The ranks of retirement millionaires have swelled in the second quarter, as per a Fidelity Investments report. The financial services behemoth noted a double-digit growth in account holders with seven-figure balances in their 401(k) and individual retirement accounts (IRAs), with the former category seeing a 10% surge and the latter rising by 13%. This spike in the number of retirement millionaires – 378,000 401(k) millionaires and 349,100 IRA millionaires – comes amidst an overall uptick in the average amounts saved in various types of retirement accounts.

The report also highlighted a consistent increase in the average balances of three key retirement accounts for the third consecutive quarter. The average balances in IRAs experienced a 5% quarter-over-quarter jump, reaching $113,800, while the average 401(k) account balance saw a slightly smaller 4% rise to $112,400. The average balance for 403(b) accounts also spiked by 5%, settling at $102,400. According to Fidelity, a combination of steady employer and employee contributions and favorable market conditions played a significant role in these rising average retirement account balances.

Surge In Retirement Millionaires: Fidelity Investments Report

According to a recent report by Fidelity Investments, the number of retirement millionaires has notably increased in the second quarter. The financial services company’s quarterly retirement analysis reveals a double-digit growth in the number of people with seven-figure balances in their 401(k) accounts and individual retirement accounts (IRAs).

A Boost in Retirement Account Numbers

The data shows that there were 378,000 401(k) millionaires and 349,100 IRA millionaires in the quarter. This increase in retirement millionaires accompanies a consecutive third-quarter boost in the average amount saved in three types of retirement accounts. IRAs witnessed a 5% quarter-over-quarter jump, hitting an average balance of $113,800. 401(k) accounts also experienced a growth of 4%, recording an average balance of $112,400. Meanwhile, the average balance for 403(b) accounts hit $102,400, marking a 5% increase.

Factors Influencing the Growth

Fidelity attributed this growth to "steady employer and employee contributions and positive market conditions." The report comes at a time when the S&P 500 has seen a rise of over 14% since the start of the year. Similarly, the Nasdaq Composite and the Dow Jones Industrial Average have risen by 28% and 25.8% respectively.

Generational Differences in Account Balances

Interestingly, the youngest generation recorded the highest increase in 401(k) account balances, at an impressive 66%. Millennials saw their account balances increase by 24.5%, while Generation X experienced a rise of 14.5%. Baby boomers, despite having the smallest increase in their 401(k) account balances, had the highest total savings rate of 16.6%.

Retirement Readiness: A Continuing Struggle

Despite the positive trends, achieving retirement readiness remains a challenge for many. A study by Northwestern Mutual found that just over half of U.S. adults felt "financially prepared for retirement when the time comes." It seems that many anticipate staying in the workforce a year longer than previously planned, pushing the average retirement age to 65.

Takeaways

The report underscores the importance of regular savings and market positivity in growing retirement accounts. It also highlights the generational differences in retirement savings habits. However, it’s crucial to remember that while the number of retirement millionaires is growing, many Americans still struggle with retirement readiness. The key takeaway is the necessity for continued efforts to improve financial literacy and instill good savings habits, ultimately helping more people secure a comfortable retirement.