Fri May 10 2024, by Tyler Gardner

Maximizing Your 401(k): How Tyler Plans to Retire with $5 Million

Tyler? Yep. Looks like you'll be retiring with $5 million in your 401k? Yep. But you were only allowed to contribute $6,500 a year.

Oh, no. It's a 401(k). I was actually allowed to contribute $22,500 annually, not to mention the $7,500 catch-up clause after 50. Oh, and my company's 6% match. But that only adds up to $1.3 million of contributions.

Yep, and compound interest took care of the rest. Well, can't wait to get our hands on those taxes when you're 59 and a half.

Well, keep waiting, because I don't plan on touching that account until I'm 75, when the account is most likely going to be worth closer to $15 million.

Wait, but you have to take RMDs by 72. Wrong. Thanks to the Secure Act 2.0, starting this year, I don't have to take RMDs until 73. Starting in 2033, I won't have to take RMDs until 75. And that's when I'll be making the most money from that compound interest.

That's three more years of tax-deferred compound growth? Yep. Well, we'll be waiting at 75. Happy to return the favor, as I'll be officially retired and in one of the lowest tax brackets of my life.

I never paid you anyway on the $1.3 million of contributions I already put in. Good day to you.

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