There's encouraging news in the retirement savings landscape: the number of 401(k) millionaires is on the rise, driven by higher worker contributions and the recent strength of the stock market.
Not only are more savers reaching the coveted "401(k) millionaire" milestone, but millennials—traditionally seen as lagging behind older generations in retirement savings—are finally beginning to join the ranks, albeit in small numbers.
According to a new report from Fidelity, the number of 401(k) millionaires increased by 9.5% in the third quarter of 2024, growing from 497,000 to 544,000 individuals with seven-figure retirement savings.
This surge comes as overall 401(k) balances across all savers also saw a notable rise. As of the third quarter, the average 401(k) balance stood at $132,300, a 23% increase from the same time last year.
Among savers who have stuck with their 401(k) plans for the long haul, the figures are even more impressive. Fidelity's data reveals that Gen X workers who have been contributing to their 401(k)s for 15 years have an average balance of $586,100. This highlights the importance of consistency and the impact of compounded growth on long-term savings.
Millennials Are Starting to Join the 401(k) Millionaire Ranks
Though millennials—defined as those between the ages of 28 and 43—make up less than 2% of Fidelity's 401(k) millionaires, their increasing participation is a promising sign for the future. The oldest millennials are already halfway through their careers, and the youngest still have decades of working years ahead. Given the compound interest effect, it's reasonable to assume that the average 401(k) balance for this age group will continue to rise.
At present, the average 401(k) balance for millennials is $66,500. While this figure may seem modest compared to the broader pool of 401(k) savers, it's important to note that millennials have time on their side. The oldest in the cohort still have decades to grow their retirement savings, and their contributions will only continue to increase as they progress in their careers.
For those looking to join the 401(k) millionaire club, the path to success requires discipline, time, and smart financial strategies. Moneywise suggests that consistent saving—starting early—is key to achieving such milestones.
For example, if an individual contributes $400 a month to their 401(k) over a 41-year period with an average annual return of 7%, they could see their balance grow to over $1 million.
In contrast, if they delay contributions for a decade and only save for 31 years, the same $400 per month would result in a balance of around $490,000.
