Number of 401(k) ‘millionaires’ jumped 41% last year, says Fidelity | CNN Business (2024)

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Number of 401(k) ‘millionaires’ jumped 41% last year, says Fidelity | CNN Business? ›

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.

The universe of 401(k) accounts with balances of $1 million or more at Fidelity Investments rose to a record 485,000 in the first quarter, according to the company. With stocks surging, the number of retirement account millionaires jumped 15% from the prior quarter and 43% since March 2023.

Specifically, 485,000 of them. That's up 15% from the 422,000 accounts reported at the end of 2023 and 43% higher than a year ago.

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.

They have been investing in their plans for an average of 26 years, with an average balance of $1.58 million. As can be expected, the millionaires are predominantly Gen X (individuals born between 1965 and 1980) and baby boomers (born between 1946 and 1964). The average age is just shy of 59 years old.

Relatively few embrace working with multiple advisors (13%) or any individual advisor managing other advisors (quarterback approach, 5%). those with $1 million to $5 million in investable, non-retirement assets, and ultra-high-net-worth are investors with over $5 million in investable assets.

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.

Data from the Employee Benefit Research Institute, based on the Federal Reserve's Survey of Consumer Finances, reveals that a mere 0.1% of retirees manage to accumulate over $5 million in their retirement accounts, whereas only 3.2% amass over $1 million.

How 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.

How many 401k participants does Fidelity have? ›

Eligible employees

Considers only active participants with balance. Fidelity Investments Q1 2024 401(k) data based on 25,800 corporate defined contribution plans and 23.9 million participants as of March 31, 2024. These figures include the advisor-sold market but exclude the tax-exempt market.

It's possible to grow a 401(k) balance to $1 million or more, though it does require some careful planning. To make a million dollars with a 401(k), you'll generally need to save early and often.

According to a report from the IRS, the average millionaire has not one, not two, but seven different sources of income. That's right – seven streams of money flowing into their bank accounts, building their net worth and securing their financial future.

As of Q1 2024, 485,000 Fidelity customer 401(k) accounts have $1 million or more.

Can I Retire at 62? 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.

According to the Federal Reserve's latest Survey of Consumer Finances, only about 10% of American retirees have managed to save $1 million or more.

The most common 401(k) match formula for Fidelity accounts was a dollar-for-dollar match on the first 3% and then 50 cents on the dollar on the next 2%. If a worker contributed 5% of their salary, according to that formula, their employer would be contributing another 4% (or 3% plus half of 2%).

The founding Johnson family, individually and through various trusts, owns stock representing a 49% voting interest in FMR, and have signed agreements pledging to vote all their shares as a bloc. Edward Johnson III was chairman of the group, but was replaced by his daughter, Abigail Johnson.