Investopedia/Julie Bang
The Key Takeaways
- A recent Fidelity study found that there are more than half-a-million 401(k), or millionaire, investors in the third quarter of 2024. That’s an increase by 9.5% over the last quarter.
- Retirement savers investments have surged, in part, because of the stock market's stellar performance this year.
- The average 401 (k) and IRA balances are far below a million, but they have risen by 23%, 18% respectively, compared with the same time last year.
401 (k) and Individual Retirement Accounts (IRAs) have helped more retirees become millionaires.
Fidelity’s data, which analyzed over 16 million IRAs, 24 million 401ks, and other accounts found that there are 544,000 401k millionaires in the third quarter of 2024. That is a 9.5% increase from Q3 2019. The number of IRA billionaires increased as well by 5% in Q3, to over 418,000.
Bull Market Boosts Retirement Funds
Even though Q3 saw a higher number of retirement plan millionaires, the average retirement balance was still less than a dollar million.
Average IRA account balance is $129,200. This represents an 18% increase compared with Q3 of 2023.
The S&P 500, a broad barometer of the U.S. stock markets, gained 5.2% during the three months ending September, but was up nearly 21% since the beginning of the year till the end of Q3.
And while retirement savers are profiting from the stock market's stellar performance, they also have one more factor to be thankful to—consistent saving habits.
Average 401(k), or retirement plan, contributions were 14.1% (9.4% from employees and 4.7% by employers). This was the same as last quarter.
Generation X Saves More for Retirement
Gen X, or those born between 1965 and 1980, in particular, were stashing away more money towards retirement—though recent data indicates some Gen X are struggling to balance saving for retirement and financially helping their family.
Between Q3 of 2023 and today, the total IRA contribution for Gen X increased by 35 percent. These members may soon be retiring. The oldest are over 60.
Many Americans will retire earlier than they planned, sometimes without their consent. To prepare, it is important to consider the increased life expectancy of Americans and any possible cuts in Social Security benefits.
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