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Number of 401(k) Millionaires Surges Thanks to Booming Stock Market
By Pete Grieve MONEY RESEARCH COLLECTIVE
Fidelity reports that 485,000 accounts have seven-figure balances, up from 340,000 a year ago.
Stock market growth has boosted 401(k) balances and led to a record number of accounts over the $1 million mark.
At the end of the first quarter, Fidelity reports that 485,000 accounts had seven-figure balances, which is a 15% increase from the end of 2023 when there were 422,000 401(k) millionaires. A year ago, there were 340,000, according to the investment firm.
While only a small percentage of Americans have reached the $1 million dollar milestone for 401(k)s, the majority of people with any amount of money in a retirement account has benefited from the rise in stock prices. The S&P 500 index gained more than 10% in the first quarter, and is up 26% over the past 12 months.
401(k) balances are rising
The average 401(k) balance was $125,900 in the first quarter, which is 16% higher than the average a year earlier of $108,200, according to Fidelity.
“Record-high contribution levels coupled with positive market conditions pushed average account balances to their highest levels since the fourth quarter of 2021,” the company said in a release.
Higher account balances show the payoff of making steady contributions. The data indicate that becoming a 401(k) millionaire takes commitment and patience, and that account holders 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.
- Their average contribution rate for 401(k) millionaires is 17%, counting employee and employer contributions.
- The average 401(k) account holder had a savings rate of 14.2% in the first quarter, an all-time high and an increase from the rate in 2019 of 13.5%.
Beyond 401(k)s, Fidelity’s data shows that individual retirement account (IRA) and 403(b) account balances have increased substantially in the past year:
- The average IRA balance was $127,745 (up 13%).
- The average balance was up 16% to $113,000 for 403(b)s, which are similar to 401(k)s but for public-sector and nonprofit employees.
The increase in retirement account balances is a positive development, but many Americans are still behind track in preparing for the future. That even includes some of the 401(k) millionaires, considering that U.S. adults say they’ll need nearly $1.5 million to retire comfortably, according to a recent Northwestern Mutual survey.
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Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.