The 401(k) Millionaires Club Continues to Grow, Turbocharged By Stock Market Gains | Global News Avenue

Rising stocks have given a big boost to retirement savers, with more and more taking advantage of 401(k) plans and Individual Retirement Account (IRA).

In the third quarter of 2024, there were 544,000 401(k) Fidelity data analyzed 24 million 401(k) accounts and more than 16 million IRAs and found that the number of millionaires increased 9.5% from the previous quarter. The number of IRA millionaires also grew in the third quarter, rising 5% to more than 418,000.

Bull market boosts retirement savings

Although there were more retirement plan millionaires in the third quarter, the average retirement account balance was well below $1 million, even though the average saver benefited from bull market.

The average 401(k) account balance was $132,300, up 23% from the same period last year, while the average IRA account balance was $129,200, up 18% from the third quarter of 2023.

The S&P 500, a barometer of U.S. stocks, rose 5.2% in the three months to September, but is up nearly 21% from the beginning of the year to the end of the third quarter.

While retirement savers have benefited from the stock market’s outperformance, they have another factor to be thankful for – a consistent saving habit.

The average 401(k) contribution rate was 14.1% (9.4% for employees, 4.7% for employers), unchanged from the previous quarter.

GenX save more for retirement

Generation X, especially those born between 1965 and 1980, are saving more for retirement—although recent data suggests that some Trying to Balance Retirement Savings and help their families financially.

From the third quarter of 2023 to the present, Gen X’s total IRA contributions increased by 35%. The oldest members of this group are 60 years old and may be approaching retirement.

Many Americans are retiring early, often not by choiceand must be prepared for this scenario, especially as life expectancy and potential continue to increase Social Security benefit cuts.