Number of 401(k) ‘millionaires’ reaches new high

On balance, 401(k) participants have had a good run over the past year. Especially those who have amassed a balance of at least $1 million.

On balance, 401(k) participants have had a good run over the past year. Especially those who have amassed a balance of at least $1 million. The number of so-called 401(k) ‘millionaires’ rose to a new record high in the second quarter, according to a new data analysis released Wednesday by Fidelity Investments, which based its conclusions on 24 million 401(k) accounts across the 26,000 employer-sponsored plans that it administers. As of June 30, nearly half a million 401(k) accounts (497,000) had balances of $1 million or more, up 2.5% from the prior quarter. The average balance hit $1,595,200, up from $1,581,00 at the end of March, according to Fidelity’s data. Of course, for the vast majority of 401(k) participants, the numbers were less flashy and the trends a mix of good and bad news. Great stock market returns can’t create an adequate retirement nest egg unless someone is consistently saving and investing over their career. The good news here is that Fidelity found that participants’ average savings rate was 14.2% of their income in the second quarter, on par with where it was in the prior quarter. That savings rate is just below the 15% that retirement experts typically recommend. And it reflects a combination of employee contributions (9.4%) plus an employer match (4.8%). The average 401(k) balance across all participants rose to $127,100, up 1% from the first quarter, and up 13% from the second quarter in 2023.