Personal Finance

Has anyone maxed out their 401(k) for over 20 years — what's the secret to their success?

David Beren

Published: December 15, 2024 1:23 pm

There are various philosophies about managing your 401(k) over time. The bottom line is that if you ask ten different financial managers what the best path forward is to grow this account, you’ll likely get 11 different answers, which can be a source of frustration for millions. 

24/7 Wall St. Key Points

• This Redditor says you can max out your 401(k) in 20 years, earning millions. 
• The comment section of this post almost universally agrees with their recommendation. 
• The maximum contribution for a 401(k) account has changed over the last 20 years. 
• Also: Is your 401(k) optimized for your retirement? Take This Quiz and Find Out (Sponsored)

In the case of one Redditor posting in r/Bogleheads, there is an outstanding question about how people have managed their 401(k) accounts over 20-plus years. It sounds like this Redditor isn’t in this exact scenario but is more interested in what is possible regarding growing an account for multiple decades. 

This is an interesting question, as you want to invest as much as possible into a 401(k) for as long as possible to ensure you have the best possible retirement lifestyle. 

The Scenario 

What we are looking at with this Redditor is a question about what is realistic regarding 401(k) earning potential over 20 years. In their mind, contributing a maximum amount between $50,000 and $70,000 at a growth rate of 8% should enable someone to have $5 million in an account after 20 years. 

Based on their understanding of the 401(k) world, employees can contribute up to $23,000 to their plan in 2024 and $22,500 in 2023. There is also the understanding someone over 50 can increase their contribution amount as a “catch-up” by adding $7,500 to the balance over time. 

This Redditor sees that the total amount of money that can be contributed to a 401(k) in 2024 is $69,000 ($76,500 with catch-up) when accounting for employee and employer matching contributions. 

What drives this Redditor’s question is that they claim to know two individuals who will reach the maximum contribution amount. One such individual is in tech, and the other is a physician. They firmly believe these people are telling them the truth about being able to hit the maximum contribution amount. 

The Reality 

First and foremost, I am not a financial advisor, and any questions about 401(k) investing should be directed to a qualified individual. This said, the Redditor’s claim is meeting its match in this post’s comment section for obvious reasons around the idea that someone hitting a $70,000 max 401(k) contribution is extremely unlikely. 

The most telling reason is that few companies, with an emphasis on “very few,” would offer this matching level. Considering that individual contribution hits the ceiling at $23,000, you’re asking an employer to carry the rest of the weight as far as the difference is concerned, up to $69,000, something that businesses of any size are extremely unlikely to do. 

However, the biggest concern is that the maximum limit hasn’t been $23,000 for 20 years. If you return to 2000, the maximum contribution limit was only $10,500. The 2003 limit was $12,000, so the likelihood that anyone is hitting a $5 million 401(k) balance in 20 years, assuming they started in 2003, is improbable. 

At least one person commented they have been maxing out contributions since 1990 and are still only at $3 million. However, short of any company providing any unusually high matching, the Redditor’s scenario of hitting $5 million in 20 years seems like a dream. 

The Takeaway

The reality of any 401(k) account is that if you have the means to max the maximum contribution every year, you should do so. There are tax benefits now, and if you receive an employer contribution, you’re also getting what can be considered “free money.” 

In other words, there are many reasons why making the maximum contribution is a smart move. However, this doesn’t mean that you will be in the position this Redditor thinks possible, which possibly only applies to the smallest number of individuals and companies.