401(k) ‘millionaires’ surged in the last year: Fidelity
More than 485,000 accounts had seven-figure balances at the end of the first quarter, a 15% increase from the end of 2023, according to Fidelity, which is the largest 401(k) platform in the country.
A record number of Fidelity 401(k) balances have topped the $1 million mark, thanks to robust stock market growth. The S&P 500 index gained more than 10% in the first quarter and is up 26% over the past 12 months.
“Record-high contribution levels coupled with positive market conditions pushed average account balances to their highest levels since the fourth quarter of 2021,” Fidelity reported.
More than 485,000 Fidelity accounts had seven-figure balances at the end of the first quarter, a 15% increase from the end of 2023. A year ago, there were just 340,000 401(k) millionaires invested in Fidelity accounts. The average balance was $125,900 in the first quarter, which is 16% higher than the average a year earlier of $108,200.
The data indicate that becoming a 401(k) millionaire takes commitment and patience, and that accountholders in general are doing a better job of saving for retirement. According to Fidelity:
- 401(k) millionaires have been saving for an average of 26 years.
- The average contribution rate is 17%, counting employee and employer contributions.
- The average 401(k) accountholder had a savings rate of 14.2% in the first quarter, an all-time high and an increase from the 2019 rate of 13.5%.
Gen Xers who aggressively saved have an average of $543,400 in their Fidelity accounts. By contrast, long-term baby boomer savers are looking at average balances of $543,200. This is the first time ever that Gen Xers in the long-term saver group beat the 15-year continuous balances for baby boomers.
However, many baby boomers who are retired could be drawing down savings and spending their money. Some also might have shifted money from some 401(k) plans to other savings, including annuities outside of the plan, to provide a stream of income in retirement.
Related: Retiring at 65? Not so much, say 7 in 10 pre-retirees
This year alone, more than 4 million Americans will turn the average retirement age of 65 — the largest wave of Americans reaching the retirement age in history. Although the increase in retirement account balances is a positive development, many Americans still are behind in preparing for the future. This includes even some of the 401(k) millionaires, considering that U.S. adults say they will need nearly $1.5 million to retire comfortably, according to a recent Northwestern Mutual survey.