The Value of Saving for your Future.
According to Vanguard, in 2017 the average 401(k) plan balance was about $100,000 and the median balance was around $27,000. More than half of the United States population had zero savings, tax-deferred or otherwise, whatever. The vast majority had saved less than $1000. Sad!
The Financial Samurai blog crunched the numbers to show the time it would take, using various strategies, to reach millionaire status when starting from scratch. This exercise assumes maxed out contributions and average historical performance.
Portfolio allocation Historical return Time to 401(k) millionaire
100% equity 10.2% 18 years
80% equity/20% fixed income 9.5% 19.5 years
70% equity/30% fixed income 9.1% 19.7 years
60% equity/40% fixed income 8.7% 20.5 years
50% equity/50% fixed income 7.8% 21 years
40% equity/60% fixed income 7.2% 21.5 years
30% equity/70% fixed income 6.6% 22.2 years
20% equity/80% fixed income 6.6% 23 years
100% fixed income 5.4% 25.5 years
100% cash 1% 44 years
“Historical returns can’t guarantee future returns, but after a 10-20 year period of investing in your 401(k), your average annual portfolio return will likely begin to mimic the historical averages,” Financial Samurai’s Sam Dogen wrote.
Sam Dogen also offered up this roadmap of savings targets: