There are a record number of 401(k) millionaires, Fidelity says

Americans are taking advantage of healthy markets to continue building their nest eggs.

In the third straight quarter of growth in retirement savings, the number of 401(k) accounts with at least $1 million rose another 2.5 percent to 497,000 in the second quarter, according to the latest Retirement Analysis of Fidelity Investment. report released on Wednesday.

Despite the fact that it is less extreme than what the asset management firm had seen in previous quarters, this increase in savings resulted in the third-highest average account balance on record, with an average 401(k) balance of $127,100 for the quarter.

“Although increases were modest, retirement savers in the second quarter of 2024 benefited from continued growth from the previous quarter, when contribution levels and average account balances reached record levels,” said Sharon Brovelli, president of investments at the site of work at Fidelity, in a statement. .

Average total 401(k) savings rates rose slightly to 14.2 percent as employee and employer contributions remained at record levels from last quarter, Fidelity said. This savings rate is closest to the 15% suggested by Fidelity.

That savings growth was comparable to Fidelity’s other retirement account offerings, including IRAs and 403(bs). A 401(k) gives for-profit employees the ability to invest retirement savings; a 403(b) works similarly, but is for employees of nonprofit organizations; and an IRA is set up by an individual at their financial institution and is tax-free.

But the overall savings numbers continue to fall short of the amount Americans think they will need retire comfortably. That number, known as the “magic number,” hit 1.46 million dollars this year, according to a recent study by financial services firm Northwestern Mutual.

Moreover, the social security Administration he warned that the trust funds on which some 66 million Americans rely will be depleted in 2034 due to an overburdened Social Security system unable to keep up with the growing number of retirees and people are living much longer than before.

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