How One Woman Became a 401(k) Millionaire
Saving early and implementing a smart investing strategy helped Alison Sowell make big gains over time.
The number of investors with at least $1 million in their 401(k)s reached a record 233,000 in late 2019, and IRA millionaires totaled 208,000, according to Fidelity Investments, which tracks 30 million retirement plans. Thanks to an early start on saving and a disciplined strategy, Alison Sowell, 51, is a proud member of the club, with more than $1 million saved for retirement through her contributions to workplace plans. Last year, she was recognized by Jackson, Grant Investment Advisers as a “401(k) Champion” for her diligence.
Sowell, who lives in San Jose, Calif., began her journey to millionaire status when she was 16 years old. She worked for Nordstrom, and her manager convinced her to set aside some of her earnings in the company’s 401(k) and profit-sharing plan. “He said, ‘Imagine writing yourself today a future check for $1 million when you retire,’ ” says Sowell, who is now a senior executive administrator for a technology company.
Sowell is living proof that a setback doesn’t have to derail your long-term plan. When she left her job at Nordstrom after 10 years, she cashed out about one-fourth of her savings in the retirement account to pay off credit card debt. “In the long run, I think I did myself a disservice. I lost out on some money that I was going to use to pay debt because of taxes and penalties, and I lost out on the future earning power of that money in the stock market,” she says.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But she has always made the maximum allowable contribution to her 401(k), wherever she has worked. And now that she’s older than 50, she’s putting in catch-up contributions, too. “Finally seeing my balance go over the $1 million mark was a really good feeling. I probably won’t retire anytime soon, but if I do need to retire early, I have some money to draw on that is well invested and should last,” she says.
Lisa has been the editor of Kiplinger Personal Finance since June 2023. Previously, she spent more than a decade reporting and writing for the magazine on a variety of topics, including credit, banking and retirement. She has shared her expertise as a guest on the Today Show, CNN, Fox, NPR, Cheddar and many other media outlets around the nation. Lisa graduated from Ball State University and received the school’s “Graduate of the Last Decade” award in 2014. A military spouse, she has moved around the U.S. and currently lives in the Philadelphia area with her husband and two sons.
-
Six Ways Women Can Overcome Any Financial Obstacles Holding Them Back
To improve your financial situation, focus on empowering yourself first.
By Kiplinger Advisor Collective Published
-
Should You Enroll in Medicare if You Still Have a Job?
This question is being asked more than ever these days, so here’s what you can do when it comes to making Medicare decisions while you’re still working.
By Jae W. Oh Published
-
403(b) Contribution Limits for 2024
retirement plans Teachers and nonprofit workers can contribute more to a 403(b) retirement plan in 2024 than they could in 2023.
By Jackie Stewart Published
-
SEP IRA Contribution Limits for 2024
SEP IRA A good option for small business owners, SEP IRAs allow individual annual contributions of as much as $69,000 a year.
By Jackie Stewart Published
-
Roth IRA Contribution Limits for 2024
Roth IRAs Roth IRA contribution limits have gone up for 2024. Here's what you need to know.
By Jackie Stewart Published
-
SIMPLE IRA Contribution Limits for 2024
simple IRA The maximum amount workers at small businesses can contribute to a SIMPLE IRA increased by $500 for 2024.
By Jackie Stewart Published
-
457 Contribution Limits for 2024
retirement plans State and local government workers can contribute more to their 457 plans in 2024 than in 2023.
By Jackie Stewart Published
-
Roth 401(k) Contribution Limits for 2024
retirement plans The Roth 401(k) contribution limit for 2024 is increasing, and workers who are 50 and older can save even more.
By Jackie Stewart Published
-
Is a Medicare Advantage Plan Right for You?
Medicare Advantage plans can provide additional benefits beneficiaries can't get through original Medicare for no or a low monthly premium. But there are downsides to this insurance too.
By Jackie Stewart Published
-
What You Must Know About the Different Parts of Medicare
Medicare Medicare can be complicated but we've got you covered. Here is a quick guide to the different benefits provided through each part.
By Jackie Stewart Last updated