Fidelity Investments has reported that the number of 401(k) account holders with balances exceeding $1 million has reached a record 500,000 β a figure that has doubled in four years and represents a remarkable demonstration of the power of long-term, consistent retirement saving in America.
The archetypal 401(k) millionaire is not a high-income executive who made large one-time contributions. Fidelity's data shows the median income for this cohort is $150,000 β solidly upper-middle-class but not wealthy by any measure. The common factor is time: the average 401(k) millionaire has been contributing consistently for 26 years, taking full advantage of employer matching, and never withdrawing funds during market downturns.
The bull market has helped significantly. Fidelity estimates that market appreciation accounts for 40% of the average millionaire's balance, with contributions making up 38% and employer match 22%.
The data also reveals the painful flip side of America's retirement savings picture. While 500,000 Americans have $1 million or more, the median 401(k) balance for all American workers is just $87,000 β and 25% of working-age Americans have no retirement savings at all.
