The Simple Path to Wealth

Your roadmap to a rich, free life — in just five minutes per week.

October 14, 2025

“Don’t expect too much from the company you work for, even if it’s a good company.”

—Andy Rooney

THE SIMPLE NUMBERS

At the end of June, Americans collectively held around $13 trillion in employer-based retirement plans, according to a report from the Investment Company Institute released last month. That includes $9.3 trillion in 401(k) plans.

Upwards of $18 trillion was held in individual retirement accounts (IRAs). Government defined-benefit plans — pensions — stacked up to $9.3 trillion across the federal, state, and local levels. Private-sector pensions were at $3 trillion, and "annuity reserves outside of retirement accounts" totaled $2.5 trillion.

SIMPLE PATH OF THE DAY

A slice of timeless wisdom from The Simple Path to Wealth:

"It is important to understand that 401(k)s, IRAs, and the like are not investments themselves. Rather, think of them as the buckets that hold the investments we choose ... The benefit of having your investments grow tax-sheltered over the decades is no small thing, and in most cases, you should fund these buckets to the maximum the law permits."

ASK JL

Q: How do you prioritize investment accounts for someone who does not make enough money to max out all pre-tax accounts? How important is it to have money split up between various accounts — IRAs, 401(k), brokerage — vs. having most of your wealth concentrated into one account, like a 401(k)? —Jessica W.

Hi Jessica,

First, if your income is low, the tax advantages of traditional IRAs and 401(k)s are not worth it. Focus on the Roth versions.

In order:

If your 401(k) offers a company match, max it out to the level needed to capture the full match. There is no better deal than this.
Fund your Roth IRA up to the max allowed. I prefer IRAs to 401(k)s as they are more completely in your control.
Once the Roth IRA is fully funded, return to your 401(k) and finish fully funding it beyond the match.
Once both your IRA and 401(k) are fully funded, begin investing in a taxable account with your brokerage.

Don’t worry about your money being tied up in tax-advantaged accounts until you're 59. There are several ways to access those dollars before then if needed.

As your income rises, the tax advantages of a traditional IRA or 401(k) may become more valuable. You can always switch to funding those and let your Roths ride.

—JL

Got a money question keeping you up at night? Reply to this email and we'll get it over to JL.

WHAT WE'RE READING

📚 The United States is a very wealthy nation, Ben Carlson writes at A Wealth of Common Sense, but many Americans don't feel rich. Why?

📚 For some slightly more advanced FIRE tax strategies, check out this post on the Mad Fientist's blog.

📚 JL Collins joined the Fit Rich Life podcast a couple of weeks back to offer his usual wisdom in his usual killer podcast voice.

THE BIG QUESTION

What share of your investment pie is in an employer 401(k)? What percentage is in a Roth IRA? A standard brokerage account? Did you plan it all that way, or is this just how things shook out?

Reply to this email and we'll feature some of your responses in upcoming issues!

Last week, we asked how old you were when you decided to follow The Simple Path — and whether you made a few money mistakes beforehand! Here are a few of your answers...

I suffer from a deadly combination of "I'm not very smart" and "I'm kind of lazy." If I want to look at my biggest barrier to FI, I just go look in the mirror. So, when I was about 30 years old, I went to a guy in my office who was financially well-off and asked him what he did. I didn't understand a word he said. I didn't understand what a mutual fund was, even after he explained it to me. I just did what he did and set up an automatic payment directly from my paycheck into the mutual fund. Every time I got a raise, I increased the auto payment into the mutual index fund. And when I retired, I was a millionaire and FI. —Sally F.

Two buckets of artificial flowers on windowsill — Buckets!

I have made a lot of financial mistakes in the past. The biggest one is when I elected to withdraw all of my funds from my employer 401(k) account when I resigned in the fall of 2016 and took the tax hit on over $100,000. I didn't know what it was called at the time, but this was my FU Money. I left that employer after 15 years of service for greener pastures. I'm now employed by a County department, love my job, make more money, and have room to grow and develop my skills.

I'm currently 45 and first saw The Simple Path mentioned in a financial subreddit in summer of 2023. I got the audio version and listened to it during my commute to and from work. It was life-changing for me. I always knew that saving for retirement was important, but didn't know what to do besides contribute to my work retirement accounts. I also had a small amount invested in a taxable brokerage account.

Since finding the Simple Path, I opened a Roth IRA and have fully funded it each year, investing in VTI. I also make sure I'm contributing enough to my work retirement accounts to capture all employer contributions and matches. I have switched my allocations across my various employer accounts to a low cost S&P 500 index fund (Fidelity 500). I'm still contributing as I go...not quite 50% of my income, but enough to not come up with a handful of mud either. —Phil L.

I was 37 when I opened my Vanguard account in 2006. My biggest money mistake, in dollar and percentage terms, was to never join my company 401(k) program. I wanted to keep access to the money, I had no idea that IRA conversions would be possible, and I never sat down with a friggin' calculator. And I missed some good advice. —Bruno B.

When I was 29, I finished paying off $2,000 in credit card debt (small mistake) and finally invested my first retirement dollars in a Roth IRA. I feel like waiting that long to invest was a mistake, though it has worked out well for me. At 32 years old, I decided to follow The Simple Path to Wealth in earnest — or a very similar path, anyway.

By the following year, with hard work and some luck, I had started my career in a lucrative industry. From then on, I maxed out my 401(k) and plowed half (or more) of each paycheck into index funds. At 41, work is now optional. I still enjoy it for the most part and am not ready to quit. Yet. —Lucas L.

I was 55 when I started with this newsletter, so just this year. I got divorced at the age of 54 and started looking after my money for the first time in my life. I make $59,000 a year gross, but I’ve been able to increase my net worth by $20,000 this year, so I’m very happy with that. I know I’m behind schedule, but I’m trying to focus on the future and not the regrets of my past. —Dana K.

In 2013, at 32 years old, a friend pointed me to MMM’s blog which pointed me to yours, and I devoured it. I had always been a saver and lived below my means, but it wasn’t enough. I was putting 8% into my 401(k) to get the match, and saving everything else in my checking account. No one said that wasn’t enough, and I thought you had to work until you're 65 years old. At this point, I was married, so my husband and I quickly got on the same page that early retirement was the goal.

Like your blog said, I put all my eggs in the VTSAX basket and watched it very carefully. There were a few rough patches, like 2015, 2018, 2020, 2022, but we never stopped contributing to our 401(k)s. The years of incredible gains covered the years of negative or 0% gains. Our wealth continued to outpace any other investment strategies, and as a bonus, we didn’t have to work to make that money. It worked for us! —Elisabeth B.

Although I've had a 401(k) since the 1980s, I didn't understand anything about investment choices until about a decade ago. It took reading John Bogle's little red book to understand Vanguard's (and Fidelity's) low-fee choices, and the power and relative safety of index mutual funds vs individual stocks. My husband focused on individual stocks in his self-managed 401(k), and thus we experienced huge, volatile swings. (We also made several other stupid mistakes, such as an adjustable rate mortgage in the 1990s and way-upsizing our home in retirement about 20 years ago.) Fortunately, none of the mistakes were fatal, and our retirement is fine. —Becky M.

I was 52, four-ish years ago. My wife and I had just closed on the sale of our house in central Florida, driving 11 hours north to our new primary residence in East Tennessee. She searched around on Amazon for audio books we could listen to while we drove that might give us some clue as to what to do with the money we'd just gotten for our house. We chose The Simple Path To Wealth, and shortly thereafter dropped most of the money from the sale into VTSAX.

We've added a bit to that since then. The total appreciation has been about 50%, so that's nice. Mistakes? Probably. We still have some investments we set up decades ago with a financial advisor — I'm not sure if those are mistakes or not. They're not VTSAX, and their fee is non-zero, so quite possibly. —Larry & Roxanne C.