Personal Finance

My 47-year-old mother is an RN who makes over $100 per hour and her 401(k) only has $167k in it and she doesn't understand how behind she is

Joey Frenette

Published: January 8, 2025 12:37 pm

Even those with a high hourly wage may still be running a bit behind when it comes to retirement. Undoubtedly, in a prior piece, I noted that it’s typically not the best idea to rely on one’s 401(k) when it comes to saving for retirement. There are numerous other vehicles that should be leveraged to build up a retirement nest egg that’s suitable for your personal lifestyle.

Indeed, the 401(k), especially for those who have an employer match, can be a fantastic way to set and forget. If you’re automatically making contributions and an employer is topping it up with some sort of match, there may not be any need to worry about it. Right? Indeed, that isn’t always the case, especially if your 401(k) sum is below the average for your age.

Checking up with your 401(k) is wise.

Undoubtedly, nobody wants to hear that they’re behind schedule for retirement. And that’s why it’s easy to contribute to the 401(k) and not give all too much thought to it. After all, setting and forgetting can be a great idea, as it takes your emotions out of the game, allowing your retirement nest egg to grow over time.

Never checking your 401(k), though, can be a bad thing, especially if you’re expecting to retire at a certain age (let’s say 65). That’s why I’d argue that checking once per month (at least) can be wise, perhaps with the help of a financial advisor who can tell you where you stand and if you’re ahead or behind. At the very least, you should know what you’re investing in through your 401(k) and how it’s performing relative to the overall market. Maybe, just maybe, you’re not participating in America’s great bull run. And if you’re falling behind, some drastic change could be needed.

Stagnant growth in this RN’s 401(k)—what’s the move?

In this piece, we’ll check in on a 47-year-old-year registered nurse (RN) who’s making well north of $108 per hour but has scored meager returns (just 2% in the past 10 years!) with an interest income fund.

Indeed, the S&P 500 is firing on all cylinders right now, with 52% gains in the past two years and around 189% in the past decade. Over the same span, the Nasdaq 100 is up more than 400%, making a 2% gain absolutely horrid, even with the lower risk profile. Indeed, one may not have too much say in how one can invest 401(k) proceeds. That said, I would be willing to bet there are more options available to them, perhaps ones that have more equity exposure.

With just $167,000 saved, I think the RN should seek to get a bit more aggressive with their strategy to make up for lost time, at least in my opinion. Of course, this doesn’t mean allocating the 401(k) towards an aggressive growth mutual fund, but it could entail a greater mix of equity exposure. Undoubtedly, a major reason for the RN’s reason bout of underperformance, I believe, could have to do with hefty investment fees and underperformance in the bond market.

In any case, I’d encourage the RN to meet up with a financial advisor so they can change the funds that are invested through via the 401(k). Additionally, I’d also look to invest in a brokerage account beyond the 401(k). I’ve said it before and I’ll say it again: the 401(k) is just one pillar to hold up a retirement!

The bottom line

The good news for this RN is that she’s still relatively young, has a nice wage, and has the means to catch up. As such, the best thing the person can do is learn from their mistakes, meet with an advisor, and change their trajectory while they’re (likely) still in their prime earning years.