The number of 401(k) millionaires has hit an all-time high

The number of 401(k) plan participants with account balances exceeding $1 million reached a record high by the end of June, according to new data from Fidelity Investments.

Approximately 497,000 individuals became so-called 401(k) "millionaires" in the second quarter, reflecting a 2.5% increase from the previous quarter. This marks the third consecutive quarter of growth in retirement savings. Among these accounts, the average balance climbed to $1,595,200, up from $1,581,000 at the end of March.

"Although the increases were modest, retirement savers in the second quarter of 2024 benefited from the ongoing upswing seen in the previous quarter, when contribution levels and account balances reached record highs," said Sharon Brovelli, president of workplace investing at Fidelity.

Despite this growth, the typical retirement account balance remains far below the $1.46 million that Americans believe they need to retire comfortably.

Fidelity’s data also shows that the average balance in employer-sponsored retirement contribution plans rose to $127,100, a 1% increase from the beginning of the year and a 13% jump from the same time last year. The median account balance stands at $55,500.

On average, Americans are contributing about 14.2% of their income toward savings, though retirement experts recommend saving at least 15%.

Many consumers continue to face financial challenges, including high interest rates and persistent inflation, which have made everyday expenses like rent, gasoline, and groceries more costly. These price increases disproportionately impact low-income Americans, whose already limited paychecks are more vulnerable to fluctuations.