Membership in the 401(k) millionaire club is growing by leaps and bounds.
The number of 401(k) accounts with balances of $1 million or more at Fidelity Investments rose 27% to 537,000 in 2024, driven by a banner year in the stock market, the company said.
Retirement savers benefited from a 25% total return for the S&P 500 in 2024. That followed on the heels of a 26% increase in 2023. But even with the back-to-back 20%-plus gains — something that has happened only 10 times since 1871 — survey after survey shows most Americans remain anxious about being able to afford a comfortable retirement.
About 60% of Americans have access to 401(k)-type plans, and the vast majority of accounts have far less than $1 million. In fact, the average balance at Fidelity was $131,700 at year end. However, contribution rates have remained steady.
“People have concerns about the economy, the rising cost of living, rising inflation — so the thinking is that they’re likely making some sort of change somewhere in their personal financial lives,” said Michael Shamrell, vice president of thought leadership at Fidelity. “But it looks like they’re not pulling back on their retirement savings.”
Fidelity said the median account balance among 401(k) millionaires is about $1.4 million.
For those behind on savings, members of Gen X have been making strides as they approach retirement age. About 14% made catch-up contributions and the cohort had a total savings rate of 15.2%, in line with what many financial advisers recommend. Additionally, those who have saved in 401(k)s for 15 years, with the same employer, saw average balances jump 18% to $589,400 last year.
Meanwhile, Gen Z savers, the oldest of whom are now 28, were no savings slouches, either. Members of that generation who have contributed to their 401(k) for five years saw average balances rise 66% to reach $52,900. Such a huge jump is likely due to having a high proportion of their savings in equities.
Overall, almost 40% of retirement savers bumped up their contribution rate last year, for an average increase of 2.9%. A chunk of that likely came from the use of auto-escalation plans, which automatically raise an employee’s contribution rate by 1% a year. About 90% of savers got a contribution from their employer, Fidelity said.
