Number of 401(k) Millionaires Hits New High
In the world of retirement savings, becoming a “401(k) millionaire” is a significant milestone. According to Fidelity Investments, the end of 2023 saw a record high of 422,000 401(k) millionaires.1 This news is a cause for celebration and a testament to the power of consistent saving, smart investing, and the long-term benefits of employer-sponsored retirement plans.
Let's look at what this milestone means for the future of retirement.
What Is a 401(k) Millionaire?
Firstly, let's clarify what it means to be a 401(k) millionaire. This term refers to individuals who have accumulated at least one million dollars in their 401(k) retirement accounts. These accounts, offered by many employers, allow employees to contribute a portion of their salary on a pre-tax basis, with potential employer matches and tax-deferred growth.
The 401(k) Millionaire Milestone
Recent reports have shown a substantial increase in the number of 401(k) millionaires across the country. According to data from Fidelity Investments, one of the largest 401(k) providers in the U.S., the number of savers with million-dollar-plus 401(k) accounts has hit a record high. In fact, as of the last reporting period, there were over 400,000 Fidelity 401(k) accounts boasting balances of $1 million or more.1
This significant milestone is a result of various factors aligning, including a decade-long bull market, increased contribution limits, employer matches, and diligent saving and investing habits by account holders.
The Power of Consistency
One of the key lessons from the rise of 401(k) millionaires is the power of consistency. These individuals didn’t amass their wealth overnight. Instead, they diligently contributed to their retirement accounts, often taking advantage of employer matches to maximize their savings potential.
Even small, regular contributions can add up significantly over time, especially when combined with the potential for compound growth. This long-term approach to saving and investing is a powerful strategy for building wealth, as evidenced by the growing number of 401(k) millionaires.
The Role of Smart Investing
Another crucial factor in the success of 401(k) millionaires is smart investing. These individuals often diversified their investments, spreading their money across various assets such as stocks, bonds, and mutual funds. By doing so, they mitigated risk while also taking advantage of market growth.
In addition, many 401(k) plans offer target-date funds and other investment options tailored to different risk profiles and retirement timelines.2 These options make it easier for account holders to make informed investment decisions aligned with their goals.
The Future of Retirement
The rise of 401(k) millionaires is not only a personal achievement for those individuals but also a positive sign for the future of retirement, in the U.S.A more people reach this milestone, it signals a shift towards greater financial security in retirement.
The increasing number of 401(k) millionaires is a noteworthy achievement that demonstrates the effectiveness of disciplined saving, smart investing, and long-term planning. These investors have shown that with consistent effort and sound financial decisions, the goal of a financially secure retirement is within reach.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Distributions from traditional employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty. The target date of a target date fund may be a useful starting point in selecting a fund, but investors should not rely solely on the date when choosing a fund or deciding to remain invested in one. Investors should consider funds’ asset allocation over the whole life of the fund. Often target date funds invest in other mutual fund and fees may be charged by both the target date fund and the underlying mutual funds. The principal value of these funds is not guaranteed at any time, including at the target date.
Investors should consider the investment objectives, risks and charges, and expenses of mutual funds carefully before investing. The prospectus, which contains this and other information about the funds, can be obtained directly from the company or from your financial professional. The prospectus should be read carefully before investing or sending money.
Ivy Pierson, CEP, MBA Investment Advisor Representative Securities and advisory services offered through Cetera Advisors LLC (doing insurance business in CA as CFGA Insurance Agency LLC), member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity. Pierson Wealth Management is located at 28368 Constellation Rd., Ste. 396, Santa Clarita, CA 91355. CA Insurance Lic#0C92500. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful
