Finance experts reveal the three secrets to becoming a 401(K) millionaire

Accruing a seven-figure retirement pot is something most Americans never achieve.

Under one percent of savers have more than $1 million in their 401(K)s, according to analysis by the US's biggest provider of 401(K) accounts. 

Fidelity found 422,000 of its 45 million accounts had hit the milestone.

But experts insist the task isn't as arduous as it may seem. Personal finance blog The Motley Fool has broken down the three habits of 401(K) millionaires. 

Although financial planners argue there is no 'magic number' for retirement pots, a seven-figure balance can be a helpful target. 

Over a 25-year retirement, it would give retirees $40,000 a year to live on - bolstered by additional Social Security payments.

Always get the full company match

When you sign up for an employer-sponsored 401(K) plan, you have the option to have the company match your contributions.

Specifics vary between employers but in principle the plans operate in the same way: you put a certain percentage of your salary to your plan and the company will also contribute up to 100 percent of your offering.

Commonly employers may offer $0.50 per dollar up to 6 percent of your pay. Alternatively, they can provide a dollar-for-dollar match on the first 3 percent and $0.50 per dollar on the next 2 percent.

Experts frequently point out that by not contributing to your 401(K) - or contributing too little - workers are leaving free money on the table.

The Motley Fool also points out that 401(K) contribution limits are so generous workers are unlikely to exceed them. For 2024, the deductible limit is $23,000 or $30,500 for those over the age of 50.

Its analysis suggests securing a full company match will put your savings rate close to 10 percent per year. 

With an average salary of $60,000 per year you will end up contributing $6,000 per year. Over a 40-year career this will lead to $1 million. 

Alway minimize plan fees 

Fees on 401(K) plans can significantly dampen investment returns. There are three types of fees covering administrative, service and investment.

Although administrative fees tend to be non-negotiable, savers do have more control over service and investment charges. 

Service fees are only paid when you wish to activate certain features of your plan for example, taking out a 401(K) plan.

Investment costs are charged by the funds available on your plan. Savers can find funds with a low expense ratio such as broad-based index funds. 

Never interrupt investments

The key to accruing a large 401(K) balance is time. Those who surpass the $1 million mark tend to have been investing for years - and they haven't paused contributions or withdrawn funds until they need to.

This approach allows them to benefit from compound interest. This is when interest is generated not just on the original invested sum but on the interest that has already been accumulated.

For example, if you invested $100 with a 10 percent annual return, you would have $110 after one year. In the second year, the 10 percent return would then be applied to the $110 figure. 

'The trend means your interest amount increases slightly each year, allowing money to snowball.

The Motley Fool writes: 'If you want to become a 401(K) millionaire, you have to understand the power of compounding. It might not seem like much that first year you contribute 10% of your salary to your 401(K). It might not even feel like much after the fifth year.

'But eventually, you'll see your account growing quicker than you ever imagined as it pushes toward $1 million. That only happens, though, if you keep your money invested and never disrupt it unnecessarily.'