401(k) Millionaires up 40% in 2023
There was good news in finance this week, at least for those fortunate enough to have a lot of it. Across 2023 more have a lot of it. Fidelity reported that the number of its customers who have retirement account balances of $1 million or more increased by 40% from a year earlier. Here's a chart of numbers published in this article in Yahoo! Finance (27 Feb 2024):
This isn't the first time Fidelity has published this kind of data, nor is it the first time multiple media outlets have excitedly reported it. (I chose Yahoo! Finance here because a) they made an insightful graph and b) they're not behind a paywall.) It's also not the first time I've written about these reports. When I wrote about Fidelity's report a year ago I was sour on the news coverage. Though that was because the articles I saw a year ago were poorly written, by authors who seemingly didn't understand what the data actually mean.
So, what do these numbers actually mean? What they are is a barometer of overall retirement account health. The number of people who have $1MM in one account, at one bank, went up 40% in a year. That's good news; don't get me wrong. But it's not an indicator of how many people overall have $1MM socked away for retirement, and it's not an indicator of how well the average person has saved for retirement.
I am part of this data set, BTW. I have a retirement account at Fidelity. Mine is one of those 45 million accounts mentioned in the citation in the chart above. But I am not one of the 401(k)/IRA millionaires in the headline.
Sad to say, I don't have $1MM in my Fidelity retirement account. I don't even have half that. And I'm better off, financially, than most Americans.
Part of that is that my retirement savings are split across multiple accounts at multiple financial institutions. Fidelity only sees a fraction of my portfolio. But even adding together all my retirement savings across 4 banks I'm still below $1MM currently. Will I get to a million eventually? Yes. I'm all but certain of that. But I'm not there yet.
So, what does it take for the approximately 813,000 people in Fidelity's report who are retirement millionaires? First, I'll just note that that's less than 2% of the total sample size. Those fortunate 2%, generally speaking, have been saving for many years to accumulate such balances. Fidelity says the average age of such accounts is 26 years. The account holders are mostly late career professionals or already retired. Fidelity says the average person in the set is 59 years old. They're likely also well paid- so they can afford to fund their 401(k)s aggressively- and benefited from things like employer matches. I say all this, BTW, as a well paid, late career professional who has saved aggressively- and isn't there yet. Like I said, I'm better off than most... but I'm not the top 2%.
This isn't the first time Fidelity has published this kind of data, nor is it the first time multiple media outlets have excitedly reported it. (I chose Yahoo! Finance here because a) they made an insightful graph and b) they're not behind a paywall.) It's also not the first time I've written about these reports. When I wrote about Fidelity's report a year ago I was sour on the news coverage. Though that was because the articles I saw a year ago were poorly written, by authors who seemingly didn't understand what the data actually mean.
So, what do these numbers actually mean? What they are is a barometer of overall retirement account health. The number of people who have $1MM in one account, at one bank, went up 40% in a year. That's good news; don't get me wrong. But it's not an indicator of how many people overall have $1MM socked away for retirement, and it's not an indicator of how well the average person has saved for retirement.
I am part of this data set, BTW. I have a retirement account at Fidelity. Mine is one of those 45 million accounts mentioned in the citation in the chart above. But I am not one of the 401(k)/IRA millionaires in the headline.
Sad to say, I don't have $1MM in my Fidelity retirement account. I don't even have half that. And I'm better off, financially, than most Americans.
Part of that is that my retirement savings are split across multiple accounts at multiple financial institutions. Fidelity only sees a fraction of my portfolio. But even adding together all my retirement savings across 4 banks I'm still below $1MM currently. Will I get to a million eventually? Yes. I'm all but certain of that. But I'm not there yet.
So, what does it take for the approximately 813,000 people in Fidelity's report who are retirement millionaires? First, I'll just note that that's less than 2% of the total sample size. Those fortunate 2%, generally speaking, have been saving for many years to accumulate such balances. Fidelity says the average age of such accounts is 26 years. The account holders are mostly late career professionals or already retired. Fidelity says the average person in the set is 59 years old. They're likely also well paid- so they can afford to fund their 401(k)s aggressively- and benefited from things like employer matches. I say all this, BTW, as a well paid, late career professional who has saved aggressively- and isn't there yet. Like I said, I'm better off than most... but I'm not the top 2%.