money The tally of 401k millionaires hits new high
The number of 401k and IRA millionaires again reached record highs, according to Fidelity Investments, thanks in part to good returns from stocks in the fourth quarter.
The number of 401k accounts with balances of at least $1 million hit 233,000 in the fourth quarter, up from the previous record of 200,000 in the third quarter and 212,000 more than a decade ago when stocks were just beginning to dig out from the financial crisis crash.
IRAs — or individual retirement accounts — saw a similar trajectory. The tally of IRA millionaires jumped 14% to 208,000 at the end of 2019. This beat the previous record of 182,400 IRA millionaires, reached in the third quarter of 2019.
Fidelity’s statistics are based on the 17.3 million 401k and 9.9 million IRA retirement accounts it oversees.
These millionaire retirement savers not only benefited from an impressive quarter of stock market gains — which saw the Standard & Poor’s 500 index gain 8.53% — but also from consistent, long-term investing.
“Among 401k millionaires, we see they’ve been saving throughout their 30-year career,” said Meghan Murphy, a vice president at Fidelity. “And saving up to 25% of their annual salary.”
Who also benefited?
But it wasn’t only millionaires who reaped retirement benefits at the end of 2019.
Investors who had saved for a decade saw their average balances top $328,200 in the fourth quarter, an increase of more than $21,000 from the prior quarter.
401k balances rose to $112,300, a 17% increase from the previous year, while IRA balances reached $115,400, a jump of 17% from 2018.
Americans also made an effort to invest more out of their paychecks.
Overall, 33% of investors saw their savings rate increase in 2019. Of those, 2 in 5 voluntarily upped their contributions, while the remaining benefited from automatic increases to contributions.
“I would say in general all of the goodness we’re seeing is a reminder to people to check in on their [stock] allocation and rebalance as they make more money,” Murphy said.
Millennials who’ve saved for the last 10 years when the S&P 500 gained 188.88% saw their balances reach new heights as well, rising to $149,800 in the fourth quarter.
“With millennials, they are the first full generation to go through their entire career having access to 401k plans or being automatically enrolled,” Murphy said. “We’re seeing roughly a quarter of millennials saving 15% or more for retirement.”
Dhara is a writer for Yahoo Money and Cashay, a new personal finance website. She can be reached at dhara.singh@yahoofinance.com. Follow her on Twitter @dsinghx.
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