Using Retirement Accounts For Wealth Growth

At the end of 2024, more than 537,000 Fidelity 401(k) accounts had balances over $1 million. That’s not a typo. Over half a million people at Fidelity alone have reached seven figures within their retirement plans. So, what’s the secret? It’s not timing the market. It’s not chasing hot stocks or the latest crypto trend. It’s the boring basics—done consistently, over time. --- The Foundations of 401(k) Millionaire Success: ✅ Save more than you spend Aim to save at least 15% of your income (including employer contributions). 20% is even better, especially if you're starting later or playing catch-up. ✅ Invest for the long haul If your time horizon is 10+ years, think like an owner, not a lender. That means prioritizing a diversified, low-cost portfolio of equities over fixed income. ✅ Use tax-advantaged accounts to reduce tax drag Retirement plans offer some of the most powerful compounding tools available—maximize them: 1. Contribute enough to get your full company match in your 401(k) 2. Use a Backdoor Roth if you’re income-ineligible for direct Roth contributions 3. Max out your 401(k) annually 4. If your plan allows it, use the Mega Backdoor Roth strategy 5. Consider a High Deductible Health Plan + HSA—and make sure to invest your HSA contributions 6. Participate in your Employee Stock Purchase Plan (ESPP) to buy stock at a discount --- 🎯 No gimmicks. No secret sauce. Just smart, consistent habits repeated over decades. Yes, the market will fluctuate. Yes, the headlines will be unsettling. But wealth is built by those who stay disciplined—and the data proves it’s working. The path to a seven-figure 401(k) isn’t flashy, but it is proven.

Ever wondered how high-income individuals manage to grow their retirement savings exponentially, all tax-free? This post is for you! Let's talk about the mega backdoor Roth IRA, a little-known retirement strategy that could potentially multiply your tax-free growth. A mega backdoor Roth IRA can allow you to contribute almost six times the regular limit to a traditional Roth IRA. Wondering about the numbers? Instead of the usual $7,000, you could see up to $46,000 grow, totally tax-free! So, how does this work? This strategy involves your 401(k) plan. Apart from the regular Roth or traditional 401(k) contributions, if your plan allows "after-tax" contributions, you could add up to an extra $46,000 in 2024. But the real magic happens when you convert these after-tax contributions into a Roth. This conversion allows a much larger portion of your money to grow tax-free, maximizing the potential of your retirement savings. However, this strategy does require two conditions to be met: 1. Your employer must offer the option to add “after-tax” contributions into the 401(k) plan. 2. The 401(k) plan must allow an "in-plan Roth conversion" or enable you to roll these funds into a Roth IRA while still an active employee. If these conditions aren't met, the mega backdoor Roth IRA strategy may not be feasible for you. Have you considered the potential benefits of a mega backdoor Roth IRA for your retirement strategy? #retirementplanning #finance #taxplanning #retirementsavings #wealthmanagement

Would you miss an extra $1,000,000? (Your Uncle Sam may get it instead) Many people worry about whether they're managing their retirement funds properly? Understandably so. There's a lot to think about. But what you should be thinking about is how much of your hard-earned cash vanishes to taxes. Let me share a strategy that could possibly save you over $1,000,000 in taxes. Throughout your career, you've likely amassed wealth in traditional IRAs or 401ks. But here's something no one told you. Due to the government's required minimum distributions, these accounts can lead to serious tax problems later on. These withdrawals are taxed as ordinary income and can: 🚫 push you into a higher tax bracket 🚫 result in higher Medicare premiums 🚫 even affect your Social Security This is where the Roth conversion comes into play. It works like this. You transfer money from a tax-deferred account to a tax-free Roth IRA. Yes, you do have to pay tax today on the conversion. But, the payoff is tax-free growth for the next 30 or 40 years with no required minimum distribution. The potential tax savings? Astonishing. Before doing a Roth Conversion consider these 4️⃣ key factors. 1️⃣ Current tax bracket: 👉 The tax on the Roth conversion is paid at your current tax rate. 👉 In a high tax bracket? 👉 It might be more sensible to wait until your income drops. ~~~ 2️⃣ Future tax bracket: 👉 If you predict that taxes will rise during retirement, paying the tax now could be wise. ~~~ 3️⃣ Asset allocation: 👉 A Roth conversion can be highly beneficial if your account has high growth potential. ~~~ 4️⃣ Don't try to do this alone. 👉 Work with a professional. 👉Mistakes could be costly and irreversible. ~~~ 💡 Let's look at an example. Imagine a retiree who converts $50,000 into a Roth IRA today. At an annual growth rate of 8%, it will double every 9 years, leading to significant tax savings over the long run. By strategically planning Roth conversions you can potentially save a fortune in taxes over your retirement years. It's all about balancing the immediate tax cost against the long-term benefits of tax-free growth. 📌 So, what are your thoughts on Roth conversions? 📌 Do you believe it could be a game changer for your retirement planning? *** P.S. If you want to join others in retiring confidently, building a more intentional life, and making the most of your life with your money, follow me 🔔 here. *** ✍️ Care to share your thoughts? ♻️ Reshare if you enjoyed this.

There's a not so secret silent partner we all have in our retirement accounts. And no matter how much we have accumulated over time, our 401k and IRA balances don't really match reality; every dollar that comes out, the government takes its piece. There's no free lunch. We are able to lower taxable income our entire working lives, the accounts grow tax-defered; don't act like the government just forgot. They're gonna wet their beak and take their piece. Especially now that hundreds of thousands of individuals have account balances well over $1 Million, way more than ever before, they will be ready. So should we. Millionaire status is great but we've got to be real here. Effective, proactive planning becomes more and more urgent as the numbers rise - there's simply too much at stake here. There are some moves to make, as always, better ahead of time. Maximize different buckets - Spread savings and investments between pre-tax (401ks and IRAs), Roth (tax free in retirement), and taxable (or in the jargon, non-qualified) brokerage accounts. Fill those different buckets accordingly, mindful of tax treatment all along the way. Plan how and when you take withdrawals - The order and timing for pulling money out of your accounts is important. Spreading withdrawals over years helps avoid bigger tax bills, keep you in a lower tax bracket. Roth conversions before retirement: If you expect a few years with lower income (like after you stop working but before required minimum distributions kick in), move some money from a traditional IRA or 401(k) into a Roth. You’ll pay taxes now, but money in the Roth grows and comes out tax free later. Stay on top of RMDs - required minimum distributions (RMDs) - In your early 70s, you must start taking withdrawals (I don't make the rules). Ignoring them leads to steep penalties. Plan ahead so you’re ready and don't get hit with extra taxes, and look into strategies like charitable giving from IRAs if it fits your situation. Think about all sources of income - Diversify. Plan for different streams of income to last a (hopefully very, very) long time. Pensions, social security, cabbage patch kids dolls, whatever... And take care of your health, once that's gone all the planning in the world is out the window. Let me know your thoughts. IRA, 401(k) millionaires hit record highs https://lnkd.in/eCq98Xjb