Can Pharmacists Retire as 401k Millionaires?
Can pharmacists retire as a 401k millionaire? The answer is a resounding yes! In fact, non-pharmacists can become 401k millionaires as well. Let’s find out how!
401K Millionaires
It turns out American millionaires have a lot of things in common. According to a survey conducted by Ramsey Solutions from personal finance expert, Dave Ramsey found out that:
- 79 percent didn’t receive an inheritance
- 69 percent never averaged a six-figure salary
- 88 percent went to college
- Most had a 401k account
Of the 10,000 millionaires surveyed 80% have a 401k account. As a recap, traditional 401k accounts offer tax advantage by saving pretax money, most offer employer match and your savings grow tax-deferred.
One additional advantage of 401k accounts is that it’s an automatic saving, the money is taken out of your paycheck without you noticing it. You’ll learn to live without that money and have some comfort in knowing that you’re saving toward your retirement.
Grow Rich Slowly
I have written about my belief that it’s best to accumulate wealth over time. In other words, grow rich slowly.
This is exactly what the survey data proved. The survey shows that 75 percent of millionaires attributed to their success as a result of consistently saving over a long period of time.
According to the survey results, the average millionaire spends 28 years investing and saving before reaching that magic mark of $1 million.
As stated a 401k account also builds wealth over time, through consistent contributions, matching and compound interest.
Therefore, it’s not about scheming to get your hands on large amounts of cash quickly. Instead, the goal is to grow rich slowly by adding small amounts over the years.
401k accounts is one of the surest way to get you on your way to become a millionaire.
Growth of 401(k) and IRA Millionaires
A recent article from Yahoo Money gives us proof that the strategy of building wealth through retirement accounts such as 401k or IRA is a successful strategy.
According to the article, Fidelity accounts with at least $1 million hit a record high.
According to Fidelity, the number of 401k millionaires increased from 224,000 to 262,00 from a pool of 30 million retirement accounts held at Fidelity.
The number of IRA millionaires increased from 204,000 to 234,000.
This is attributable to the growth of the stock market indexes over the previous months.
Not to despair, if you’re not a 401k or IRA millionaire. The averages of both accounts also increased by 4% and 6% respectively for non seven figure accounts.
Bonus: Don’t do these 10 things with your money
Since I mentioned Dave Ramsey in this post, I came across an article that discussed his money advice and I wanted to share it that you all.
- Don’t try to tackle your biggest debts first
- Don’t buy with a credit card what you can buy with cash
- Don’t buy new
- Don’t spend when you can invest
- Don’t go to a fancy college
- Don’t splurge once you graduate
- Don’t try to justify frivolous purchases
- Don’t give your kids an allowance
- Don’t try to get rich too quickly
- Don’t buy an engagement ring from a jewelry store
Final Thoughts
There you have it! The 10 money don’ts from Dave Ramsey. He is well known for his deb snowball and getting out of debt advice.
You can’t go wrong with his baby steps advice.
Why I don’t agree with all of his advices, I do like his baby steps and the fact that he’s a believer in getting rich slowly!
As of this writing, it’s getting toward the end of the year. I will write about this at a later post but it’s time to think about money moves that you can make before the end of the year.
Since we are talking about 401k and IRA, let’s start there.
One of the best money moves to make right now is to check your 401k contribution to make sure that you’re getting the employer’s match. This problem arises when perhaps you’ve been too aggressive with your savings and you’ve maxed out your 401k contributions of $19,500 for the year.
I’m lucky that my company will do a lump sum contribution to make sure that I get the match that I deserved even though I reached the maximum of my 401k contribution prior to my last paycheck.
Some companies may not have that in their rules and you may forfeit these few matching contributions. I recommend checking your 401k contribution percentage to make sure you’re consistently getting the company’s match while you’re also on track to maximize your own 401k contribution.
Maxing out your IRA, Roth IRA, traditional 401k, and Roth 401k is one of my recommended money moves before the end of the year.
Do I believe that you can become a 401k millionaire as a pharmacist? You betcha! Stick to your 401k savings plan and you’ll one before you know it. Good luck!