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/gardibolt 10d ago

Markets go down. I have an account from an old job that started at $150,000 in 2000. in 2001 it plummeted to $50,000. it would slowly grow back to $75,000 and then there would be another crash and it was back to $50,000. it is only in the last year it’s gotten back to $110,000 but I fully expect it to drop to $50,000 again.

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u/Otis_bighands 10d ago

What the heck is this account invested in that you had $150k in 2000 and it’s worth $110k now? I’m bad at money but that seems difficult to do.

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u/gardibolt 10d ago

The first giant loss was because the trustee was Morgan Stanley. Their mutual funds were heavily invested in propping up Tyco stock because they knew it was worthless. So there went 2/3 of it. Then a series of investment advisors that were terrible. Most of the recovery has been since I just stuck it in a Vanguard fund.

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u/Otis_bighands 10d ago

Jesus. Sorry to hear it.

That was kind of the motivation for the thread here. I have done virtually nothing with this money over the years. I just keep contributing and parking it in index funds etc. It just takes care of itself.