A significant increase in 401(k) millionaires has been reported, with over 769,000 individuals reaching this milestone by the end of June, marking an increase of 115,000 since March. This statistic comes from Fidelity’s latest retirement analysis, which highlights the growing number of savers with at least $1 million in their workplace retirement accounts. In comparison, the average 401(k) balance stood at $155,800, while the median was considerably lower at $35,800.
The surge in millionaire savers follows a challenging first quarter for the stock market, where the S&P 500 experienced a decline of about 7%. However, a notable recovery occurred in the second quarter, with the index rebounding by 14.9%, its strongest rise since 2020.
Fidelity also noted an increase in IRA millionaires, which rose from 571,622 in March to 684,140 at the end of June. The average IRA balance increased by 10% from the previous quarter, reaching $144,523. The latest findings indicate that consistent saving and early investments are crucial factors in achieving millionaire status in retirement accounts.
The average contribution rate for employees hit a record 9.6%, while employer contributions averaged 4.8%, bringing the total to 14.4%. Notably, 81.2% of participants contributed enough to receive their full employer match, and a small percentage increased their contribution rate during the quarter. The average 401(k) millionaire is typically 58 years old and has been saving for about 25 years.
Despite the rise in millionaires, challenges remain, as nearly 20% of retirement savers had outstanding 401(k) loans in the second quarter. Hardship withdrawals also slightly increased, indicating not all savers are on a secure path toward retirement.
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