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The number of 401(k)-created millionaires has reached a new peak as retirement balances overall grow for the third quarter in a row.
Fidelity analyzed more than 48 million retirement accounts, including IRAs, 401(k)s and 403(b)s, for its latest quarterly retirement analysis. The study found that in Q2 2024, the number of 401(k) millionaires hit a new high of 497,000 people.
That's 12,000 more 401(k) millionaires in Q2 compared to the previous quarter.
IRA-created millionaires also jumped by 6% from the first to the second quarters, going from 376,275 to 398,594 people.
Meanwhile, average retirement account balances increased. The average 401(k) balance hit $127,100, up from $112,400 in Q2 2023, while 403(b) balances reached $114,700 compared to $102,400 last year.
The average IRA balance was the highest, at $129,200 this quarter.
What contributes to high balances in retirement? Fidelity says starting early and saving consistently is the key.
"Through market ups and downs, we always stress the importance of making steady retirement contributions," said Sharon Brovelli, president of workplace investing at Fidelity Investments.
The report showed that those who stuck with the same plan with the same employer for 15 years grew their 401(k)s to an average balance of $531,200 — just over half a million dollars.
Four out of five retirement plan holders also received an employer contribution last quarter, which is consistent with the 79.5% of employees who received contributions from their workplaces at the same time the previous year.
Q2 continued the trend of high contribution levels and account balances established last quarter.
"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," Brovelli said.
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