The number of retirement accounts with balances above $1 million spiked dramatically to a new record this year. Some 485,000 401(k) accounts had balances above $1 million in the first quarter, CNN reports. That's a 15% increase from the end of 2023 and 43% higher than this time last year. Bloomberg first reported on the record-setting figure provided Thursday by Fidelity Investments. The company said the average balance for these 401(k) "millionaires" was $1,580,000, up slightly from $1,551,300 in Q4.
"There is no secret sauce for how a 401(k) participant can accumulate that kind of balance" but "the amount one saves over time" is key, CNN reports. Fidelity found the average 401(k) millionaire has been saving for 26 years while contributing 17% of their income, including matches from employers. Millionaire retirement accounts make up just 2% of Fidelity's 24 million defined contribution plan accounts, according to Bloomberg.
The average 401(k) balance similarly spiked 16% from a year ago to $125,900. That's the highest level since the end of 2021, per Bloomberg, though the outlet notes "large account balances boost the averages." The median balance for 401(k)s at Fidelity is far lower at $28,900. Fidelity attributes the spikes to "record-high contribution levels coupled with positive market conditions." The average savings rate is at 14.2%, including employer matches, nearing the recommended 15%. If all this makes you feel self-conscious, note that nearly half of Americans have no money saved in a 401(k), as CNN points out. (More 401(k) plans stories.)
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