Record number of 401(k) and IRA millionaires

[Bullitt]

Last time I noticed these reports was February around the previous peak. This is from the previous quarter though.

Average balances at Fidelity show a long way to go to a million. Without knowing everyone's individual story, these numbers should be taken with a grain of salt and not as an arbitrary "goal". Page 6 at the link from Fidelity below provides some scope.

At the end of the third quarter, the number of Fidelity 401(k) participants with at least $1 million in their account rose by 17% over the previous quarter to 262,000. Meanwhile, the number of IRA millionaires rose by 15% over the previous quarter to 234,000.

The previous record high number of 401(k) and IRA millionaires was at the end of 2019 when there were 233,000 Fidelity 401(k) millionaires and 208,000 IRA millionaires. According to Fidelity, most of the growth (90 percent) in account balances this year has been due to strong market performance rather than increased contributions.

The average Fidelity 401(k) account balance was up 5% at the end of the third quarter over the previous quarter to $109,600, while the average Fidelity IRA balance was up 6% at the end of the third quarter over the previous quarter to $109,600.

There has also been a drastic rise in the number of Thrift Savings Plan (TSP) millionaires this year.

https://frontierwealth.com/ranks-of-401k-and-ira-millionaires-is-on-the-rise-despite-the-pandemic/

More details in the link from Fidelity at the bottom. Average contribution + employer contribution has been rising and now stands around 13.5% (Page 5). I'd say that's a more important number than what someone has in their 401k since savings rate is something you absolutely can control.

With average balances Increasing this quarter, those who have been saving over the long-term (15 years) have saved an average of $433,100.

Millennials who have continuously invested in their DC plan for 15 years have an average balance of $219,700 in Q3 2020.

https://sponsor.fidelity.com/bin-public/06_PSW_Website/documents/Building_Financial_Futures.pdf

 

[Bullitt]

Boomers — they are now 56 to 74 years old — have an average balance of $210,400, but it’s well-known that small groups of super-savers — the 401(k) millionaires — push the averages up.

The median — where half have more and half have less — is a far-more modest $69,900. “As the median amounts in this study show, millions of Americans over the age of 55 have too little saved for a comfortable retirement, and not enough time to save significantly more,”

Also missing is the part where employee stock options, company stock, 2x, 3x levered funds can cut both ways.

 

[Cactus]

Well, comparing that to the latest figures of TSP millionaires: https://www.tsptalk.com/mb/tsp-talk-news-etc-/33759-there-over-49-000-tsp-millionaires.html

gives us 49,620 millionaires out of 5,677,989 participants. That puts the government figure at only 0.87% compared to Fidelity's 1.6%.

Remember that the next time someone says we get payed too much.

P.S. The government also auto-enrolls new employees now.

 

[tsptalk]

There’s now a record number of 401(k) and IRA millionaires, according to Fidelity

Fidelity says a record 441,000 IRA or 401(k) accounts it manages had balances of $1 million or more.

The number represents 1.6% of the 27.2 million IRA and 401(k) accounts managed by Fidelity.

The average 401(k) balance rose to a record $112,300, a 7% increase from last quarter’s balance of $105,200.

Employees are saving more: One-third of plan participants increased the amount they were saving by an average of 3%.

https://www.cnbc.com/2020/02/13/fid...cord-number-of-401k-and-ira-millionaires.html