Number of 401(k) Millionaires Hits New High

In the world of retirement savings, becoming a “401(k) millionaire” is a significant milestone. Reaching this level is 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?

First, 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 Q4 2024 data from Fidelity Investments, one of the largest 401(k) providers in the U.S., “...there was a 27% increase in the number of 401(k)-created millionaires in 2024, rising to 537,000 from 422,000.”

Start early

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.

But of all of these factors, contributing to the account early is the most important. These individuals didn’t amass their wealth overnight. Fidelity noted that the average age of these 401(k) millionaires is 59 years old, and many have been with the same plan for an average of 26 years.

The Power of Consistency

One of the key lessons from the rise of 401(k) millionaires is the power of consistency. Most 401(k) millionaires 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.

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. While the vast majority of Americans’ retirement savings are amassed through plans provided via 401(k) plans, Pew estimates that nearly 56 million private sector workers don’t have such a plan at work.3 If someone you care about is in this position, please connect them with your HCM advisor so they can receive guidance on the options available to them.

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.