The number of paper millionaires with 401(k) retirement accounts has reached an all-time high according to a report released Wednesday.
Fidelity Investments says the number of people with more than a million dollars in their 401(k) accounts reached 497,000 in the second quarter, up 2.5% from the first quarter of 2024.
In an analysis of the 24 million accounts it administers, Fidelity found the number of consumers with more than a million dollars in their IRA increased 6% in the same period to 398,594.
Many of those account holders can not be considered true millionaires because if the markets move lower, the value of their accounts could drop. Also, pre-tax account holders will be forced to pay federal and state taxes upon withdrawing money.
The report also found that savers in Generation X had a 30% increase in total IRA contributions over the past year, with current contributions the highest they've been in the last five years.
The average balance for 5, 10 and 15-year continuous savers increased again this quarter, demonstrating the value of consistently contributing in the same plan for an extended period.
Fidelity said 15-year Gen X savers continue to see their savings increase, with an average balance this quarter of $554,000 (compared to $543,400 last quarter) – a promising sign as this generation approaches retirement.
Fidelity found that the average savings rate was 14.2% in the second quarter when factoring in participant funds and company matches. That is nearing the 15% it recommends to properly fund a retirement.
The average 401(k) balance rose 1% in the last quarter to $127,100.
"Although increases were modest, retirement savers in the second quarter of 2024 benefited from the continued upswing of the previous quarter, when contribution levels and average account balances reached record highs," said President of Workplace Investment Sharon Brovelli.
"Through market ups and downs, we always stress the importance of making steady retirement contributions. This quarter, Americans leveraged positive market conditions to build upon their savings and further secure their financial future."
Fidelity says the 401(k) millionaires reached that level of retirement savings by starting early and contributing consistently over many years.
