(Bloomberg) -- The amount of 401(k) millionaires is within striking distance of an all-time high.
The number of seven-figure 401(k) accounts at Fidelity Investments jumped 20% in 2023’s final quarterto 422,000, marking a sharp recovery from the previous quarter’s 7.7% drop, ananalysis releasedby Fidelity on Tuesday shows.
Related: 401(k) Real Talk Episode 95: February 28, 2024
Gains in the stock market helped swell retirement balances last year as the S&P 500 advanced 24% following 2022’s 19% decline.The impressive run was powered in large part by the so-called “Magnificent 7” stocks that now make uproughly 30%of the market-cap weighted S&P 500 Index. In 2023, Nvidia Corp. gained more than 238%, Meta Platforms Inc. rose more than 194% and Amazon.com Inc. was up more than 80%.
The only timewhen the ranks of 401(k) millionaires at Fidelity was higher was in 2021’s fourth quarter, when there were 442,000 such accounts. Elsewhere, the number of seven-figure IRAs is at a record391,600 accounts.
Related: 401(k)s Will Be Gone Within a Decade
The average age of 401(k) millionaires at Fidelity skews older at around 59. However,Gen Xersalso hit a nice milestonein the last few months of 2023. Those who have had the same401(k) plan for 15 straight years saw average balances hit $501,000. That said, the average overall retirement balance at Fidelity is far from the millionaire mark, at$118,600.
Other highlights from the report:
- The total savings rate —adding up workers’contributions and their employers’ matching contributions —was 13.9%, in line with the previous two quarters.
- For all of 2023, over 37% of workers with 401(k)s raised the percentage of pre-tax salary they directinto their plan.In just the fourth quarter, 10% of employees raised the percentage.
- Some 78% of 401(k) savers contributedenough to their plan to get their employer’s full matching contribution.
- Roth IRA accounts held by Gen Z savers rose 50% in 2023’s fourth quarter compared with the same period in 2022.
To contact the author of this story:
Suzanne WoolleyinNew Yorkat[emailprotected]
FAQs
The first quarter had 485,000 401(k)-created millionaires. That was a 15% increase from last quarter, when there were 422,000, and a 43% increase from a year ago's count of 340,000, Fidelity said.
How common are 401k millionaires? ›
Most people never make it to that milestone. Only the top 3.3% of retirement savers had accumulated over $1 million across their accounts as of the end of the last decade, according to estimates from the Employee Benefit Research Institute, based on the latest Federal Reserve Survey of Consumer Finances.
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 a 401k millionaire? ›
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.
What is the average 401k balance at retirement? ›
Average and median 401(k) balances by age
| Age range | Average balance | Median balance |
|---|
| 35-44 | $76,354 | $28,318 |
| 45-54 | $142,069 | $48,301 |
| 55-64 | $207,874 | $71,168 |
| 65+ | $232,710 | $70,620 |
2 more rowsMar 13, 2024
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved. If you're looking to be in the minority but aren't sure how to get started on that savings goal, consider working with a financial advisor. What Does the Average Retiree Have Saved?
How many 401k multi millionaires? ›
Specifically, Fidelity noted that as of the end of 2023, the number of 401(k) accounts with balances of $1 million or more was 422,000, up a hefty 21% over the previous quarter. (Also noteworthy was Fidelity finding that its IRA customers with accounts valued at a million dollars or more hit a record 391,562.)
What is considered wealthy in retirement? ›
To be considered wealthy at age 65 or older, you need a household net worth of $3.2 million, according to finance expert Geoffrey Schmidt, CPA, who used data from the 2019 Survey of Consumer Finances (SCF) to determine the household net worth needed at age 65 or older to determine the various percentiles of wealth in ...
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.
What net worth is considered rich? ›
A Subjective Concept. While having a net worth of about $2.2 million is seen as the benchmark for being rich in America, it's essential to remember that wealth is a subjective concept. Healthy financial habits and personal perspectives on money are crucial in defining and achieving wealth.
You can retire a little early on $400,000, but it won't be easy. If you have the option of working and saving for a few more years, it will give you a significantly more comfortable retirement.
How long will $1 million in 401k last in retirement? ›
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
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.
What is the 80 20 rule for 401k? ›
Put 80% of your money into retirement accounts like 401ks or IRAs, and 20% in high-yield investments. Invest 80% of your money in passive index funds or ETFs and the remaining 20% in real estate. Put 80% of your money into blue-chip stocks and 20% in bonds or small and midsized companies.
What is the ideal 401k balance by age? ›
By age 40, you should have three times your annual salary already saved. By age 50, you should have six times your salary in an account. By age 60, you should have eight times your salary working for you. By age 67, your total savings total goal is 10 times the amount of your current annual salary.
What is the average American retirement nest egg? ›
| Average retirement savings balances |
|---|
| State | Average retirement balance | Rank |
|---|
| AR | $364,395 | 46 out of 51 |
| AZ | $427,418 | 31 out of 51 |
| CA | $452,135 | 17 out of 51 |
48 more rowsHow much do people save for retirement? In 2022, about 46% of households reported any savings in retirement accounts. Twenty-six percent had saved more than $100,000, and 9% had more than $500,000. These percentages were only somewhat higher for older people.
Can I get rich from a 401k? ›
The earlier you begin contributing to your 401(k) savings account, the longer your money has to grow and the greater your returns can compound (or multiply). By starting your retirement savings efforts as early as possible, you increase your chances of becoming a 401(k) millionaire and successfully funding your future.
Can I have a million dollars in my 401k? ›
If you invested $23,000 into your 401(k) each year and earned a consistent 8% return each year, you'd achieve a plan balance of $1 million in slightly under 20 years. Note that this does not factor in a potential employer match.
Is a million dollars in 401k enough to retire? ›
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.
