You are a 401(k) ‘millionairess.’ Now what?

  • If you've saved $1 million or more, congratulate yourself but know your work has only begun.
  • Areas to now focus on include maximizing Roth 401(k) and HSA contributions and laying out longevity and charitable-giving plans.
  • Now's is also the time to review your bucket list and perhaps indulge a little, too.

I recently read an article in The New York Times that detailed how, over the past 12 years, the number of women who have achieved "millionairess" status has doubled.

rich woman counting money
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Also, based on a recent Fidelity report that surveyed 15 million 401(k) plan participants, 20 percent of respondents with $1 million or more in retirement accounts are women. They invested wisely in stocks, saved more than 18 percent of their salaries and developed a consistent habit of contributing to their 401(k) plans. Many earn less than $150,000 annually, which makes the ability to reach this benchmark even more impressive.

Achieving this goal doesn't change who you are, but it can change how you plan for your future. You worked hard and saved more, and now you have options. I've consulted with clients who have achieved this level of financial success. They've reached an incredible goal, and if you're a member of the 401(k) Millionairess Club along with them, congratulations are in order.

Celebrate yourself, but know that you're not done. The discipline and tenacity that carried you into the retirement savings elite will elevate you to your next set of financial goals.

Here are some other areas that you can now focus on:

Actively fund a Roth 401(k) plan. You may now look at setting aside money in a Roth 401(k). By putting money there, you will have the option to withdraw your funds tax-free when you retire. Under current tax law, as long as your money has been held in the account for five years, you can access it tax-free after you turn 59½ and — as an added bonus — you do not have to take required minimum distributions if the funds are rolled over to a Roth IRA.

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Maximize your contributions to a Health Savings Account. Because women live longer, having a supplementary account dedicated to financing your medical needs can minimize reliance on your retirement savings. Contribution limits for 2018 are $3,450 for individuals and $6,900 for families. You can put pretax money in this account and withdraw it — our favorite key phrase: tax-free — as long as the funds are used for qualified medical expenses.

Develop a solid longevity plan. As you approach and navigate retirement, one of the key issues to manage is longevity risk. How long will you live, and will you have enough money in place so you don't outlive what you have accumulated? There are various risk factors to consider, such as health issues, family history, insurance coverage and support obligations, such as caregiver responsibilities. Once you have a plan in place, share it with your significant other, children, parents, siblings and any other family members who will be affected if your health deteriorates.

Strategize your family's charitable giving. For some people, giving back is extremely important. They want to leave a charitable model for their family to follow. Formalizing a giving strategy allows you the opportunity to develop your focus and giving criteria, determine your financial resources and select the causes that align with your money beliefs.

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Creating a donor-advised fund may be a wise option. Donor-advised funds are easy to establish because of the reduced legal and administrative burdens, they give you an immediate income-tax deduction, and they provide a cost-effective way to create charitable funding of any size and scope that you and your family can control. With the current rise in the stock market, now would be a great time to offload some of those capital gains.

Reaffirm your bucket list. With retirement on the horizon, you have set specific personal goals, whether it's to travel to destinations around the world or to move to a warmer climate near the ocean. These may be objectives established as part of your overall financial plan. Finally, visualizing the particular details of your bucket list by enjoying a few indulgences while you're healthy may help you acclimate to this upcoming life change.

Getting to millionairess status is a major achievement; only a small percentage of the U.S. population accumulates that much in savings. To each woman this goal will mean different things. Continued planning is necessary, even though your objectives and focus will change.

— By Zaneilia Harris, president of Harris and Harris Wealth

Correction: This story was updated to reflect that savers may avoid required minimum distributions for Roth 401(k)s by rolling over those funds to a Roth IRA.

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