employees who continuously invested in a Fidelity defined contribution plan for 15 years is $379,600. That's a pretty great figure.

It just goes to show you that regular contribution over time plus company 401(k) matching and profit sharing really pays off.

How many 401k millionaires are there today?

Historical 401(k) Contribution Limits

Being a 401(k) millionaire is very impressive given the maximum contribution limit for the 2021 data is $19,500. The maximum contribution tends to go up $500 every couple of years.

When I was first able to contribute to a 401(k) in 1999, the maximum contribution limit was only $10,000. Therefore, being able to get to 401(k) millionaire status on such limited maximum contribution amounts truly shows the power of compound interest over time.

The historical maximum 401(k) contribution keeps on going up. Check out the chart below for details.

The key right now for everyone is to take FULL advantage of your company's 401(k) plan and max out your contributions each year. After 10 years, you'll be amazed at how much you'll be able to accumulate.

Related: I Could Have Been A 401k Millionaire By 40

When You'll Become A 401(k) Millionaire

If you're curious to know when you'll roughly be a 401k millionaire if you are start with $0, max out their 401(k) this year and every year after, and return the average annual return of the portfolio composition since 1926, here are the results.

100% Equity Allocation (10.2% historical return): 401(k) millionaire in 18 years.

80% Equity / 20% Fixed Income (9.5% historical return): 401(k) millionaire in 19.5 years.

70% Equity / 30% Fixed Income (9.1% historical return): 401(k) millionaire in 19.7 years.

60% Equity / 40% Fixed Income (8.7% historical return): 401(k) millionaire in 20.5 years.

50% Equity / 50% Fixed Income (8.3% historical return): 401(k) millionaire in 21 years.

40% Equity / 60% Fixed Income (7.8% historical return): 401(k) millionaire in 21.5 years.

30% Equity / 70% Fixed Income (7.2% historical return): 401(k) millionaire in 22.2 years.

20% Equity / 80% Fixed Income (6.6% historical return): 401(k) millionaire in 23 years.

100% Fixed Income (5.4% historical return): 401(k) millionaire in 25.5 years.

100% Cash (1% assumed return): 401(k) millionaire in 44 years.

How long it will take you to become a 401k millionaire

Of course, historical returns cannot guarantee future returns, but after a 10-20 year period of investing in your 401k, your average annual portfolio return will likely begin to mimic the historical averages. Further, if your company provides a generous 401k match or profit sharing plan, then its likely you will become a 401k millionaire sooner.

For those readers with more than $0 in your 401(k), simply find an online compound interest calculator and input your data for your specific results. The good thing is, all the numbers above can be considered the maximum longest amount of time it will take to get to 401(k) millionaire status in a normal market.

The Key To Becoming A 401k Millionaire Is Longevity

Let's review my 401(k) savings targets by age and see when various age groups of savers may become 401(k) millionaires if they are able to work at a job with a 401(k) plan for several decades.

Based on my 401(k) by age estimates, older age savers (50+) should be able to become 401(k) millionaires around age 60 if they've been maxing out their 401(k) and properly investing since the age of 23. If not, then best of luck with Social Security, a paid off house, and hopefully after-tax investment accounts.

Middle age savers (35-50) should be able to become 401(k) millionaires around age 50 if they've been maxing out their 401(k) and properly investing since the age of 23. I'm expecting to be a 401(k) millionaire when I turn 50 in 2027 by contributing to a Solo 401(k) plan.

Younger age savers (20-34) should be able to become 401(k) millionaires around age 40 if they've been maxing out their 401(k) and properly investing since the age of 23.

As you've only got one life to live, you might as well figure out a way to escape the grind sooner, rather than later. Not a day goes by where I'm not thankful for aggressively building a portfolio of non-401(k) investments in my 20s and 30s to have the courage to leave my 401(k) behind.

Recommendation To Become A 401(k) Millionaire

Run your 401(k) through Personal Capital's 401(k) Investment Fee Analyzer to see how much you're wasting in fees. I ran mine through and found out I was paying $1,748.34 a year in fees I had no idea I was paying. After discovering how much I was wasting on actively managed mutually fund fees that didn't have a perfect track record for beating their respective benchmarks, I switched to low cost index fund ETFs.

Personal Capital's Investment Checkup tool also allows you to analyze your investment risk exposure and make appropriate adjustments. I've been using Personal Capital's free tools since 2012 and have seen my net worth reach record highs. The more you can stay on top of your money, the better you can optimize your wealth.