How to Save Like a 401(k) Millionaire

Lesson 2: Put increases on autopilot

Many 401(k) millionaires see their savings rate as a moving target. Nearly 40 percent of Fidelity’s retirement savers boosted their contribution rate in 2024, and the average increase was nearly 3 percent. You can adopt a set-it-and-forget mindset by taking advantage of auto-escalation features that increase your contribution rate by a set amount annually.

Starting this year, workplaces that have established retirement plans since Dec. 29, 2022, must automatically enroll eligible employees and increase contributions by 1 percent each year (up to a maximum that can range from 10 percent to 15 percent, at the company's discretion). This change is a result of SECURE 2.0, a federal law enacted in 2022 to bolster retirement savings opportunities. If your 401(k) plan has been around longer, you’ll need to let your plan manager know that you want to auto-escalate your rate.

Lesson 3: Save aggressively

401(k) millionaires don’t scrimp when it comes to fattening their plans. Their personal saving rate is about 17 percent of their pay, not including any employer match, Shamrell says. That’s well above the 9.4 percent average for all Fidelity savers in the fourth quarter of 2024.

Not everyone can save at that level from day one. One way to catch up is to increase your rate when you get raises or bonuses. By immediately directing that higher pay into your retirement account, Benna says, you don’t give yourself a chance to miss it.

“That was true for me personally with our plan,” he says. “If we had to save after paying all our bills and mortgages, it would’ve never happened.”

But it’s not just how much money you save — it’s also how you invest it. The younger you are, the more you may want to focus on high-return investments like stocks, says Eric Tyson, a former financial planner and the author of Personal Finance for Dummies.

“For somebody who’s in retirement or really close to retirement, there certainly can be valid arguments for having a modest portion of your money in bonds,” he says. “But for younger workers and people who can see leaving the money in these plans for decades, not just years, they really should skew the mix pretty heavily towards stocks.”

Lesson 4: Keep a separate emergency fund

“Life happens, and things come up that you weren’t planning for,” Tyson says. Whether they affect your home, your car or your health, those things often cost a lot of money. If you don’t have any emergency savings, you might be tempted to take money out of your 401(k) when the unexpected occurs.

With inflation increasing everyday expenses and high interest rates elevating credit card debt, more people are borrowing money from their retirement plans or taking early withdrawals. Among Fidelity plan participants, 18.8 percent had a loan outstanding at the end of 2024, compared to 17.8 percent at the end of 2023.

Vanguard, another major plan provider, has also seen an uptick in loans. The firm reported that 4.8 percent of its retirement plan participants took out a hardship loan in 2024, up from 3.6 percent in 2023.

You’ll typically have up to five years to repay the loan, with interest, but in the meantime that money isn’t earning investment returns. And if you make a withdrawal rather than taking a loan, you’ll likely owe income taxes on that money, plus a 10 percent penalty if you are younger than 59½. By building an emergency savings fund, you can tackle unexpected expenses while keeping your nest egg growing.

Lesson 5: Make up for lost time

What if you’re mid-career and haven’t saved as much as you’d have liked? It’s not too late. You can still build a significant nest egg, especially by taking advantage of catch-up contributions once you turn 50.

The IRS sets multi-tiered limits on how much 401(k) savers can contribute to their plans. In 2025, the base limit for people under age 50 is $23,500. From age 50 on, you can kick in an extra $7,500, for a total of $31,000.

And starting this year, thanks to another provision of SECURE 2.0, those between the ages of 60 and 63 can make even bigger catch-up contributions — up to $11,250, for a total of $34,250.

Lesson 6: Stay the course

The longer you invest in a 401(k) plan — or any type of investment account — the more you benefit from compounding returns. According to the Fidelity data, the average balance for Gen Xers who have contributed continuously to their plans for 15 years is $589,400.

Staying the course also means maintaining your savings habits even during periods of stock market volatility, like the recent tumble that saw the S&P 500 drop more than 9 percent from mid-February to early March.

“The markets swing up and down many times throughout your career,” Shamrell says. “You shouldn't be making changes based on short-term market events, and this group is a great example of that.”

Focus instead on factors like your appetite for risk and when you’ll need the money you’re investing, he says: “Any change that you're going to make to your 401(k) should be in the context of a long-term savings strategy.”

Even with the uncertainty surrounding tariffs and the soaring price of eggs, it’s important to stick to your savings plan.

“We know from our own research that a lot of people are concerned about inflation and the cost of groceries,” Shamrell says. “But the good news is that [retirement savers are] not pulling back.”