Retirement accounts account for more than half of the wealth of the wealthy

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If you think that having a high net worth is a far-fetched dream, you are definitely not alone. In fact, the vast majority of US adults (74%) do not believe they will become high net worth individuals themselves – defined as having at least $1 million in investable or liquid assets – according to a recent report. Morning Consult survey commissioned by digital wealth management firm Personal Capital.

But becoming an individual with great wealth over the course of your life involves more than just earning a good salary or having multiple income streams.

Retirement investing—something we can all have access to—plays a major role in many millionaire portfolios: For high net worth individuals who use the personal capital dashboard, retirement accounts such as 401(k) plans and IRAs have contributed 55% of their wealth total.

“This is something I think high net worth investors have discovered,” Michelle Brownstein, certified financial planner and vice president of Personal Capital Private Client Group that works with high net worth clients, told Select. “The strategies needed to get rich are different from those needed to stay wealthy and ultimately make money.”

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Prioritize maximizing your retirement accounts

While most survey respondents (59%) agreed that it was important to maintain a diversified investment portfolio, fewer (46%) prioritized their retirement accounts.

However, this belief can hold you back from making your money work for you and, ultimately, increasing your net worth in the long run. With a 401(k) retirement account, for example, your earnings automatically return to your plan and compound interest goes to work, allowing you to earn returns on your initial investment, as well as your investment gains.

Retired savers with 401(k), 403(b), most 457 federal government savings plans and plans can contribute up to $20,500 in 2022, while 401(k) savers age 50 and older can Make an annual compensation contribution of up to $6,500 in 2022, with a total contribution of $27,000.

Don’t forget that your 401(k) contributions increase deferred taxes and also decrease your taxable income. If you can’t hit the 401(k) cap, at least make sure you’re contributing enough to meet any employer match, otherwise it’s basically free money left on the table. As your income increases, you can also increase your contribution amount.

Those with a traditional IRA or Roth IRA can contribute up to $6,000 in total between their accounts, while savers age 50 or older can make an annual compensation contribution of up to $1,000, with a total contribution of $7,000.

If your employer doesn’t file a 401(k), consider opening an IRA so saving for retirement isn’t put in the background. In general, traditional IRAs are more effective if you expect to be in a lower tax bracket when you retire, while Roth IRAs are best for those in a lower tax bracket today. You can find both traditional Roth IRAs at big-name brokerages like Charles Schwab and Fidelity, or via robo advisors like Betterment.

As you work to increase your retirement savings, be sure to track the progress of your personal net worth over time with tools like Personal Capital and Securities, which allow you to link all of your accounts in one place, including checking, savings, money markets, CDs and retirement accounts, As well as your debt accounts.

Fidelity Investments

  • Minimum deposit and balance

    The minimum deposit and balance requirements may vary depending on the investment vehicle chosen. There is no minimum to open a Fidelity Go account, but a minimum balance of $10 for robo-advisor to start investing. Minimum $25,000 balance for custom planning and advice

  • expenses

    Fees may vary depending on the investment vehicle chosen. No commission on stocks, ETFs, options trading and some mutual funds; Zero transaction fees for more than 3,400 mutual funds; $0.65 per options contract. Fidelity Go is free for balances under $10,000 (after $3 per month for balances between $10,000 and $49,999; 0.35% for balances over $50,000). Fidelity’s custom consulting and planning fee is 0.50%

  • bonus

  • investment vehicles

    Android advisor: Fidelity Go® and Fidelity® Planning and personal advice Irish Republican Army: Fidelity Investments Traditional, Roth and Rollover IRAs Brokerage and Trading: Trade Fidelity Investments else: Fidelity Investments 529 College Savings; HSA . fidelity®

  • investment options

    Stocks, bonds, ETFs, mutual funds, CDs, options, and fractional stocks

  • educational resources

    Extensive tools and in-depth, industry-leading research from over 20 independent providers

to improve

On the Safe Betterment website

  • Minimum deposit and balance

    The minimum deposit and balance requirements may vary depending on the investment vehicle chosen. For Betterment Digital Investing, the minimum balance is $0; Premium Investing requires a minimum balance of $100,000

  • expenses

    Fees may vary depending on the investment vehicle chosen. For Betterment Digital Investing, 0.25% of your funds balance as annual account fee; The premium investment fee is 0.40% per annum

  • bonus

    Up to one year of free management service with a qualifying deposit within 45 days of signing up. Valid only for new single investment accounts with Betterment LLC

  • investment vehicles

  • investment options

    Stocks, Bonds, ETFs, and Cash

  • educational resources

    Betterment RetireGuide™ helps users plan for retirement

personal capital

On the secure Personal Capital website

  • cost

    The app is free, but users have the option to add investment management services for 0.89% of their money (for accounts under $1 million)

  • standout features

    A budgeting app and investment tool that tracks both your spending and wealth

  • Classify your expenses

    Yes, but users can edit

  • Account links

    Yes, bank and credit cards, as well as IRAs, 401(k)s, mortgages and loans

  • Availability

    Viewed in both the App Store (for iOS) and Google Play (for Android)

  • Safety Features

    Data encryption, fraud protection, and strong user authentication

Mint

Information about Mint was collected independently by Select and has not been reviewed or provided by Mint prior to publication.

  • cost

  • standout features

    Shows income, expenses, savings goals, credit score, investments and net worth

  • Classify your expenses

    Yes, but users can edit

  • Account links

    Yes, bank and credit cards

  • Availability

    Viewed in both the App Store (for iOS) and Google Play (for Android)

  • Safety Features

    Verisign scanning, multi-factor authentication, and Touch ID mobile access

Editorial note: The opinions, analyses, reviews or recommendations contained in this article are those of the editorial board alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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