The Number of 401(k) Millionaires Has Hit a Record, Fidelity Says (2024)

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Bigger contributions and a strong stock market mean a greater number of retirement accounts have $1 million or more than ever before.

May. 29, 2024

By Rocio Fabbro, Quartz (TNS)

Record-high contributions and a healthy stock market are boosting retirement savings for some, at a time when Americans feel they need a bigger nest egg than ever before.

There are now 485,000 retirement accounts with at least $1 million—up 43% from 340,000 401(k)-created millionaires a year ago, according tonew datapublished byFidelity Investmentson Thursday.

This still falls short of the$1.46 millionU.S.adults believe they’ll need to retire comfortably, according to a recent study by financial service firm Northwestern Mutual.

With an overburdened social security systemunable to keep up with the growing number of retireesand people living far longer than they used to, theSocial SecurityAdministrationhas warnedthat the trust funds that some 66 million Americans rely on will be depleted in 2034.

This year alone, more than four million Americans will turn 65, the average retirement age—the largest wave of Americans reaching the retirement age in history, according to Northwestern Mutual.

But Americans,under pressure from inflation, are storing away more than ever—and getting some help from the market. Total average 401(k) savings rates reached a record high of 14.2%, driven by strong contributions both from employees and employers. The S&P 500 index SPX rose 10.6% in the first quarter.

A Gen Z boom in Roth IRA accounts

The number of Gen Z Roth IRA accounts increased 71% from a year ago, according to Fidelity, with average contributions rising 11%. Thekey differencebetween the retirement accounts is that contributions to a 401(k) are generally pre-tax, while Roth IRA contributions are made with money that has already been taxed.

Gen Z, the generation born between 1997 and 2012, is the latest to enter the job market. Gen Z expects to have an even more expensive retirement, projecting, alongside millennials, that they’ll need more than $1.6 million to live comfortably once they exit the workforce—the highest of any generation.

Younger generations are recognizing the value of starting to save up early, given that the 401(k) millionaires have had their plans for an average of 26 years, with an average contribution rate of 17%.

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