The number of folks with $1 million or more saved in their 401(k) accounts jumped 20% from September to the end of December, according to Fidelity Investments.
In total, there were 422,000 retirement savers in Fidelity 401(k) plans with balances of seven figures or more as of December 31, up from 349,000 at the end of September and 299,000 at the end of 2022.
Additionally, there were 391,562 IRA millionaires on December 31, up from 338,725 at the end of September and 280,320 at the end of December 2022.
"We are pleased to see retirement balances increase so significantly this quarter, reflecting the improving market conditions and enabling retirement savers to see significant gains in their account balances and retirement preparedness," said Michael Shamrell, vice president of thought leadership for Fidelity Workplace Investing, in an interview with Yahoo Finance.
Retirement savers ended the year with average account balances at their highest level in nearly two years. Adding to this positive trend, more than a third of workers increased their retirement savings contribution rate in 2023.
This data comes from Fidelity's fourth quarter analysis of savings account balances for more than 45 million IRA, 401(k), and 403(b) retirement accounts.
If you're among the nearly 1 in 4 Americans who are unsure of how much they have saved in their retirement accounts, it might be a good idea to check. You might be pleasantly surprised. Last year was favorable for many Americans' retirement savings account balances, with the S&P 500 index up 26.3% and the Dow Jones Industrial Average up 13.7%.
The increased balances, however, were not solely due to the strong stock market. At the end of 2023, 78% of 401(k) savers were contributing enough to secure the full matching contribution offered by their employer. The total average 401(k) savings rate for the fourth quarter, which includes employee and employer match contributions, was approximately 14%.
In the fourth quarter, nearly half of individuals increased their contribution voluntarily, without waiting for their plan to automatically increase. About 1 in 4 employers now offer auto-enrollment, and the average employer default contribution rate is at an all-time high of 4.1%, according to the report.
The average savings tenure of Fidelity account millionaire savers is 26 years, showing that consistent long-term investing pays off. The average age of a retirement account millionaire is 59.
"The key to saving for retirement is playing the long game and maintaining consistent contributions over time," Shamrell said. "The increase in the number of 401(k) millionaires is a perfect example, as the majority of these savers aren't necessarily doing anything special other than saving at a high rate in the same plan over a long period of time."
Nearly half of Fidelity's millionaires are baby boomers, which is similar to the number of Gen X millionaires, while millennials account for just 0.8%.
