The number of Americans with at least $1 million in their 401(k) retirement accounts has reached a record high, driven by a strong stock market performance and sustained employee contributions. Fidelity Investments reported a 19% increase in such accounts between the first and second quarters, totaling 769,000.
This surge occurred despite economic pressures like rising costs for groceries and utilities. The S&P 500 saw a 15% gain in the second quarter, encouraging more individuals to invest in their retirement. Concurrently, the average employee contribution rate remained at a record 9.6%.
Approximately 3% of Fidelity’s 25.8 million 401(k) accounts now hold balances of $1 million or more. Michael Shamrell, vice president of thought leadership at Fidelity Investments, noted the encouragement of consistent savings rates, stating, “We’re not seeing people pull back on how much they’re contributing to their 401(k)s.”
These gains were primarily achieved by older individuals who have consistently saved and invested over decades. However, most Americans are still far from this seven-figure retirement goal. As of June 30, the average 401(k) balance at Fidelity was $155,800, with average 403(b) balances at $145,000 and average IRA balances at $144,523.
A survey by NFP found that 69% of employees lack confidence in their ability to retire comfortably, and 72% believe their retirement savings are off track. The survey of 1,000 working adults also indicated that 46% are deprioritizing retirement savings or unable to save at all due to pressing expenses such as housing, transportation, and food.
Shamrell cautioned against viewing the $1 million figure as a universal target, emphasizing that individual retirement needs vary. "We don’t want people to think that, ‘OK, this is what you should aim for, this is what you’re going to need,’ because everybody’s different, and so you know some might need more, some might need less,” he said.