This calculator I found says my 401K will be worth 4 million when I retire at age 65
I'm 23, I put 12,000/year into my 401K… how does this add up to 4 million.. and if I retire how do I get the money?
Its called compounding interest (or the time value of money). Your money makes money. at 8% over 42 years that really adds up (multiplies really). And I don't think an average of 8% is all that aggressive. If you could earn an average of 9% you'd end up with $5.6MM. You can see what a huge difference 1% makes over that many years. The trick is to do it for a long period of time and ride out the tough years but don't get crazy in the boom years either. Steadily contribute and don't touch the money until you're 65.