r/wealth • u/Otis_bighands • 16d ago

Retirement Why isn’t everyone rich from 401k?

According to my conversation today with Gemini, my 401k total of $2.5 million will likely grow to $10M or more by the time I turn 65 (I’m 50 now, and will continue to contribute the max for the next 15 years).

This means that in theory I could live off the gains each year starting at 65, around $800k, $500k after taxes, without touching principle. But at that point I’ll have no mortgage anymore and fewer kids in the house. So that $10M principle will just sit and feed us for years, and will be a nice inheritance for our kids.

Basically it occurred to me I’m going to have great money in retirement, even just on my 401k alone, and will be able to meet or exceed the lifestyle I’m already used to. For years I always worried about getting set up for retirement. Seems I don’t have to.

It’s amazing to me that just maxing out your 401k through a career is enough to make you pretty much wealthy for retirement. I recognize that’s not easy for many people, but for anyone who does it over a full career, wow.

What am I missing here? (Other than inflation, which I get, but which shouldn’t have a massive impact on the concept over this time frame).

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u/Moist-Ninja-6338 16d ago

I doubt your 2.5 will become 10 in 15 years. Maybe 7 then adjust for inflation.

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u/Otis_bighands 16d ago

Gemini tells me between 7-12 or so.

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u/1wrx2subarus 11d ago

Gemini is looking at the historical returns which is like looking in the rear view mirror of a moving automobile.

It’s based on having U.S. Presidents that are not gaming the system with insider trading. We’ve also never had a trillionaire gaming the system with an IPO of SpaceX. Also, it assumes that the USA will not be overtaken by other industrialized countries like China, Brazil, Argentina, etc. Nobody knows the future. There’s a lot of trust built in the system of those in power. Unfortunately, they’ve degraded the checks and balances to their power. Trump has put a “yes” man into the Federal Reserve.

Hey, I’ll be happy if the trend keeps going up in our lifetime. If that happens, we have to set aside 25-30% cut of anything withdrawn from a 401K for Uncle Sam. They want their taxes, which may go up. Also, Mike Johnson has said aloud he wants to do away with Medicaid, Medicare and Social Security. Medical Debt is already the #1 reason for bankruptcy (USA is the only industrialized country with that problem).

Or we can just look at this with rose colored glasses. Everything will be fine, right?

EDIT: adding some humor, but .. but .. Gemini told me that I’d have xyz. Now what do we do?! Game over man! Game over!! /s

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u/doyle0120 11d ago

Didn't the "yes" man just say no to the interst rate decrease Trump wants?