I calculated on a website that if I contribute $15,000 a year to 401k and my employer matches some of it, I should have about 13-17 million in 40 years. Is this really true? I use a couple of oneline calcualtors.
2007-11-19 12:07:23 · 10 answers · asked by Anonymous in Business & Finance ➔ Investing
If I contribute $10,000 it should be between 9-12million, is this right too?
2007-11-19 12:08:05 · update #1
$10,000 a year should be 9-12 millions, is this correct too?
2007-11-19 12:10:14 · update #2
I am assuming average rerutn, 9-10%
2007-11-19 12:16:14 · update #3
Depending upon the rate of return used and the amount of the employer match, yes that can be true. It's the power of compounding that does that for you.
Do bear in mind that in 40 years $10 million will not be worth what it is today, but it should still ensure a comfortable retirement.
2007-11-19 12:13:40 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 1⤋
It all depends on your employer's % match and what annual interest rate you are assuming. Considering only the $15K per year deposit at 6% APR, in 40 years you will have $2.32M. At 10% APR, you would have $6.64M. There are some higher risk funds available that have been producing 20-30% per year. So select your investments carefully. Do not place your 401K money into your company's stock fund.
Wish I had started earlier in 401Ks. Even if inflation eats into a 401K of $3.6M+, you will be glad that you made the life time sacrafice for retirement.
2007-11-19 12:18:47 · answer #2 · answered by trader 4 · 0⤊ 0⤋
I think thats a bit of a stretch. If you Pick a good set of Index Mutual Funds of Stocks Bonds and Foreign You would have Several Millions.
The big Danger is that you decide to muck around with your plan and outfigure yourself and poof there goes 500,000 do that a few times and you may be down to a paultry million or 2.
Start Early Pay attention to costs.
Invest in Passively Managed Mutual Funds
Stay the Course..
Good Luck Gerry
2007-11-19 15:29:53 · answer #3 · answered by tndiehard 2 · 0⤊ 0⤋
Yes...but that's a purely hypothetical. Rare is the company that will match to that extent. Most will limit their match to 8% of your income or less. In addition, it's unlikely that you'll get 10-11% return on your investments. Certainly the market has performed that rate over time but if you pull out specific 40 year periods you'll see that it hasn't done that well and in some cases has actually performed quite poorly (in relation).
2007-11-20 02:15:56 · answer #4 · answered by digdowndeepnseattle 6 · 0⤊ 0⤋
It's only about $7M if you invest $15k at the beginning of each year for 40 yrs with a rate of 10% p.a. compounded annually.
2007-11-19 14:04:37 · answer #5 · answered by megan1410 2 · 0⤊ 0⤋
True.
You maybe limited as to how much you can contribute in any one year. Ask you plan administrator.
2007-11-19 12:12:16 · answer #6 · answered by Dash 7 · 0⤊ 0⤋
Well if everything goes good. !0% annually is not an easy feat.
2007-11-19 13:24:35 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Hate to be a bummer but your 401(k) could also become worthless, just ask anyone who worked at Enron.
2007-11-19 12:18:00 · answer #8 · answered by Hubris252 7 · 0⤊ 2⤋
Find out what fees you are paying and factor that in.
2007-11-19 12:16:15 · answer #9 · answered by Anonymous · 1⤊ 0⤋
Based on the rate of return and compounding, it is very possible.
In 40 years if there are still Democrats in power you'll need every penny of it for taxes.
2007-11-19 12:12:30 · answer #10 · answered by Nvr2soon 6 · 2⤊ 5⤋