Building a $1 million nest egg may seem an impossible feat.
However, amassing such retirement wealth is within reach for almost anyone — provided they take certain steps, financial advisors say.
“You might think that, ‘Well, I have to become a Silicon Valley entrepreneur to become rich,’” said Brad Klontz, a financial psychologist and certified financial planner.
The calculus is simple, he said.
Every time you’re paid a dollar, save and invest a percentage toward your “financial freedom,” Klontz said.
With this mindset, “you can work almost any job and retire a millionaire,” he said.
It’s not necessarily a ‘Herculean task’
Saving $1 million may sound like a “Herculean task” but it “might not be as hard as you think,” Karen Wallace, a CFP and former director of investor education at Morningstar, wrote in 2021.
The key is to start saving early, perhaps in a 401(k) plan, individual retirement account or taxable brokerage account, experts said. This allows investors to harness the magic of compound interest over decades. In other words, you “let your investments do as much heavy lifting as possible,” Wallace wrote.
About 79% of American millionaires say their net worth was “self-made,” according to a Northwestern Mutual poll published in September. Just 11% said they inherited their wealth, while 6% got it from a windfall event like winning the lottery, according to the survey of 4,588 U.S. adults, fielded from Jan. 3 to Jan. 17, 2024.
There were 544,000 Americans with 401(k) balances of more than $1 million as of Sept. 30, according to Fidelity Investments, which is the largest administrator of workplace retirement plans. There were also more than 418,000 IRA millionaires.
In fact, the number of 401(k) millionaires grew by 9.5%, or 47,000 people, between the second and third quarter of 2024, largely due to stock-market gains.
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