Saving up $1 million is an applaud-worthy achievement worth celebrating. Indeed, anyone who reaches such a milestone is now officially a millionaire. And why a few million more saved up for retirement certainly can’t hurt; I do think that continuing with the game plan that got one here (paying oneself first and not giving into lifestyle creep) is advisable. Indeed, consulting a financial adviser can’t hurt as the following Redditor looks to continue on their wealth-creating journey.
Quick Read
The couple has over $1M saved but only $12,000 in taxable accounts.
One spouse earns $45,000 annually while supporting three children.
Maxing out 401k contributions may reduce liquidity needed for rising family expenses.
A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here.
After making your first million, it’s wise to ask a financial planner a bunch of questions to ensure things are optimal. Now, this goes well beyond budgeting and planning out monthly expenses. Investing in the right securities, ensuring a good asset allocation, and shooting for optimal tax planning is key to letting one’s first million pave the way for an even greater fortune over the long haul.
Read: Data Shows One Habit Doubles American’s Savings And Boosts Retirement
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
In this piece, we’ll check in on a new millionaire couple who’s wondering if it’s a good idea to keep contributing to a 401k or if there are better places to stash the cash.
In the case of someone in their late 30s with three children, a good mix of assets across various accounts, but only $12,000 in a taxable brokerage account, I’d argue that it can make sense to allocate a bit more towards accounts that allow for easier access of the funds. But is there such a thing as having “too much” in a 401k?
The Math: What “Maxing Out” Actually Looks Like Today
If you’re contributing over the maximum allowable amount, then yes, there is such a thing as “too much.” Even if you stay within the rules, it is vital to ground your strategy in concrete figures. For 2026, the individual 401(k) contribution limit stands at $24,500. When one spouse is earning a relatively limited annual salary of $45,000, maxing out a traditional workplace account means deferring over 54% of their gross income into a locked retirement pool. For a growing family, dedicating such a massive percentage of income to a restrictive account severely cuts into day-to-day liquidity.
The 401k is a great tool. But can one overdo it?
For someone making a smaller salary, no match plan from their employer, less cash in non-registered accounts, and rising year-over-year expenses on the horizon (as is common for families with lots of young children), I’d argue that there can be such a thing as having “too little” allocated to non-401k accounts!
Of course, everyone looking for the perfect account allocation strategy should ask a professional. While they may charge you a hefty fee upfront, I do think that in most situations, the value added can exceed the cost of doing business with a smart and experienced adviser. The higher the net worth ($1 million is considered a high net worth) and the more complicated (or unique) the financial situation, the greater the need for such professional advice!
Indeed, three children are costly, and the expenses can add up quickly. As such, it’s important to allow for greater liquidity by not keeping everything tied up in a 401k. Sure, deferring taxes is a significant benefit of going for a 401k if one’s pulling in a considerable sum in any given year.
Flipping the Script: The Roth Alternative for Lower Brackets
With one person earning a limited salary of $45,000, that income sits squarely in the lower federal income tax brackets. Deferring taxes now via a Traditional 401(k) provides a minimal tax break today. Instead, this dynamic makes a strong case for utilizing a Roth 401(k) or a Roth IRA, which accepts contributions up to $7,500 for individuals under 50 in 2026. This creates a powerful liquidity loophole: while retirement growth remains tax-sheltered, the original principal contributions made to a Roth IRA can be withdrawn at any time penalty-free, creating an ideal fallback fund for the household.
Mitigating the Liquidity Trap: How to Access “Locked” Funds Early
Though I’m not against making big contributions for those who really want to defer taxes, a young family should know that retirement accounts are not completely iron-clad vaults until old age. If assets do end up heavily concentrated in pre-tax accounts, early retirees and savers often utilize specific wealth-engineering strategies to access funds early without triggering the standard 10% IRS penalty. This is commonly accomplished through a Roth IRA conversion ladder, where pre-tax funds are systematically shifted to a Roth account and accessed tax-free after five years, or via Substantially Equal Periodic Payments under IRS Section 72(t).
The bottom line
The 401k is a fantastic tool, but does that mean you should make the maximum allowable contribution in any given year? That depends on your income, expenses, and where you expect both to be over the medium-term future. Either way, this question is one to bring up with a professional, given the preferences of individuals. Some people value tax deferrals over liquidity and vice-versa.
Data Shows One Habit Doubles American’s Savings And Boosts Retirement
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
And no, it’s got nothing to do with increasing your income, savings, clipping coupons, or even cutting back on your lifestyle. It’s much more straightforward (and powerful) than any of that. Frankly, it’s shocking more people don’t adopt the habit given how easy it is.
