401K Millionaire: Fact or Fiction? (not what you think)

So you want to be a 401K millionaire? Latest news is that they’re at an all time
high. It’s your time. I mean, they’ve finally cracked the code on
how to actually do it. I’ve been pretty vocal over the last decade
about what a mistake investing in a 401k is. And I’m wondering, have I really been wrong
all of this time? Because if you read the headlines, you most
assuredly would think so. But what aren’t they telling you about what
you need to do to make it happen for yourself? The answer to those questions and more coming
right up. And I got to warn you, if you love your 401K,
you probably won’t want to watch this. It’s only going to upset you. But if you do watch, I won’t leave you hanging. There is an alternative that will get you
to where you want to go in a much safer fashion, not to mention faster. But real quick. If you haven’t done so already, click the
subscribe button, ring that notification bell because I post cool stuff like this each and
every week and you don’t want to miss it. Alrighty, let’s do this. This is Theriault Media. Hi, I’m Matt Theriault, CEO of Epic Real Estate. Have you read the headlines lately about 401Ks? They’re all over the place. The number of 401k millionaires, it’s hit
an all time high. That’s factual. But what is actual and what I mean by that? Well, let’s take a look and let’s look at
how it impacts you specifically. I’m going to pack a bunch of stuff into this
video in a very short period of time, and you deserve to listen until the very end. After I’m done, if you’d like some help and
you want to brainstorm some ideas about what your next steps are, at the end I’ll show
you how to do that. Okay? Okay, so let’s dive in. As hard as I’ve been on the 401K over the
years, let’s give it a little bit of credit. I mean, after all, things are looking up for
the 401k, right? The average balance, it’s up 6% and the number
of 401K millionaires is at an all time high. So it is indeed a plan that you could follow. It’s not a great plan, but it’s definitely
better than no plan at all. I mean, if you voluntarily enroll in a 401K,
it will force you to save. And historically, it does indeed produce a
noticeable return. I mean, if you’re okay with 4%, 5%, 6%, maybe
7% on a good day and you’re okay giving up control of your finances to someone else,
hoping that they do a good job for you, then it is an option. And it looks like this. So let’s look at this axis here. Okay. The vertical axis represents our cashflow. That’s our monthly income that we would like
to receive in retirement that would allow us to live comfortably without having to work. Okay? And then here’s our time. Right here, this is the retirement date, 60
years or so. Here we are right now. The goal is right here. This is the deadline, so to speak. To live comfortably in retirement …
It’s going to be a different answer for everybody but what I’m going to use is just the median
household income in America, which is about $5K a month. It’s about $4,300 a month. I’m just going to use $5K, be a little optimistic
and keep the math simple as well. So $5K a month, that’s what we’re looking
for. Right there at $5K a month, we want to hit
this. Coincidentally at $5K a month, if you were
to receive 6% on your retirement account on your 401k in retirement, that balance would
have to be $1 million. So right here is what we’re looking for, this
little mark right there when these two intersect. We want to hit, oops, $1 million. All right? That’s at 6% and you can live on $5,000 a
month. You expect to receive $5,000 a month indefinitely. So here’s the plan is you start here wherever
you are and you start putting money away into this 401k plan. You start locking it up because you can’t
touch it until you hit this retirement age, right? So you’re just locking it up, saving, saving,
saving, saving, saving, saving, saving, and then boom. On this magical day if you did everything
correctly, you reached up to a million dollars and now you can enjoy your retirement indefinitely. So this number, the people that are hitting
is at an all time high. So what would it take for you to reach that
$1 million mark in your 401K? Because people are now doing it at a bigger
rate than ever and the total number of 401K millionaires are at an all time high and that
is factual. It’s 196,000 of them to be exact. Sounds like a lot, doesn’t it? But not so fast. You see, there are almost 60 million people
enrolled in 401Ks of which makes our a 196,000 401k millionaires, they amount to less than
1% of the 401K participants. Less than 1%. 0.2% is the real number and that is actual. Fidelity and Vanguard, the two biggest 401k
facilitators report that the average 401K balance today of 65 year olds is $209,984. The average 401K account value for an investor
65 years and older was $209,984. Now this sounds like a good number and it
is a good number, but there’s a problem. That number is pulled higher by a smaller
number of super savers and high income earners. The median balance where half have more and
half have less, that’s what you want to look at. Among those 65 and older, look, it’s a measly
$64,811. If that were you and you were accustomed to
making $60,000 a year during the years that you are working, your 401K will hit zero within
one year of retirement. If you’re one of the fortunate ones and you
retire with the average balance of $200,000, then that only gives you a few more years
before you’re tapped out too, and it’s back off to the workforce you go. Welcome to Walmart comes to mind. Maybe I’m being a little facetious with that
particular comment, but you do indeed see people well into their retirement age greeting
you as you enter the store, don’t you? Was that a part of their plan? No, it wasn’t. But it is now their reality. So what’s the point of the 401K if three or
four years after you’ve retired you’ve got to go back to work? If that’s your end goal, then hey, it’s a
good plan. But if that’s not where you want to go, why
would you even entertain a 401K as an option? Locking up your money for decades that won’t
get you to where you want to go is insane. That’s a plan to fail. The 401K, it’s a broken vehicle that’s been
sold to you as a solution. It’s not enough. Nor will it be. I mean even if you do it right, most people
don’t make enough money to save enough and if even if you did, the government won’t allow
you to put enough into it annually that would get you to where you want to go in any reasonable
amount of time. Yeah, but still, how can you turn down the
employer match? It’s free money and my 401K, it’s done great
the last decade. It’s working for me just fine. And Susie Orman, she said this and Dave Ramsey,
he said that. I know I’ve heard it all before here in the
comments. And I can understand why this conversation,
why it upsets so many. But don’t get mad. It’s just math. I mean regardless of how you may feel about
the subject, it’s not going to change the math. Listen, if you’re happy with where you are
financially, then don’t listen to me. Keep doing what you’re doing. And if you are happy with where you’re headed,
are you sure you’re going to end up where you think you are? Some people are making it to $1 million. The headlines are telling us that more and
more people are making it happen. So what are they doing that 99.8% of the others
aren’t? You want to know, right? Yeah. So did I. So I did a ton of research on the necessary
steps that one needs to take to become a 401K millionaire. I filtered it out all the naysayers. I pushed aside the skeptics and the cynics
and I only listened to the advocates of the 401K in search of their specific instructions
to make the 401K produce $1 million by the age of 60. And I found these 401k experts. They’re everywhere. People love this thing. I found them on CNBC TV, on CBS New York. I saw them on Time Magazine. I found them on Fox Business News and I found
them on CNN business. I mean, imagine that. What other subject will you ever find Fox
and CNN to agree? There was no shortage of advice to be had
and they all agreed how to make it happen. The consensus of how you play the 401K game
to win and indeed become a 401K millionaire in five simple steps per of the experts, I’m
going to give them to you. Number one, sign up for the company match
if your company has one because only 49% of employers with 401K plans will match even
a portion of what their employees contribute. Two, contribute the maximum. At least 15% of your income is what the experts
recommend. 15%. Three, invest aggressively for growth. Exact words by many. The translation there is invest at a high
level of risk. Jeannie Thompson, Senior VP at Fidelity says
… Because it’s really like running a marathon
more than a sprint and you have to know where you want to go. If you invest too conservatively, you won’t
get there. You won’t get there. You won’t get there. Number four, don’t react to market swings
or cash out when changing jobs. Five, start early. Specifically in your twenties they say. Jack Otter of Baron’s says …
Probably the single most powerful element in a long term savings plan is time. And Jill Schlesinger, she’s a certified financial
planner, she’s an Emmy nominated and Gracie award winning business analyst for CBS news. After giving her version of this very same
advice, she said … If you put 15% away every single full year forever until you retire,
you may not have a million but you’re going to have a lot of money in there. And you promised so that’s
I promise you’ll have a lot of money. I didn’t say a million. So if you are fortunate enough to have a company
or work for a company that will match your contribution and you can afford to contribute
15% of your income for life and you invest aggressively with a high level of risk and
you start no later than the age of 25 years old, those are the essentials to which all
of the 401K heroes agree. Still …
You may not have a million, but you’re going to have a lot of money in there. If you do what they say, you still may not
have $1 million in your 401K. And that’s key because per recent Charles
Schwab survey, the average American doesn’t even believe the gold standard of stashing
away $1 million is enough anymore and that $1.7 million is more likely than number to
retire. What will that number be when you’re ready
to retire? If you followed the expert advice to a T,
the math says you’ve still got a 99.8% chance of missing the $1 million mark. And that should cause you to think. It should cause you to wonder, why are so
many experts fans have the 401K if the statistics they share won’t pan out for 99.8% of the
people that they’re giving this advice to? I don’t have the answer. But it makes you wonder, doesn’t it? It’s like the guy that lost 40 pounds on the
Twinkie diet. I mean, he proved it can work. But unlike the certified financial experts,
he did also say don’t try this at home. The 401k is the Twinkie diet of financial
plans. Don’t try it at home. So what did he try at home? Well, 5%, 6%, 7% returns inside of a 401K,
if that’s not going to get you to where you want to go, then it’s time to turn to an alternative. And you’ve probably got a really good idea
that I’m going to suggest something crazy like real estate. If that’s what you were thinking, you’d be
right. And sure, we can debate the risks, we can
debate the strategies, we can talk about your bad tenant experience all day long. But the real deal about real estate is the
ROI. And it has no rival. Nothing comes close for the average person. So when considering all of the profit centers
of real estate collectively, it doesn’t take any extraordinary effort to exceed 30% return
on investment. I mean in this hand, I’ve got a 401K producing
6% and then over here my real estate is producing 30%. if you’d like to see how I got to that 30%
number, you can check this video out right here where I break the math down in detail. But the point right now is that’s a five times
difference between the two. When you extrapolate that math and actively
participate just a little bit more than you are right now in your 401K, you’re going to
see that you can reach your financial freedom goal up to 10 times faster. Whoa, 10 times faster. Are you insane? You pulled that number out of the out of thin
air, didn’t you? I mean, is that what you’re thinking? Well, not really. Let’s look at it this way. Hold on. Can you show me a 20 something 401k millionaire? Here, I’ll save you some time on this one. You can’t. That 20 something 401K millionaire doesn’t
exist. The math won’t allow it. And even if it did, the government won’t allow
it with their annual contribution limits. But can you show me the 20 something real
estate millionaire? Here, I’ll make this one easy on you too. Meet Parker and meet Brad and meet Cory. All Epic clients of mine who happened to be
20 something real estate millionaires. And I’m not pointing them out to brag about
me but rather to demonstrate that I didn’t have to look further than my own clients to
find you three examples. Or how about Catalina, josh and Tony? They’re not in their twenties but they are
indeed real estate millionaires and none of these people were millionaires when we met. I’ve been working with them all less than
five years. That’s where the 10 times math comes from
as they in four years have achieved what 99.8% of 401K participants are failing to do in
40 years. Then you got Jack and Josh and Maura and Daniel
and Russell and Greg and many others all on their way and very close to real estate millionaire
status. When you look at the math like this, it’s
really now no longer a debate as to whether a 401K is good or bad as it has more to do
with your current plan right now. Is it getting you to where you want to go
in the time that you want to get there? Do you want to be a 401K millionaire or does
it really matter how you become a millionaire as long as you become one? If it’s just the millionaire thing that you
want to become, all stats overwhelmingly point to real estate to making that happen for the
average person. With that said, I don’t know, do your own
math. You know your situation better than I do. If you like your result after you’ve done
your math, then stay the course. But if you don’t, when would right now be
a good time to do something about it? One thing that the 401K experts do have right,
and that is to start early. Put time on your side. And if you feel you’re getting a late start,
hey, don’t worry about that. When you get started is important, but nothing
can make up for lost time like real estate. If you’d like to check out a proven real estate
game plan, I laid out the very one that set Mercedes and I financially free in less than
four years. So you can click right here to take a look
and then you can try it on for size. Or if you want to hop on the phone and brainstorm
together some new ideas around real estate, watch this. Ready? God bless to your success. I’m Matt Theriault. Bye for now.

19 thoughts on “401K Millionaire: Fact or Fiction? (not what you think)

  • Simple question, my company matches 6% of what I put into my 401k. Currently have 40,000 available. Should I yank it out, or just continue contributing and let them match 100% of what I put in. Seems like an easy answer to me but, interested in other options.

  • I believe you have to diversify and be an active participant in your financial plan in order to succeed. Put at least enough in a 401k to get company match and get enough knowledge to manage the account to get more than 6%. As well, invest in real estate if you are comfortable with managing property. The key is to put yourself in a position to win down the road. You have to look out for yourself because nobody else is going to.

  • Partly agree. Rather than choosing one over the other, why not do it all – RE and also 401k as these are 2 separate asset classes. Also doing RE alone won’t guarantee you a safe retirement. What if a 2008 like crash in RE happens just around your retirement when one needs the funds the most.

  • This video is awesome matt! I’ve been so torn since I left my last job… Your video definitely got my wheels turning again! Thank you! 🔥

  • Great video that really exposes how we are "sold" sound investing. I think the biggest reason these companies taut 401ks is it doesn't matter if you make or lose money, they still make money for managing your money. Still grills me.

  • this is super cool! really enjoyed watching your video brother! cant wait to see more from you 🙂 keep them coming!

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