The first quarter of 2024 has seen an unprecedented rise in the number of 401(k) millionaires. This milestone highlights the growing trend of Gen X savers surpassing baby boomers in retirement savings.
According to USA Today, the first quarter saw a record number of 401(k) millionaires, now totaling 485,000 savers.
Fidelity Investments‘ latest data noted that average 401(k) balances for Gen X long-term savers have hit $543,400. This is the first time Gen Xers have overtaken baby boomers, who averaged $543,200.
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Fidelity’s vice president, Michael Shamrell, cited more than 15 years of consistent contributions from these early and diligent savers. The 401(k) millionaires have, on average, been saving in their plans for 26 years, contributing 17% of their income.
Retirement savings trends also indicated that overall 401(k) savings rates, including employee and employer contributions, have climbed to an all-time high of 14.2% in the first quarter.
According to Nerdwallet, the average retirement savings we typically see by age are:
- Under 35 – $49,130
- 35-44 – $141,520
- 45-53 – $313,220
- 55-64 – $537,560
- 65-74 – $609,230.
- 75 and older – $462,4100
The remarkable growth in balances is primarily driven by long-term contributions and market performance. Despite economic challenges, these savers have persisted, ensuring a robust financial future as they approach retirement age.
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The surge in 401(k) millionaires marks a significant shift in retirement savings patterns, especially among Gen X. This group has consistently demonstrated strong saving habits, likely contributing to the latest statistics that show a record number of 485,000 401(k) millionaires. According to the Survey of Consumer Finances, nearly 50% of families headed by someone under age 35 had retirement accounts .
According to an article from earlier this year, this surge is a result of resilient contributions and market conditions. The rise in average balances for Gen X long-term savers, which hit $543,400, is a notable development. This is the first time this demographic has outpaced baby boomers, whose average 401(k) savings stood at $543,200.
Fidelity Investments’ vice president, Michael Shamrell, emphasized the impact of long-term saving behaviors. Savers contributing an average of 17% of their income over 26 years have driven the growth in today’s 401(k) millionaires. This consistent approach to saving, even amid economic challenges, underscores the importance of long-term financial planning.
All of this doesn't come as a surprise as Gen X has been often referred to as the “401(k) generation” because they entered the workforce during a significant shift towards these plans, as pensions are being eliminated. Though 401K was created by a tax code amendment in 1978, Gen X entered the workforce just shortly after making them the first generation of having 401Ks offered their whole work cycle.
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