With retirement savings on the rise, reaching a million-dollar balance is becoming more attainable for many. According to a recent analysis by Fidelity of over 48 million retirement accounts, including IRAs, 401(k)s, and 403(b)s, the number of individuals with million-dollar 401(k) balances has surged to a record high.
In the second quarter of 2024 alone, the count of 401(k) millionaires climbed to 497,000, marking a significant 12,000-person increase from the previous quarter. Additionally, millionaires with IRA accounts saw a 6 percent rise, reaching 398,594. As more people hit this financial milestone, a financial expert shares insights on how you too can achieve a seven-figure retirement fund.
Average retirement account balances continued to grow. The average 401(k) balance reached $127,100, up from $112,400 in the second quarter of 2023, while 403(b) balances increased to $114,700 from $102,400 in the previous year. The average IRA balance reached its highest point this quarter at $129,200.
Secrets To Building A Million-Dollar Retirement Nest Egg
According to Sharon Brovelli, president of workplace investing at Fidelity Investments, consistent retirement contributions are crucial even during market fluctuations. The report revealed that those who remained with the same employer and retirement plan for at least 15 years achieved an average 401(k) balance of $531,200, exceeding half a million dollars.
Four out of five retirement plan participants received an employer contribution in the last quarter, mirroring the 79.5 percent who received such contributions from their workplaces during the same period the previous year.
In the second quarter, they continued the trend of strong contribution levels and growing account balances observed in the previous quarter. “Although increases were modest, retirement savers in the second quarter of 2024 benefited from the continued upswing of the previous quarter, when contribution levels and average account balances reached record highs,” Brovelli said.
Four Positive Trends For Retirement Savers
While many Americans across all generations express concerns about outliving their retirement savings, there are several encouraging trends for those planning for their golden years. Let’s delve into these positive developments.
1. Total 401(k) Savings Rates Remain Steady
The average 401(k) savings rate remained unchanged this quarter at 14.2 percent, reflecting continued high levels of employee and employer contributions (9.4 percent and 4.8 percent, respectively). This marks the closest the savings rate has ever approached Fidelity’s recommended rate of 15 percent, which includes both employee and employer contributions.
2. Average Long-Term Balances Continue to Climb
The average balances for those consistently contributing to their retirement plans for 5, 10, and 15 years have increased again this quarter, highlighting the benefits of long-term, consistent savings.
Notably, Gen X4 savers with 15 years of contributions continue to see their savings grow, with an average balance of $554,000 this quarter (up from $543,400 last quarter), offering a positive outlook as they approach their retirement years.
3. Gen X Accelerates IRA Contributions
Gen X savers have significantly increased their total IRA contributions by 30 percent over the past year, reaching the highest levels in the last five years.
4. Million-Dollar Retirement Accounts on the Rise
The number of individuals with million-dollar retirement accounts continues to surge. This quarter saw a new all-time high, with 401(k)-created millionaires increasing by 2.5 percent to 497,000 from 485,000 in the previous quarter.
Similarly, IRA-created millionaires saw a 6 percent increase, rising from 376,275 to 398,594. These individuals achieved this financial milestone by starting early and consistently contributing to their retirement savings over many years.
As retirement savings continue to grow, it’s clear that consistent contributions and long-term planning are key to achieving financial security in your golden years. By following the trends mentioned above, you can take steps toward building a substantial retirement nest egg.
