If you’ve been steadily building your 401(k), there’s some exciting news. According to a new report from Fidelity Investments, retirement savers have plenty to celebrate: average 401(k) balances reached all-time highs in the third quarter of 2024.
401(k) Balances Soar
The numbers tell a powerful story. By the end of Q3 2024, the average 401(k) balance climbed to $132,300 – an impressive 23% increase compared to last year. If your balance is above this, you’re ahead of the curve. But even if it’s not, don’t stress – steady contributions and long-term planning make all the difference.
What’s driving this record-breaking growth? A mix of strong market performance and consistent saving habits is paying off for diligent investors.
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Market Growth Fuels Retirement Accounts
The stock market has played a significant role in pushing balances higher. Here’s how major indexes performed this year:
- Nasdaq: Up 31% year-to-date
- S&P 500: Gained 27%
- Dow Jones Industrial Average: Rose over 16%
This momentum has been a game-changer for 401(k)s. But while the market’s growth has been impressive, it’s not the only factor driving these gains.
Consistent Saving is Key
Savers are showing remarkable discipline. The average total savings rate held steady at 14.1%, with employees contributing 9.4% and employers adding another 4.7%. These consistent contributions and employer matches create a foundation for significant long-term growth.
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Long-Term Savers See the Biggest Payoff
The results are extraordinary for those who’ve stuck with their plans for 15 years or more. Fidelity reports that savers with this level of commitment have an average balance of $558,300. Gen X savers in this group are doing even better, with an average of $586,100.
Even through market fluctuations, staying invested has delivered massive rewards for long-term participants.
The 401(k) Millionaire Club is Growing
Another standout stat? The ranks of 401(k) millionaires are expanding. As of Q3, the number of accounts with over $1 million increased by 9.5%, reaching 544,000. These savers typically have:
- An average balance of $1.616 million
- Roughly 26 years of consistent contributions
- A savings rate of about 17% of their income
It’s a clear reminder that consistent decades-long effort can produce extraordinary results.
It’s Not Just About 401(k)s
The growth extends beyond traditional 401(k)s:
403(b) balances climbed to $119,300, up 23% year-over-year.
IRA balances rose by 18%, reaching an average of $129,200.
These trends show that strong markets and smart saving habits benefit retirement savings.
Looking Ahead: Stay the Course
As 2024 wraps up and 2025 approaches, financial experts emphasize the importance of sticking to your plan. Markets will rise and fall, but the key to long-term financial success is consistent contributions and a focus on your goals.
So, how does your 401(k) compare? Whether your balance is above or below the average, the most important thing is to keep going. Every dollar saved brings you closer to financial independence – and maybe even a spot in the millionaire’s club.
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*Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications, including Zacks, The Nest and eHow. She is not a licensed financial adviser and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes that the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.