Benjamin Brandt, host of the Retirement Starts Today Radio Show and Founder/CEO of Capital City Wealth Management is coming on the show today to talk about the 5 steps to building wealth inside your 401k.
Believe it or not, $1 million may seem like a lofty goal by today’s standards, but will it be enough if you’re planning on retiring 20-30 years from now?
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The Show Notes
Benjamin is an expert when it comes to retirement planning and is highly respected by people from all over the financial world. He has an incredibly popular podcast, the Retirement Starts Today Radio Show where every Monday he is helping you prepare for the best retirement possible.
In my interview with Benjamin, I asked him to share with us the 5 simple ways to truly become a 401k millionaire and then to break down each step in detail.
Step 1: Start Saving Today
The money you will be living off of in retirement is not from the money you are setting aside today. It’s from the money that your money will be making in the form of compound interest.
Step 2: 10% -15% Invested
Start off by saving 10% – 15% of your income. Then, every time you get a raise, split the raise: half goes to you and the other half goes to your 401k.
Step 3: Always Get the Employer Match
97 percent of employers offer a company match. How much is the match, is it a tiered match, and how do you find this out? Remember, the employer match is truly FREE money for your nest egg.
Step 4: Invest Into the Right Funds
Not everyone will be investing into the same funds. Some of us retire next year and other will retire in 30 years from now. Knowing what to invest in based on the level of risk and time you have left is crucial.
Benjamin gives some great insight on what you should be investing in depending on age vs risk vs reward.
Step 5: Keep Your Hand out of the Cookie Jar
There are three ways you can access money from your 401k, and only one of them is correct.
The correct way: wait until you are in retirement and access your nest egg penalty free.
Wrong way #1: early withdrawal and pay a hefty penalty
Wrong way #2: take a 401k loan
Due to COVID-19, the penalties for taking from your 401k have been waived. Also, the loan requirements have also loosened up due to the virus. You can learn all about the here inside Episode 128 of the Money Peach Podcast.
Links Mentioned in the Episode
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One Comment
I retired five years ago with way more than a million dollars in my 401K. That was a reasonable amount then but for someone retiring in 25 years inflation will eat away at over half of its buying power. In other words if you want a million dollar lifestyle then you’ll need 2.1 million dollars to pay for it. On the other hand I was only allowed to put in around $7,000 when my company first opened up 401k accounts and now the contribution max is $19,500. So today if someone maxes out their contribution every year, like I did, they’ll have several million by the time they retire. I never noticed the money I invested, it was invisible to me. And when that balance finally hit seven figures? It was a pretty happy day for us!