While the widespread shift over the past five decades to 401(k)s for retirement savings has kept some Americans from shouldering the burden of being primarily responsible for their own retirement finances, others have been able to work the system. to their advantage.
Marku, 65 years old, is one of them.
Mark, whose last name is known to Business Insider but is being withheld for privacy purposes, retired three years ago at the age of 62. During his nearly 40-year career in geology, he was able to accumulate over $2 million for his retirement, even after putting many children through college.
“You just leave it alone, and you look 40 years later, and it’s a really nice number,” he said.
The first company he worked for in the 1980s had a retirement plan, which quickly transitioned to a 401(k) in the first year he was there. He read several articles on how to maximize the new benefit and, from that point on, he said he just basically maximized it. He listened to the advice that you should save aggressively in a 401(k), and so he did. Then, he said, he just left it there and tried not to worry about it.
Every once in a while, when there was a dip in the market, it was a little alarming, but if I was a procrastinator or whatever, I didn’t move the money. I just left them at the same things. said Mark.
Mark is the epitome of what happens when retirement savings do what they’re supposed to do. He was also able to do everything in the country: He said he was very blessed not to have long periods of unemployment and to have earned enough to always be able to max out his 401(k). He lived in low-cost living areas and didn’t have children right away – meaning he was able to build up some savings before starting parenthood.
“When it’s all said and done, I ended up with two more million dollars,” he said. “Never put in extra, never take anything, never borrow money or any of that sort of thing.”
What Mark did right – and what he thinks others should do
In his earlier working years, Mark was surprised by people who didn’t contribute to their 401(k) accounts, even if it was just a small amount to get the match. He thinks some simply didn’t know much about 401(k)s during the transition from retirement or didn’t understand them.
“I heard a lot of people who didn’t even take advantage of it, and it just seemed like a no-brainer,” he said.
Of course, not every American has access to a retirement account. As of 2023, just under three-quarters of Americans had access to some form of retirement benefits, according to the Bureau of Labor Statistics. And of those who do, a solid portion still don’t share in the benefits.
Some of this may be based on how benefits have changed. While Mark is a big proponent of the 401(k) and it has worked well for him, other workers may be used to pension plans. Mark is part of the group that saw the transition of the pension economy from defined benefit, pension-like plans that pay out fixed amounts, to defined contribution plans, which pay out based on how much you put in – and like the stock market does.
For example, after a crash in the 1980s, Mark said “it was very alarming to me that I lost so much money on paper – but it came back”.
“From that point on, I realized every other recession after that, it’s going to come back — and it did,” he said.
Mark’s advice for retirement savings would include taking advantage of the few benefits that exist now that didn’t really exist when he was doing his retirement planning, things like index funds and Roth accounts — after-tax savings plans that can be offered by employers, in the case of 401(ks), or generally open to Americans making under a certain amount.
“If I were to start now, I would put more money in Roth accounts,” he said. He also admitted that he lives in a low cost of living area – and said that if workers can, they should try to lower their living costs. He understands that some countries cost “a lot more” than others.
But overall, Mark said he’s a “pretty big proponent of the 401(k).” He said that while he knows some people have their issues with it, he thinks that what he calls quasi-forced savings — the ability to take it out of a person’s hands before they have a chance to spend it — is one of the “Smartest Things That Exist.”
For him, his savings have meant tremendous peace of mind. Unless something very unforeseen comes up, they won’t be out of money. If there’s something they need to spend money on or help their children, they can – and that’s thanks to their savings.
“If I had to tell people what to do, there’s big savings and you save early — or you save early, and it doesn’t have to be big, but you save early and you get all that compound,” Mark said. . “It makes a big difference. I realize it’s the hardest time to save for a lot of people, but if you can save the money before it hits your hands, I think that’s a big deal.”
Are you a boomer doing well in retirement? Contact this reporter at jkaplan@businessinsider.com.
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