Retirement Millionaires on the Rise as Americans Boost Savings, According to Fidelity Report
According to a recent report by Fidelity Investments, retirement millionaires experienced significant growth in the second quarter of the year. The analysis of retirement accounts revealed double-digit increases in the number of individuals holding seven-figure balances in their 401(k) accounts and individual retirement accounts (IRAs). Fidelity reported a 10% rise in the number of 401(k) millionaires, reaching 378,000 in the quarter. Additionally, the number of IRA millionaires climbed by 13%, totaling 349,100.
This increase in retirement millionaires coincided with a rise in the average amount saved in three types of retirement accounts. IRAs saw a 5% increase quarter-over-quarter, with the average balance reaching $113,800. The average balance in 401(k) accounts increased by 4% to $112,400, while 403(b) accounts experienced a 5% spike, averaging $102,400. The steady contributions from employers and employees, as well as favorable market conditions, played a significant role in boosting average retirement account balances.
The report also highlighted the savings rates of different generations. Among baby boomers, millennials, and generations X and Z, the youngest group displayed the largest increase in 401(k) account balances, averaging a 66% growth. The average balance for millennials increased by 24.5%, and generation X saw a 14.5% rise. While boomers had the smallest increase in their 401(k) account balances, the report showed that those still working had the highest total savings rate at 16.6%. The overall 401(k) savings rate was 13.9%.
Commenting on the findings, Fidelity Investments Workplace Investing President Kevin Barry emphasized the importance of maintaining high contribution and savings rates to improve retirement readiness. He stated, “As we begin to see improvements in market conditions, maintaining high contribution and savings rates is an essential component of improving one’s retirement readiness.”
The positive growth in retirement accounts aligns with the overall performance of the stock market. As of Friday, the S&P 500 saw a rise of over 14% since the beginning of the year, while the Nasdaq Composite increased by nearly 28%. The Dow Jones Industrial Average also experienced a 25.8% surge during the same period.
However, a separate study conducted by Northwestern Mutual found that just over half of U.S. adults expressed confidence in their financial preparedness for retirement. Furthermore, they expect to stay in the workforce for an additional year compared to last year, with the average retirement age now projected to be 65.
As Americans strive to secure their retirement, increasing savings rates and consistent contributions to retirement accounts remain crucial. With the market showing signs of improvement, individuals are encouraged to take advantage of these favorable conditions and further enhance their retirement readiness.
Sources: FOX Business, Fidelity Investments, Northwestern Mutual