Reaching the six-figure mark in your 401(k) is a major milestone. So the GOBankingRates reader who wrote in to share that they’d 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.
Their question was simple: “What should I do now?”
To answer it, GOBankingRates turned to Chad Gammon, CFP, owner of Custom Fit Financial. Gammon offered both congratulations and practical guidance for the reader.
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Enjoy the Power of Compounding
Gammon says that once a 401(k) reaches around $300,000, savers often begin to experience the real power of compounding.
“In previous years, it felt like you were putting money in for not much in return,” he said. “But around $300,000, it starts to feel like the market is working for you — and in a good year, you may make more money than you put into your 401(k).”
Continue the Good Habits
Gammon is also quick to acknowledge that reaching this milestone signals strong financial discipline — and habits worth maintaining.
“For many people, it can take 10 years or more to accomplish this goal, depending on contributions and how the market has performed,” he said. “Getting to this point means you’ve built a habit of saving and staying invested and are on a good path toward retirement.”
Congratulations, reader — you’re making fantastic progress toward your retirement goals. Now, Gammon has some practical tips for making the most of what you’ve built so far.
Focus on Your Time Horizon
When thinking about next steps, Gammon says it’s common for investors to fixate on hitting a certain dollar amount. Instead, he encourages focusing on time horizon.
“If you’re within five years of retirement, you may want to be a little more conservative than you are today,” he said. “It’s also helpful to complete a risk assessment to determine your asset allocation.”
Working with a financial advisor who understands your unique goals and situation is key, since there’s no one-size-fits-all approach. What works for one person at age 40 may not work as well for another fortysomething, Gammon noted.
Have a Diversification Strategy
As balances grow, Gammon suggests developing a thoughtful diversification strategy. First, they should make sure they aren’t holding too much company stock — a common risk that can quietly build over time.
From there, the focus should shift to coordinating investments, ideally with the help of a financial professional. Without coordination, it’s easy to end up with overlapping investments that create unintended concentration risk.
“It’s kind of like being at a buffet and selecting a little bit of everything without a direction,” he said.
Think Carefully About Roth Conversions
Gammon says investors at this stage often start asking about Roth conversions. Converting pre-tax dollars to Roth accounts can offer tax-free growth — but the timing matters.
“If they believe they’ll be in a lower tax bracket later in retirement, they may want to wait,” he said. “The same thinking applies to Roth contributions within a 401(k), an option that’s becoming more common.”
Mix the Accounts
Finally, Gammon encourages maintaining a mix of pre-tax, Roth and taxable accounts to increase flexibility in retirement. If the reader hasn’t already, he recommends exploring a taxable brokerage account — one he says many savers overlook once they’re maxing out retirement plans.
“This can be a great account to build alongside your 401(k) to provide more flexibility in the future,” he said.
The Bottom Line
Saving $300,000 in a 401(k) is no small feat — and our reader should be proud. But as Gammon notes, this milestone also marks a transition point. From here on out, strategy matters just as much as saving.
Maintaining the discipline they’ve shown so far and working with expert guidance can help ensure their next moves help turn an already strong balance into a comfortable, secure retirement.
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This article originally appeared on GOBankingRates.com: What To Do When Your 401(k) Reaches $300K, According to a CFP
