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Published: May 24, 2024 3 min read
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Stock market growth has boosted 401(k) balances and led to a record number of accounts over the $1 million mark.

At the end of the first quarter, Fidelity reports that 485,000 accounts had seven-figure balances, which is a 15% increase from the end of 2023 when there were 422,000 401(k) millionaires. A year ago, there were 340,000, according to the investment firm.

While only a small percentage of Americans have reached the $1 million dollar milestone for 401(k)s, the majority of people with any amount of money in a retirement account has benefited from the rise in stock prices. The S&P 500 index gained more than 10% in the first quarter, and is up 26% over the past 12 months.

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401(k) balances are rising

The average 401(k) balance was $125,900 in the first quarter, which is 16% higher than the average a year earlier of $108,200, according to Fidelity.

“Record-high contribution levels coupled with positive market conditions pushed average account balances to their highest levels since the fourth quarter of 2021,” the company said in a release.

Higher account balances show the payoff of making steady contributions. The data indicate that becoming a 401(k) millionaire takes commitment and patience, and that account holders in general are doing a better job of saving for retirement:

  • According to Fidelity, 401(k) millionaires have been saving for an average of 26 years.
  • Their average contribution rate for 401(k) millionaires is 17%, counting employee and employer contributions.
  • The average 401(k) account holder had a savings rate of 14.2% in the first quarter, an all-time high and an increase from the rate in 2019 of 13.5%.

Beyond 401(k)s, Fidelity’s data shows that individual retirement account (IRA) and 403(b) account balances have increased substantially in the past year:

  • The average IRA balance was $127,745 (up 13%).
  • The average balance was up 16% to $113,000 for 403(b)s, which are similar to 401(k)s but for public-sector and nonprofit employees.

The increase in retirement account balances is a positive development, but many Americans are still behind track in preparing for the future. That even includes some of the 401(k) millionaires, considering that U.S. adults say they'll need nearly $1.5 million to retire comfortably, according to a recent Northwestern Mutual survey.

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