National Savings Day was October 12 and according to this Money Magazine article, the number of 401(k) millionaires saving for retirement reached an all-time high.
Do You Have $1 Million in Your 401(k) Yet? The Number of People Who Do Just Hit an All-Time High
by Brad Tuttle, August 24th, 2019
Years of continued growth in the stock market has nudged the number of 401(k) millionaires up to an all new record high, Fidelity Investments recently reported.
Fidelity says that the number of 401(k) millionaires reached 196,000 at the end of the second quarter of 2019. The previous high for 401(k) millionaires was 187,400, in the third quarter of 2018.
Around the start of 2017, there were only about 93,000 401(k) millionaires, according to Fidelity — meaning that the ranks of people with at least $1 million in their 401(k) accounts have more than doubled since then.
How much money should you have saved in your 401(k) account?
The answer to that depends on how old you are, how much money you make at work, and what kind of lifestyle you expect in retirement.
Retirement experts say workers should be saving 12% to 15% of their pay in 401(k)s every year, and the value of your account should obviously rise swiftly as your near retirement age.
If you’re contributing to your 401(k) at the recommended amounts, you should have roughly twice your annual salary saved by the age of 35, Fidelity says. When you hit 50, your 401(k) balance should be roughly six times your annual salary, and by the age of 67 you should have 10 times your annual salary saved in a 401(k).
Bear in mind that the vast majority of workers are not 401(k) millionaires, nor are they anywhere near the $1 million mark. The average 401(k) balance at the end of the second quarter of 2019 was only $106,000, according to Fidelity. That’s also a record high, up from $104,000 in the third quarter of 2018, and a steep incline from a decade ago during the recession of 2009, when the average 401(k) balance was just $52,600.
If you don’t have anywhere near $1 million in your 401(k), you don’t necessarily need to feel bad — especially not if you’re fairly young and haven’t hit peak earning years yet in your career. But take note that it’s always best to start saving when you’re as young as possible, to maximize the likelihood you can enjoy a happy and (mostly) worry-free retirement.
Here’s some advice from economists on 401(k)s and how to get started saving for retirement, as well as some tools for how to estimate how much money you’ll need in retirement.
This article was originally published in Money Magazine on August 24th, 2019.