Saving for retirement requires dedication and time. During those years of dedication, however, market movements will make significant jumps that you can then celebrate. And we’re in the midst of such a shift.

A recent Fidelity study highlights this very fact. According to a review of Fidelity 401k accounts, the number of participants with over $1 million in assets within the account has increased by 15% in the first quarter of 2024, compared to end of 2023. This is a result of the market moving forward – it’s up 11% through 2024 and 25% over the course of the past year.

All-in-all, the number of 401ks that had $1 million or more in them reached 485,000, up from 422,000 at the end of 2023.

These 401k millionaires have used the market’s increases to boost their long-term savings, creating valuable assets for them in the future. But it didn’t happen overnight. In fact, most of the accounts were likely built over decades. We’re just seeing the impact that the latest market jump can provide.

To enjoy such a ride, it requires creating a strategy to incorporate savings in the form of a 401k or other vehicle. To achieve that, you need to understand how to begin saving for the long-term – or saving more for the long-term. Too often, these strategies are forgotten, until some market swing encourages savers to re-commit to their long-term plan.

These strategies will allow you to build, while you wait for the next market boom.

Take advantage of the match

Most 401k plans offer some level of match, if you contribute a certain amount, like matching 100% of the first 4% of your salary that you contribute. Much of the advice around this is you should absolutely take advantage of the ‘free money.’

It goes further than that, though. When you’re hired, you’re given a salary package. The package includes your salary, but also all the additional perks and benefits you gain in the employment. Part of the salary package is the 401k match.

By not utilizing the match, you’re not just avoiding free money, you’re giving back part of your salary package. You’re essentially giving your employer money owed to you for the job that you were hired for.

That’s not an ideal scenario. Instead, make sure to keep what you’re compensated for, and that includes the 401k match.

Incorporate the savings

One reason that people struggle to save is that they treat it as an afterthought. Instead of adding savings into the budget before all the spending that takes place, they relegate retirement for anything that may or may not be left over.

What ends up happening? Savings is never prioritized.

Instead, it’s important to incorporate the 401k or any savings at the very beginning of the process. This will allow you to determine what to spend, after you’ve taken care of things like saving.

To do this, consider the flow-based method to budgeting. In this method, you create three separate parts of your budget: Fixed costs (those that occur every month at the same price), non-monthly costs (those that occur a few times a year), and flex costs (essentially variable costs that change every month).

You begin with the fixed costs – determine how much will be spent each month. Then look at the non-monthly costs like vacations, vet bills or holiday gifts and determine, how much you need to save for these throughout the year, adding part of the paycheck to that savings line. This prevents unexpected costs to ruin your savings strategy. Finally, anything left goes towards flex costs.

By incorporating a specific amount for savings within the fixed costs line, you’re addressing it before you tackle any of your other spending. That will allow you to address the 401k before you ever think about going out to that expensive restaurant or buy that overpriced t-shirt.

Automate the savings

One of the more powerful tools incorporated in the past several years for retirement savings was the use of automatic enrollments into 401ks for employees. Studies have found that it increases participation by a significant margin. Since businesses and 401k providers opted people in automatically, employees then had to take steps to opt out.

While they may not always like that they were forced to save, far fewer employees took the steps to opt out of the 401k. Why? Because it was easy, and they didn’t want to take the steps to cease the savings.

You can use this same principal in your savings, whether it’s in the 401k or another retirement tool. By incorporating the savings, and then automating it, you will hardly notice that you made a contribution.

Instead, you’ll only feel the impact, once you see your net worth grow.

And if you’ve automated a bit too much savings, then you can always adjust. But it’s better to feel a little uncomfortable now, and then experience the boost of success that comes while you invest as the market climbs.

But to win it, you have to be in it – it just may take a step or two to get started. Then, once you pass a personal milestone, make sure to celebrate your success.

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