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Published: Feb 27, 2024 3 min read
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Recent stock market gains propelled a significant rise in the number of retirement savers who’ve reached the milestone of a $1 million 401(k) balance.

In the fourth quarter, Fidelity Investments reports seeing a 20% jump in the number of 401(k) millionaires. Compared to the fourth quarter of 2022, the number was up 11.5%.

“Retirement savers ended the year on a positive note with improved market conditions and consistent contributions helping boost average account balances to their highest level in nearly two years,” Fidelity said in a report.

The S&P 500 has been on a strong run since November and reached new record highs in February. The large cap stock index is up about 27.5% in the past year as inflation has eased and other economic conditions have improved. The Nasdaq and Dow Jones indexes are up 39.7% and 19.2%, respectively.

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Average 401(k) balances are soaring

The average balance 401(k) is $118,600, which is a 14.1% increase from the fourth quarter of 2022, according to Fidelity, which is the largest 401(k) provider in the U.S.

Americans often invest their 401(k)s in mutual funds or ETFs, which can include stocks and bonds.

The strong performance of the stock market has lifted values of the holdings in these accounts. The other factor is an increase in contribution: In 2023, 37% of 401(k) Fidelity savers increased their retirement contribution rate.

The average total savings rate, which includes employer contributions, is 13.9%, according to Fidelity.

Fidelity’s expert say the positive trends in 401(k) balances are a reminder of the importance of long-term investing and patience with your 401(k). There will be tough years for 401(k)s like 2022, but in the long run, balances generally rise.

“2023 gave us the highs of the highs, and the lows of the lows, but encouragingly, many retirement savers took the long view and stayed the course through it all,” Sharon Brovelli, president of workplace investing at Fidelity Investments, said in the report.

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