(Bloomberg) — The amount of 401(k) millionaires is within striking distance of an all-time high.
The number of seven-figure 401(k) accounts at Fidelity Investments rose 20% in the final quarter of 2023 to 422,000, marking a sharp recovery from the previous quarter's 7.7% decline. published analysis from Fidelity Tuesday shows.
Stock market gains helped boost retirement balances last year as the S&P 500 advanced 24% after a 19% decline in 2022. The impressive performance was powered in large part by the so-called “Magnificent 7” stocks that now constitute about 30% of the market cap-weighted S&P 500 index. In 2023, Nvidia Corp. gained more than 238%, Meta Platforms Inc. rose more than 194% and Amazon.com Inc rose more than 80%.
The only time Fidelity's 401(k) millionaire ranking was higher was in the fourth quarter of 2021, when there were 442,000 such accounts. Elsewhere, the number of seven-figure IRAs is at a record 391,600 accounts.
The average age of 401(k) millionaires at Fidelity is the oldest at around 59. However, Gen Xers also hit a good milestone in the final months of 2023. Those who have had the same 401(k) plan for 15 consecutive years , saw average balances reach $501,000. That said, the average total retirement balance at Fidelity is far from the millionaire mark, at $118,600.
Other highlights from the report:
- The total savings rate – adding up workers' contributions and their employers' matching contributions – was 13.9%, in line with the previous two quarters.
- For all of 2023, over 37% of workers with a 401(k) increased the percentage of pre-tax pay they contribute to their plan. In the fourth quarter alone, 10% of employees increased the percentage.
- About 78% of 401(k) savers contributed enough to their plan to receive their employer's full matching contribution.
- Roth IRA accounts held by Gen Z savers grew 50% in the fourth quarter of 2023 compared to the same period in 2022.
To contact the author of this story:
Suzanne Woolley in New York at (email protected)