More millionaires are among us thanks to ballooning IRA 401(k) balances.

A growing number of retirement savers have a million or more in IRAs or 401(k)s.

IRA account holders at Fidelity with $1 million or more saved rose to 398,594 at the end of June, up from 376,275 at the end of the first quarter, according to Fidelity Investments.

This increase of almost 6% is significant. That’s more than double those with seven-figure balances in Fidelity 401(k) plans.

There were 497,000 millionaire retirement savers in Fidelity 401(k) plans at the end of the second quarter, up from 485,000 at the end of March — a 2.5 percent increase.

Fueling the bulging balances in retirement accounts was another robust quarter of market returns and consistent contributions, Rita Assaf, Fidelity’s vice president of retirement products, told Yahoo Finance.

Savers have been able to reach this high level by starting early and contributing consistently over many years, she said.

Average total 401(k) savings rates, for example, have held steady since the beginning of this year at 14.2 percent, a combination of employee and employer 401(k) contributions.

However, growing IRA balances are noteworthy because this is money that people save and invest on their own without the help of employer matching funds.

Read more: These are the new traditional IRA and Roth IRA limits in 2024

DIY economy, not necessarily by choice

About 1 in 6 workers receive no retirement benefits, with the percentage significantly higher among Gen Z (20%) and baby boomers (30%), according to a recent report by the Transamerica Center for Retirement Studies.

“It’s a real concern and requires a do-it-yourself approach when it comes to saving and investing for retirement,” Catherine Collinson, CEO and president of the Transamerica Institute, told Yahoo Finance. “Without an employer and employer-sponsored retirement benefits, it’s easy to do nothing,” she said.

You can open any of these retirement accounts through your credit union or local bank. Mutual fund companies and brokerage firms are also good places to do this. An IRA is easy to set up online: enter your bank details, how often you want to invest, and the amount you want to transfer to the IRA.

Some states also offer IRA programs that are open to self-employed individuals. These include Oregon, Colorado, Connecticut, Maryland, Illinois, California and Virginia.

At Fidelity, 12.3 million people are saving and investing for retirement through 15.8 million IRAs, where the number of accounts grew 11.7% and total assets grew 22.2% between the second quarter of 2023 and the second quarter of this year.

The story continues

Read more: Retirement Planning: A Step-by-Step Guide

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The New IRA Millionaires

The average age of a millionaire created by an IRA is 68, compared to 59 for a millionaire created by a 401(k), Assaf said.

Even so, many of Fidelity’s IRA millionaires are Gen Xers and reaching their peak earning years. Some even surpass boomers, she added.

Gen Xers saw a 30 percent increase in total IRA contributions over the past year, with their current contributions the highest in five years, according to the analysis.

IRA investors can opt for a traditional IRA for the upfront tax break. Contributions to traditional IRAs are often tax-deductible, but withdrawals years later in retirement are taxed at the same rates as regular income, such as wages.

Another choice is a Roth IRA, which has no deduction today, but when you withdraw the funds, the withdrawals are tax-free.

Eligibility to contribute to a Roth IRA is based on your income. For tax year 2024, the limits are between $146,000 and $161,000 for single filers and between $230,000 and $240,000 for joint filers.

For 2024, the total you can contribute to all traditional IRAs and Roth IRAs can’t exceed $7,000, or $8,000 if you’re 50 or older.

If you’re self-employed, you can also keep more of your income by contributing to a Simplified Employee Retirement Plan, or SEP IRA. The contribution limit for a SEP IRA for 2024 is 25% of your compensation or $69,000 – whichever is less.

Most of the total balance for IRA millionaires is held in traditional IRAs, Assaf said. The reason: people converting workplace plans like 401(k)s to IRAs.

Importance of contribution

While not all account holders contribute to their IRAs annually, the number of Fidelity IRA accounts with a contribution increased 31% between the second quarter of 2023 and the second quarter of this year.

Regular contributions matter because you’re constantly adding funds to your accounts, whether the market is rising or falling. This has an essential cumulative impact for building wealth.

The average savings tenure of Fidelity account millionaires is over two decades. What it says is that it’s worth continuing and investing consistently for the long term.

“The key to saving for retirement is to play the long game and maintain consistent contributions over time,” Michael Shamrell, vice president of thought leadership for Fidelity Workplace Investing, previously told Yahoo Finance. “Most of these savers don’t necessarily do anything. special, apart from saving at a high rate in the same plan over a long period of time.”

For generations, Roth IRAs have been the preferred retail retirement savings vehicle, with 65% of all new IRA contributions going to Roth. Roth IRAs among Gen Z investors — those born between 1997 and 2012 — have grown 66% in the past year.

“What we’re seeing is that the millionaires created by IRAs are a combination of savings at work (rollovers) or asset transfer (think moving an IRA from another provider) as well as people who simply continue to contribute and they make sure they invest so that their money. is growing,” Assaf added.

I second that emotion. Ultimately, it’s up to you to invest in your future and get serious about doing so.

Kerry Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “In Control at 50+: How to Succeed in the New World of Work” and “Never too old to get rich.” Follow X @kerryhannon.

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