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: