401(k) millionaires hit a record high - and it seems this 'slacker' generation is finally getting its act together

By Alessandra Malito

The trick: Starting early and contributing "consistently"

The number of 401(k) millionaires hit an all-time high, according to Fidelity Investment's latest quarterly report, buoyed by steady investing and strong stock-market performance.

Retirement savers with at least $1 million in their 401(k) plans grew by 2.5% between the first and second quarters of the year, and IRA millionaires increased by 6% in that same time frame, according to the Fidelity data, which analyzes the investment firm's 48 million 401(k), 403(b) and IRA accounts. Fidelity attributed reaching this milestone to starting early and consistently contributing through the years, as well as "strong market conditions," according to the report.

Overall, even those who have not yet hit the $1 million mark have seen progress. The average account balance in the second quarter was $127,100 in a 401(k), $114,700 in a 403(b) and $129,200 in an IRA, all upticks from the previous quarter.

Some generations really stood out in the second quarter. Generation X, which is on the cusp of retirement and as a group has struggled to save for retirement, saw a 30% jump in total IRA contributions over the past year. They were also contributing more than they ever have in the last five years. Their average balance was $554,000 in the second quarter, compared to $543,400 the quarter before. Generation X includes individuals who were born between 1965 and 1980.

Fidelity's report comes the same day Bankrate released its own survey results on retirement confidence, the latter of which highlighted the mistakes retirees feel they've made on the path to retirement.

More than a fifth of Bankrate's survey participants said their biggest financial regret was not saving for retirement early enough. Almost half (45%) of people with a financial regret, which also included not saving enough for an emergency and taking on too much credit card debt, said inflation was the reason behind their mistakes over the last 12 months.

The generations were mixed on their worries about retirement preparedness: Baby boomers and Generation X said not saving for retirement earlier was their biggest financial regret, with 37% and 26% saying so, respectively. Millennials' biggest regret, however, was not saving enough for an emergency, followed by taking on too much credit card debt - retirement prep came in third, with only 13% saying their biggest regret was not saving earlier. Gen Z showed similar results: not saving enough for emergencies, taking on too much credit card debt and taking on too much student loan debt ranked higher than retirement savings concerns, the survey found.

The good news: Saving for retirement may be easier now than ever before, especially with more companies encouraging long-term savings through employer-sponsored plans and incentives to contribute more. A new Transamerica report on retirement savings found middle-class Americans had a median of $8,000 in emergency savings at the end of 2023. Another one in seven said they had none and a quarter weren't sure how much they had saved.

Comparatively, those survey respondents said they anticipated needing to save $1 million or more for retirement, and a majority of people said they were confident they would be able to retire comfortably in the future.

Other recent surveys have also accentuated retirement confidence may come with age. Three-quarters of retirees in a Gallup poll said they had enough money to be financially secure in retirement, compared to non-retirees, who were less confident that they'd have enough money for the future. The perception of retirement stability often changes once people make the switch, the Gallup survey found.

-Alessandra Malito

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

08-31-24 1452ET

Copyright (c) 2024 Dow Jones & Company, Inc.