Number of 401(k) Millionaires Surges Thanks to Booming Stock Market

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.

More from Money:

8 Best Life Insurance Companies of 2024

Why Keeping Your 401(k) After Retiring Could Be a Smart Savings Decision

Over Half of Americans Think the U.S. Is in a Recession (It’s Not)

© Copyright 2024 Money Group, LLC. All Rights Reserved.
This article originally appeared on Money.com and may contain affiliate links for which Money receives compensation. Opinions expressed in this article are the author’s alone, not those of a third-party entity, and have not been reviewed, approved, or otherwise endorsed. Offers may be subject to change without notice. For more information, read Money’s full disclaimer.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.