A surge in the stock market has thrust more retirement investors into the millionaires club.
Data released Tuesday by Fidelity Investments found that the number of employees with 401(k) balances over $1 million rose 41 percent in the fourth quarter of 2023 compared with the same period a year earlier.
Fidelity Investments, one of the largest administrators of workplace plans, said it had 422,000 401(k) millionaires at the end of 2023, a nearly 21 percent increase from the third quarter.
The number of IRA millionaires hit a record 391,562 in the fourth quarter, about 40 percent higher than a year earlier.
It’s been a rocky road for this group of investors. The number of IRA and 401(k) millionaires started to drop in 2022 because of market conditions.
Skip to end of carousel
Get Michelle’s advice free in your inbox
You can’t borrow your way to wealth. Learn how to save, spend mindfully and talk about money with your family and friends. Sign up for her free newsletter, which hit inboxes on Wednesdays.
End of carousel
The average age of the 401(k) millionaires is 59, but their wealth accumulation isn’t just a function of time — it also stems from good investing practices. The number of people in Fidelity’s millionaires club remains relatively small — 1.8 percent of 401(k) participants and 2.61 percent of IRA holders — but they demonstrate a lot of positive behaviors that other investors should follow, such as not panicking when there’s a market downturn.
“They’re a great example of people who have really stuck with it and taken a long-term approach to their retirement savings,” said Mike Shamrell, Fidelity’s vice president for workplace thought leadership.
Many of these folks drifted in and out of the millionaires club over the last year and a half, but they weren’t deterred.
“It’s not like there are all these super 401(k)s pulling up the average,” Shamrell said.
The median balance among the millionaires is $1.34 million.
I found my wealth-building people. We agree getting rich is a slow race.
“There are a lot of people right around a million, and if there is a little bit of a downswing, they will drop out of the group,” Shamrell said. “But if they continue to stay the course, contribute at the healthy amount that they typically do, and there are more positive market conditions, they will surpass that threshold at some point in the near future.”
The news was good for non-millionaire investors as well: Average retirement account balances increased.
The average balance for Gen X workers — individuals born between 1965 and 1980 — who have been saving in their 401(k) plan for 15 years shot up to $501,000 by the end of 2023, according to Fidelity.
Not rich? Take this quiz to see how to build your wealth.
Workers who continued to contribute to their retirement plans even when the stock market took some worrisome drops have seen a payoff in their account balances, according to Fidelity. The company provides a quarterly analysis of more than 46.1 million individual 401(k), 403(b), and IRA retirement accounts.
The average 401(k) balance for the fourth quarter increased to $118,600, up 10 percent from the previous three months. IRA balances rose about 6 percent to 116,600 and 403(b) accounts were up 9 percent to $106,100.
Overall, retirement investors have shown resilience as account balances have fluctuated up and down, Shamrell said.
Want to be a 401(k) millionaire? Here’s what it takes:
- Contribute enough to get whatever company match is offered. Fidelity said 81 percent of workers receive some type of employer contribution either through company match or profit-sharing. The typical match is a dollar-for-dollar match on the first 3 percent and then 50 cents on the dollar on the next 2 percent, Shamrell said. An overwhelming majority of 401(k) savers contribute enough to get the full company match.
- Don’t cash out of your retirement account when you change jobs. Don’t borrow against the account.
- Aim to save at least 15 percent of pretax income annually for retirement, Fidelity recommends. This would include any employer match.
- The daily movements of the stock market can rattle even the most seasoned investor. But don’t let that panic derail saving for retirement. On the flip side, people often ask Shamrell what they should do to take advantage of a market rally. “My non-jazzy answer to that is nothing,” he said. “You should continue to take a long-term approach. That’s what’s going to benefit them the most as opposed to trying to leverage any sort of short-term changes.”
- If you’re worried you might react impulsively to the market, consider a target-date fund. Most target-date funds hold a mix of stocks, bonds and other investments. This type of investing is designed to become more conservative as an investor gets closer to a particular retirement date. Target-date funds are generally higher in equities for younger investors.
There’s a lot we can learn from the investing habits of people who have patiently saved for decades through bull and bear markets to reach millionaire status.
But even if you never join the club, emulate their behaviors as best you can for a more secure retirement.
FAQs
A surge in the stock market has thrust more retirement investors into the millionaires club. Data released Tuesday by Fidelity Investments found that the number of employees with 401(k) balances over $1 million rose 41 percent in the fourth quarter of 2023 compared with the same period a year earlier.
How many Americans have $1,000,000 in their 401k? ›
The amount of retirement millionaires continues to grow, too: As of March 2024, the number of 401(k) accounts with balances of at least $1 million rose to 885,138, up nearly 12%, from year-end 2023, and nearly 30% year over year. The average account balance for this group was $1,137,409 as of March 2024.
What is the average age of 401k millionaires? ›
The average age of 401(k) millionaires at Fidelity skews older at around 59. However, Gen Xers also hit a nice milestone in the last few months of 2023.
How many 401k millionaires are there in the US? ›
Fidelity also reported that the number of 401(k) accounts with balances of at least $1 million rose in the fourth quarter by 20%, to 422,000 accounts; and by 41% for the whole year. The average account balance for this group was $1,551,300 in the fourth quarter.
Can 401k make you a millionaire? ›
Even with an average salary of just $60,000 per year, you'll end up contributing $6,000 per year. If you can consistently do that for a full 40-year career, you're very likely to end up with $1 million in your 401(k).
Is $400,000 enough to retire at 65? ›
It is 100% possible to retire with $400,000, provided you're not looking to enjoy a particularly expensive retirement lifestyle or hoping to leave the workforce notably early.
How much money should a 70 year old have to retire? ›
How Much Should a 70-Year-Old Have in Savings? Financial experts generally recommend saving anywhere from $1 million to $2 million for retirement.
How much is considered rich in retirement? ›
The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes.
Is $4,000,000 enough to retire at 55? ›
You can probably retire at 55 if you have $4 million in savings. This amount, according to conventional estimates, can reliably produce enough income to pay for a comfortable retirement.
How much money do you need to retire with $100,000 a year income? ›
So, if you're aiming for $100,000 a year in retirement and also receiving Social Security checks, you'd need to have this amount in your portfolio: age 62: $2.1 million. age 67: $1.9 million. age 70: $1.8 million.
The data comes from mutual fund giant and retirement plan manager Vanguard. In its 2023 "How America Saves" report, Vanguard says the average balance for its work-based retirement accounts for clients age 65 and up currently stands at $232,710.
How many millionaires use Fidelity? ›
Fidelity Reports 422,000 401(k) Millionaires -- You Can Join Their Ranks | The Motley Fool.
What is the average retirement balance at Fidelity? ›
The financial services firm handles more than 45 million retirement accounts total. The average 401(k) balance ended 2023 up 14% from a year earlier to $118,600, Fidelity found. The average individual retirement account balance also gained 12% year over year to $116,600 in the fourth quarter of 2023.
How many people have over $1 million in 401k? ›
The number of folks with $1 million or more saved in their 401(k) accounts jumped 20% from September to the end of December, according to Fidelity Investments. All told, there were 422,000 retirement savers in Fidelity 401(k) plans sporting balances of seven figures and beyond as of Dec.
At what age should you be a 401k millionaire? ›
Based on my 401k by age estimates, older age savers (50+) should be able to become 401k millionaires around age 60 if they've been maxing out their 401(k) and properly investing since the age of 23. If not, then best of luck with Social Security, a paid off house, and hopefully after-tax investment accounts.
What is considered high income for 401k? ›
Highly compensated employees (HCEs) are employees who are earning more than $155,000 in 2024, or who own more than 5% of a business. Employers can also name the top 20% of earners in the firm as HCEs, as long as they're making over $155,000 per year for 2024. 5 (For 2023, HCEs must earn at least $150,000 per year.)
How long will $1 million in 401k last? ›
How long will $1 million in retirement savings last? In more than 20 U.S. states, a million-dollar nest egg can cover retirees' living expenses for at least 20 years, a new analysis shows. It's worth noting that most Americans are nowhere near having that much money socked away.
How many US citizens have over $1 million dollars? ›
Do you know how many millionaires there are across the country? According to a recent study, almost 24.5 million millionaires live in the U.S. today. To put that into perspective, that's more people than the entire population of Florida! And that number is growing.
What percentage of Americans have $100000 for retirement? ›
14% of Americans Have $100,000 Saved for Retirement
Most Americans are not saving enough for retirement. According to the survey, only 14% of Americans have $100,000 or more saved in their retirement accounts. In fact, about 78% of Americans have $50,000 or less saved for retirement.
How much does the average American have in his 401k? ›
Average 401(k) plan balances reached $112,572 in 2022, down from $141,542 in 2021 and $129,157 in 2020, according to Vanguard's “How America Saves 2023” report. While short-term market volatility is inevitable, it's important not to overreact to large swings in price.
