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GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines<\/a> and our products and services review methodology<\/a>.<\/p>\n 20 Years Trusted by Reaching the six-figure mark in your 401(k) is a major milestone. So the GOBankingRates reader who wrote in to share that they\u2019d saved $300,000 in their 401(k) deserves serious kudos. Still, the reader knew they were at a critical juncture on their financial path. With a balance this size, the decisions they make next could have an outsized impact on their long-term retirement readiness.<\/p>\n Their question was simple: \u201cWhat should I do now?\u201d<\/p>\n To answer it, GOBankingRates turned to Chad Gammon, CFP, owner of Custom Fit Financial<\/a>. Gammon offered both congratulations and practical guidance for the reader.<\/p>\n Enjoy the Power of Compounding<\/p>\n Gammon says that once a 401(k)<\/a> reaches around $300,000, savers often begin to experience the real power of compounding.<\/p>\n \u201cIn previous years, it felt like you were putting money in for not much in return,\u201d he said. \u201cBut around $300,000, it starts to feel like the market is working for you \u2014 and in a good year, you may make more money than you put into your 401(k).\u201d<\/p>\n Continue the Good Habits<\/p>\n Gammon is also quick to acknowledge that reaching this milestone signals strong financial discipline<\/a> \u2014 and habits worth maintaining.<\/p>\n \u201cFor many people, it can take 10 years or more to accomplish this goal, depending on contributions and how the market has performed,\u201d he said. \u201cGetting to this point means you\u2019ve built a habit of saving and staying invested and are on a good path toward retirement.\u201d<\/p>\n Congratulations, reader \u2014 you\u2019re making fantastic progress toward your retirement goals<\/a>. Now, Gammon has some practical tips for making the most of what you\u2019ve built so far.<\/p>\n Focus on Your Time Horizon<\/p>\n When thinking about next steps, Gammon says it\u2019s common for investors to fixate on hitting a certain dollar amount. Instead, he encourages focusing on time horizon.<\/p>\n \u201cIf you\u2019re within five years of retirement, you may want to be a little more conservative than you are today,\u201d he said. \u201cIt\u2019s also helpful to complete a risk assessment to determine your asset allocation.\u201d<\/p>\n Working with a financial advisor<\/a> who understands your unique goals and situation is key, since there\u2019s no one-size-fits-all approach. What works for one person at age 40 may not work as well for another fortysomething, Gammon noted.<\/p>\n Have a Diversification Strategy<\/p>\n As balances grow, Gammon suggests developing a thoughtful diversification strategy<\/a>. First, they should make sure they aren\u2019t holding too much company stock \u2014 a common risk that can quietly build over time.<\/p>\n From there, the focus should shift to coordinating investments, ideally with the help of a financial professional. Without coordination, it\u2019s easy to end up with overlapping investments that create unintended concentration risk.<\/p>\n \u201cIt\u2019s kind of like being at a buffet and selecting a little bit of everything without a direction,\u201d he said.<\/p>\n Think Carefully About Roth Conversions<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
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