I'm starting to see the light of retirement at the end of my work tunnel. It's likely less than a decade away now, and, perhaps like you, I want to be a millionaire by retirement. In fact, I would really rather have more than $1 million to my name by retirement.

My goals are within reach, thanks to many years of saving and investing. And there's a good chance that you, too, can become a millionaire by retirement -- especially if you make good use of a 401(k) account. Here's how.

Someone is looking very happy, next to a jar of coins and a pile of cash.

Image source: Getty Images.

What's a 401(k) account?

A 401(k) account is a tax-advantaged retirement saving tool offered by many employers these days. It's quite similar to 403(b) and 457 accounts.

With a regular, traditional 401(k) account, if you contribute, say, $10,000 to it in one year, your taxable income is reduced by that amount -- saving you a lot in taxes. With a Roth 401(k) account (now also offered by plenty of employers), your contributions don't reduce your tax bill for the year of contribution, but if you follow the rules, you can later withdraw funds from the account tax-free. That can be a powerful thing.

IRAs are also tax-advantaged retirement accounts, but with some key differences compared to 401(k)s. For one thing, you can invest in just about any stock or fund in an IRA held at a good brokerage. With a 401(k), you're typically offered a limited menu of investments. (As long as there's a low-fee broad-market index fund in there, though, such as one tracking the S&P 500, you can do perfectly well.) IRAs come in both traditional and Roth varieties, too, by the way.

A key difference between an IRA and a 401(k) account is this: 401(k) accounts have far bigger contribution limits. For 2024, you can contribute $7,000 to an IRA -- plus $1,000 if you're 50 or older. That's pretty good, and you can still become a millionaire with just an IRA.

But a 401(k) account welcomes contributions up to $23,000 for 2024, plus an additional $7,500 "catch-up" contribution for those 50 or older -- bringing that total to $30,500. (If your employer offers a matching contribution, be sure to grab it!)

So one key way for me, or anyone, to aim for millionaire status by retirement is by making good use of a 401(k) account. That means contributing to it generously, not just sending in 4% or 5% of your income, and investing that money effectively, such as in low-fee index funds.

Here's how much you might amass via a 401(k) account over time:

Growing at 8% for

$15,000 invested annually

$20,000 invested annually

5 years

$95,039

$126,719

10 years

$234,682

$312,910

15 years

$439,864

$586,486

20 years

$741,344

$988,458

25 years

$1,184,316

$1,579,088

30 years

$1,835,188

$2,446,917

35 years

$2,791,532

$3,722,043

40 years

$4,196,716

$5,595,621

Calculations by author via moneychimp.com.

What did I do right (and wrong) on my quest to be a millionaire by retirement?

I've done a lot of things right as I've saved and invested for retirement for several decades now. I contributed substantially to 401(k) accounts when I had access to them. And, importantly, when that access stopped, I did not cash out. Instead, I rolled over those accounts into IRAs. That permitted those dollars to keep growing for me, making a big difference.

I also invested in a Roth IRA, contributing as much as possible whenever possible. (In some of your working years, you may just not be able to max out contributions, but it's worth trying.)

My early years featured aggressive saving. I lived fairly frugally and banked as much as I could. In later years, once I was married and supporting kids and buying homes, there was less money available to invest -- but I'd given myself a valuable head start.

I also invested in a lot of individual stocks, such as growth stocks. Here's where things got interesting. I wasn't the savviest investor, especially early on. So I made lots of mistakes. I bought and sold too frequently, not giving great companies time to perform. I bought into plenty of companies and industries I didn't understand. I got burned -- a lot. I lost money.

But you know what? Overall I did just fine, because I also invested in plenty of winners -- such as Netflix, Apple, Amazon, Intuitive Surgical, and MercadoLibre -- which more than made up for the losers. (I'd still urge anyone to learn as much as possible, in order to minimize mistakes -- because fewer mistakes means even more wealth.)

If you think you'd like to invest in individual growth stocks, learn more about The Motley Fool's investing philosophy, which suggests buying into around 25 or more companies and aiming to hang on to your shares for at least five years.

Approaching retirement

As I'm approaching retirement, I'm looking into setting up multiple retirement income streams.

I'm planning on collecting Social Security, of course, and I'm hoping to delay doing that in order to beef up my benefits. I'm thinking of allocating some of my portfolio to fixed-rate annuities, too. I love that annuities will, ideally, keep paying me for the rest of my life, even when my investing interest and skills wane.

I'm also shifting more of my stock portfolio over time to dividend-paying companies. With enough of them, I can expect to collect a lot of cash regularly, without having to sell any shares. And dividends tend to be increased over time, too. If you have, say, a $500,000 portfolio with an overall dividend yield of 4%, you're looking at $20,000 in annual income from dividends. Pair that with, say, $30,000 from Social Security, and you're on your way to financial security.

These are the strategies that I've used -- and am using -- as I aim to retire with more than $1 million. Keep them in mind and consider some of them as you construct your retirement plan.