Barron's Roundtable discusses reports that Gen Z is actively seeking retirement.
The number of 401(k) plan participants with balances of $1 million or more hit a record high at the end of June, according to a new survey released by Fidelity Investments.
There were about 497,000 so-called 401(k) plan “millionaires” in the second quarter, the data showed. That's a 2.5% increase from the previous quarter and marks the third consecutive quarter of increases in retirement savings.
The average balance in these accounts increased to $1.5952 million from $1.581 million at the end of March.
The 'magic number' for comfortable retirement hits all-time high
There were about 497,000 so-called 401(k) “millionaires” in the second quarter, according to Fidelity data. (iStock/iStock)
“Though the increases were modest, retirement savers in the second quarter of 2024 benefited from continued gains from the previous quarter, when contributions and average account balances reached record highs,” Sharon Broberg, president of Fidelity's workplace investing division, said in a statement.
Despite the increase, the average account balance is still far short of the $1.46 million that Americans say they need. Retire in comfort.
According to Fidelity data, Employer contributions to retirement benefits Plan balances rose to $127,100, up 1% from the beginning of the year and 13% from the same period last year. The median account balance was $55,500.
Americans are worried about running out of retirement savings
On average, Americans save about 14.2% of their income, and retirement experts recommend saving at least 15% of your income.
Consumers are facing a number of economic headwinds, including high interest rates and persistent inflation that is driving up the costs of everything from rent to gas to groceries. The burden falls disproportionately on lower-income Americans, whose already-tight paychecks are hit hardest by price fluctuations.
Retirement experts recommend putting at least 15% of your income towards savings. (Annette Riedl/Photo Alliance via Getty Images/Getty Images)
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Inflation has fallen significantly from a peak of 9.1% recorded in June 2022, but remains Federal Reserve's 2% targetAnd compared to January 2021, before the inflation crisis began, prices are up 20%.
The uncertain economic situation has many Americans reconsidering whether retirement is a realistic goal: In a separate survey, more than a quarter of non-retired investors said that if they retired within the next 12 months, they would likely have to eventually return to the workforce because they had not saved enough, and 19% doubted they would be able to save enough money to retire. Nationwide survey data.
“Americans believe they need more than $1 million to retire comfortably, a figure that can be daunting for even the most diligent retirement savers,” said Lorna Guymon, senior vice president of annuity sales at Nationwide.
