There’s a pattern we see constantly with high-earning families in their mid-40s.
They maxed out their 401k years ago, set it, forgot it, and quietly decided that was a good enough plan. At the time it made sense. When you first hit a salary where maxing it out was even possible, it felt like a big deal. It was a big deal.
However;
Your income keeps climbing. Your lifestyle too. But your 401k contribution stays capped and nobody’s sending you an alert that your savings rate is passively decreasing every year.
Real numbers:
When your household income (HHI) was $200,000 and you maxed your 401k, you were saving around 10% of your income.
Fast-forward. Now you’re at $525,000 in HHI and applying the same max contribution. But now it’s only 4.5% of your income. That extra 5-6% over 20 years translates to roughly $1.1 million less in your portfolio by your mid-60s.
There’s a second problem hiding in there too. Your lifestyle at $525k looks nothing like it did at $200k. Which means your retirement number isn’t what you thought it was either. You’re not planning to retire on a $200k lifestyle. So, the goal changed AND the savings rate dropped at the same time, usually completely under the radar.
This is the kind of thing that feels fine until someone actually runs the numbers with you.
Investing rules of thumb and Google are fine places to get started, but as your life evolves your financial plan needs to evolve with it.
If you’re a high-achieving professional who’s ready to actually put a real financial plan in place, we’re currently taking on new clients. Reach out and let’s talk.
Already working with an advisor but thinking about making a change? We help people do that all the time. It’s a simple transfer — and if you want, you don’t have to lift a finger. We handle it.
We’d love to work with you.
Nic
Contribution examples are for illustrative purposes only. Individual cases will vary.
