I'm going to show you how this is not only possible, but quite easy to do. So how have thousands of people become multimillionaires strictly through their IRAs? Quite simply it's compounding! The greatest force in the universe according to Albert Einstein. Here are the assumptions: you start maxing out your 401k ($17,500) at the age of 22 and work until you're 65. You're saving 30% of your income, so you're making approximately $58,333. Your employer is matching 3% of your income ($1,750). I'm also assuming that your portfolio will grow 9.2% each year starting after the first year. That's a reasonable 7.2% return plus 2% dividend that is not taxed. I'd also like to note that this is a conservative number because it does not take into account any sort of growth in wages nor in the upper limit of the 401k allowance. Both of which I assure you will increase over the next 40+ years. So how much will all of this net you??
How about a cool $9,000,000 by the time you're ready to retire?! Or to be more specific
$8,995,168. Note this also doesn't account for the tax savings of $4,375 that you'll have at the end of the year since 401k's are done pretax. What would happen if you added that sum to another IRA account, like a Roth IRA? Well by the time you're 65 you could add another $2,000,000 to your net worth!
Now here comes the bad news. If you start when you're older, say 32 instead of 22. It's going to end up costing you almost $5.4 million. That's right one decade of delayed gratification will cost you over $5 million later in life. Teach your kids to start young!