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More 401(k) Millionaires Than Ever

By Nick Thornton

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Record average account balances in the nation’s 401(k)s have translated into a surge in retirement savers who can now consider themselves millionaires. 

New data from Fidelity Investments shows about 72,000 workers have $1 million or more parked in 401(k) plans, twice as many in 2012 and five times as many as a decade ago. 

Half of 401(k) millionaires had balances between $1 million and $1.25 million at the end of 2014, 39% held between $1.25 million and $2 million, and 9% of accounts held more than $2 million. 

The record amount of millionaires, and record account averages for all savers of more than $91,000, is explained in part by strong market returns.

But year-over-year contribution rates also increased by 4%, to an average of $9,670. When factoring employer matches, the average savings rate for all participants was 12.2% of salary in 2014. 

The millionaires, meanwhile, are investing for growth. About 72% of their portfolios are held in equities or equity funds, with only 12% of that being in company stock. 

And they contribute aggressively over the long haul. The average millionaire’s contribution was 16% of income in 2014, or $21,400. After factoring employers’ matches, the average contribution was $35,700 last year. 

The wealthiest savers are, as might be expected, older, almost 60 on average. That suggests they didn’t become 401(k)-rich overnight, but rather have been building their nest egg over decades. 

— Check out How to Fill in the 401(k) Results Gap by Ric Lager on ThinkAdvisor.