The Common Strategy 401(k) Millionaires Use

Dana George, The Motley FoolTue, April 14, 2026 at 9:06 AM UTC

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Key Points -

While studying 401(k) millionaires, Fidelity found that it doesn’t take an exceptionally high-paying job to build a healthy retirement account.

Consistency is key. Even when the market is wonky, holding on can be key.

If you can’t contribute as much as the millionaires in the Fidelity study, even modest contributions add up.

The $23,760 Social Security bonus most retirees completely overlook ›

You've probably seen articles touting the "ideal" amount to have saved for retirement. However, the truth is far more nuanced. Simply put, some people need more than others. Still, for many, the goal is to save at least $1 million.

While this goal may seem out of reach for the average worker, data exposes a surprising truth: Everyday people have reached the $1 million mark in their retirement accounts without relying on luck, an inheritance, or an exceptionally high-paying job. Instead, they implemented a fundamental strategy that just about anyone can use.

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Here's a breakdown of the strategy used by those who were able to build retirement wealth on their own.

Seven stacks of coins, each larger than the stack before.

Image source: Getty Images.

They started early

Let's say you've been working for years and have never invested money in a retirement account. Even if you never believed you could save, now is the best time to dive in. Waiting another week only makes it more difficult to reach your goals.

While most 401(k) millionaires began investing early in their careers, it's never too late to build an impressive portfolio of your own -- even if it doesn't quite reach $1 million.

They invested more

In 2014, Fidelity published an illuminating investment study covering the years 2000 through 2012. That period represented some truly stinky years for investors, with an average annualized return of just 2.26%.

And yet, when Fidelity looked at its millionaire clients, it found one thing they had in common: They contributed 14% on average to their 401(k)s. Yet not one of them earned more than $150,000 a year. Whether they were self-employed or worked for someone else, they continued to contribute to what must have seemed like a faraway retirement.

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Say one of those millionaire clients earned an average of $100,000 annually. Contributing 14% of their gross earnings meant parting ways (for a time) with $269 per week. However, because traditional 401(k)s are pre-tax, they didn't pay taxes on those funds before withdrawing them in retirement. That means they saved money by not owing taxes on the contributions they made to their 401(k)s when the money was earned.

Yes, their weekly paycheck was smaller, but not by as much as they might have imagined it would be.

They took advantage of employer matches

The millionaires studied by Fidelity also took full advantage of any employer-matching contributions.

If someone earning $50,000 a year worked for a company offering a 5% employer match, that means their employer added an extra $48 per week to their 401(k) contributions.

$48 may not sound like much, but it adds up. While the average annual return was only 2.26% between 2000 and 2012, the market's average annual return since 1957 has been about 10%. Splitting the difference, let's say the employee receiving a $48-per-week match earned an annual average of 7%. That means they had an extra $102,486 in their retirement account after 20 years, and an extra $236,148 after 30 years -- in addition to any money they contributed on their own.

For those who make regular contributions, even during economic downturns and recessions, there has historically been a financial reward at the end of their careers. Given the impact of recent inflation, it's understandable if you don't believe you can invest for retirement. However, aim for at least 1% (or as much as your employer will match if it offers matching). Even if you don't end up with $1 million, you'll have more than you would have if you hadn't invested at all.

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Source: “AOL Money”