The fourth quarter of 2023 saw a 20% surge in the number of 401(k) millionaires from the previous quarter, a rebound from Q3’s dip, due in part to strong market dynamics, according to Fidelity Investments’ full year 2023 retirement analysis.
The total number of retirement savers in Fidelity 401(k) plans with balances reaching seven figures reached 422,000 on December 31, 2023, a significant rise from the total of about 349,000 millionaires at the close of Q3 2023. The number is close to the record high of 442,000 millionaires at year-end 2021.
Meanwhile, the trend of individual retirement account millionaires at Fidelity has mirrored that of 401(k) millionaires. The number dipped to 338,725 in Q3 2023 and has grown back to 391,562 in Q4 2023, a 15.6% increase.
Fidelity’s analysis, which considers 22.7 million participants, revealed a positive outlook for retirement savers as the year concluded. Improved market conditions, coupled with consistent contributions, pushed average account balances to their highest levels in nearly two years. Notably, 37% of workers increased their retirement savings contribution rates throughout 2023.
“This past year ended on a high note for retirement savers,” said Sharon Brovelli, president of workplace investing at Fidelity Investments, in a statement. “When it comes to matters like market stability and economic events, 2023 gave us the highs of the highs, and the lows of the lows, but encouragingly, many retirement savers took the long view and stayed the course through it all, which is the type of commitment that can lead to a secure financial future.”
Fidelity’s report highlighted that the combined savings rates for 401(k) plans, including both employee and employer contributions, remained steady at 13.9%. This was sustained from Q2 and Q3 2023, with a marginal increase from the previous year’s 13.7%. By year-end 2023, 78% of 401(k) savers contributed at a rate sufficient to secure the full matching contribution offered by their employer.
The average retirement account balances of IRAs increased by 6% from Q3 2023 to $116,600. At the same time, average 401(k) balances grew by 10% to $118,600 and average 403(b) account balances grew by 9% to $106,100.
With the SECURE 2.0 Act of 2022, the required minimum distributions amount was increased from age 72 to 73 in 2023. Retirees younger than 70 have mostly refrained from making 401(k) withdrawals. A fifth of retirees aged 70 to 72 withdrew from their 401(k) plans in 2023, in contrast to the 94% withdrawal rate among retirees aged 73 and above, according to Fidelity.
Plan designs are also evolving, according to Fidelity’s analysis of 23,500 corporate defined contribution plans.
The firm found that more plan sponsors are offering workplace managed accounts, up to 42.1% in Q4 2023, as compared with 37.7% in Q4 2021. Plans are also including Roth options at a higher rate, with 90.4% of employers offering a Roth option as compared to 76.4% in Q4 2021.
FAQs
The total number of retirement savers in Fidelity 401(k) plans with balances reaching seven figures reached 422,000 on December 31, 2023, a significant rise from the total of about 349,000 millionaires at the close of Q3 2023. The number is close to the record high of 442,000 millionaires at year-end 2021.
How many 401k millionaires are in 2023? ›
Fidelity also reported that the number of 401(k) accounts with balances of at least $1 million rose in the fourth quarter by 20%, to 422,000 accounts; and by 41% for the whole year.
What is the 401k balance in 2023? ›
The average 401(k) balance ended 2023 up 14% from a year earlier to $118,600, Fidelity found. The average individual retirement account balance also gained 12% year over year to $116,600 in the fourth quarter of 2023.
What are the new 401k rules for 2024? ›
Highlights of changes for 2024. The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan is increased to $23,000, up from $22,500. The limit on annual contributions to an IRA increased to $7,000, up from $6,500.
How to max out a 401k? ›
Strategies to maximize your 401(k) include contributing enough to get the full employer match, increasing contributions over time, and utilizing catch-up contributions if eligible. Automating contributions and adjusting your budget can help you free up funds to maximize your 401(k) contributions.
How many Americans have $1,000,000 in their 401k? ›
(TND) — A record number of people have reached $1 million in their 401(k) retirement accounts, according to Fidelity Investments. A Fidelity spokesperson Tuesday said they counted 485,000 such accounts as of the first quarter of the year, up 15% from the previous quarter and up 43% from a year ago.
How many 401k millionaires does Fidelity have? ›
Meanwhile, Fidelity said there were 485,000 401(k)-created millionaires in the first quarter, up 15% from the prior quarter and 43% from a year ago.
What is the average 401k balance at age 65? ›
Average and median 401(k) balances by age
| Age range | Average balance | Median balance |
|---|
| 35-44 | $76,354 | $28,318 |
| 45-54 | $142,069 | $48,301 |
| 55-64 | $207,874 | $71,168 |
| 65+ | $232,710 | $70,620 |
2 more rowsMar 13, 2024
By age 50, you should have six times your salary in an account. By age 60, you should have eight times your salary working for you. By age 67, your total savings total goal is 10 times the amount of your current annual salary. So, for example, if you're earning $75,000 per year, you should have $750,000 saved.
How much money does the average person retire with? ›
The Federal Reserve's most recent data reveals that the average American has $65,000 in retirement savings. By their retirement age, the average is estimated to be $255,200.
By age 40, you should have accumulated three times your current income for retirement. By retirement age, it should be 10 to 12 times your income at that time to be reasonably confident that you'll have enough funds. Seamless transition — roughly 80% of your pre-retirement income.
What are the new 401k rules for 2025? ›
Starting in 2025, catch-up contribution limits for retirement plans such as 401(k)s will increase from $7,500 per year to $10,000. The limit will be indexed for inflation. For SIMPLE IRAs, the catch-up contribution limit will increase to $3,500 in 2023, compared with $3,000 in previous years.
What happens if you overcontribute to your 401k? ›
Unless timely distributed, excess deferrals are (1) included in a participant's taxable income for the year contributed, and (2) taxed a second time when the deferrals are ultimately distributed from the plan.
At what salary should you max out your 401k? ›
We recommend investing 15% of your gross income to save for retirement (that's Baby Step 4, by the way). So if you're 100% debt free and have an annual salary of $150,000 or more, you could max out your 401(k) simply by investing your entire 15% through your workplace retirement plan.
When should I stop contributing to my 401k? ›
A general rule of thumb says it's safe to stop saving and start spending once you are debt-free, and your retirement income from Social Security, pension, retirement accounts, etc. can cover your expenses and inflation. Of course, this approach only works if you don't go overboard with your spending.
How much is too much in a 401k? ›
In November 2023, the IRS increased the amount investors can contribute to a 401(k) plan to $23,000 per year in 2024, up from $22,500. The catch-up contribution limit for employees aged 50 and over remains $7,500 for 2024, for a total of $30,500.
What is the average age of 401k millionaires? ›
The average age of 401(k) millionaires at Fidelity skews older at around 59. However, Gen Xers also hit a nice milestone in the last few months of 2023. Those who have had the same 401(k) plan for 15 straight years saw average balances hit $501,000.
How many people have 500k in 401k? ›
How much do people save for retirement? In 2022, about 46% of households reported any savings in retirement accounts. Twenty-six percent had saved more than $100,000, and 9% had more than $500,000. These percentages were only somewhat higher for older people.
How many millionaires are in the US in 2023? ›
As of 2023, the United States has the highest number of millionaires in the world, with an estimated 25.58 million individuals with a net worth exceeding one million U.S. dollars. This represents approximately 9.7% of the adult population in the United States.
Do millionaires have a 401k? ›
The number of 401(k) millionaires surged 43% from a year ago, boosted by market gains and steady contributions.
