Advice | Here’s how long it takes workers to become 401(k) millionaires (2024)

If you’re an investor, you may not want to hear this, but wealth building is all about slow and steady.

A large part of the appeal of cryptocurrency or meme stocks is the lure of big returns made quickly. If you believe hundreds of social media posts, becoming rich can be as easy and immediate as a microwaved meal.

But crypto and meme stock prices can crash as spectacularly as they rise. The hype around such speculative investments does a disservice to people who need to save for retirement. It sets up unrealistic expectations.

Want to be a millionaire?


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Look at the behavior of workers who have invested their way to seven-figure retirement accounts. One key characteristic among them is patience.

New data from Fidelity Investments shows the number of 401(k)-created millionaires reached an all-time high in the first quarter of 2024.


The number of people with $1 million or more increased to 485,000, a 43 percent jump from the same three months last year, according to Fidelity, one of the nation’s largest administrators of workplace retirement accounts. The company provides a quarterly analysis of 45 million individual 401(k), 403(b) and IRA retirement accounts.

The news was good for retirement investors across the board: Average account balances climbed to their highest level in more than two years.

The average 401(k) balance was $125,900, up 6 percent from the previous quarter and 16 percent from a year ago. IRA balances jumped to $127,745, an increase of 10 percent from the fourth quarter of 2023 and 17 percent higher than a year ago.

The number of 401(k) millionaires in plans administered by Fidelity is small — about 2 percent. However, you can learn a lot from their investment habits. Here’s what it takes to reach millionaire status.

They are patient investors

These aren’t microwave millionaires. They know it takes time to grow their portfolios. They have been investing in their plans for an average of 26 years, with an average balance of $1.58 million.


As can be expected, the millionaires are predominantly Gen X (individuals born between 1965 and 1980) and baby boomers (born between 1946 and 1964). The average age is just shy of 59 years old.

As your earnings increase, contribute as much as you can.

The contribution limit for employees who participate in 401(k), 403(b) and most 457 plans, as well as the federal government’s Thrift Savings Plan, increased to $23,000 for 2024, up from $22,500 last year. If you are 50 or older, a catch-up provision allows you to contribute an extra $7,500 for a total limit of $30,500 to an employer-sponsored retirement plan.

In Fidelity’s data, 57.8 percent of the millionaires hit the limit at the end of 2023.

They consistently contribute to their plan

The millionaires have an average contribution rate of 17 percent.


Fidelity said record-high contribution levels and positive market conditions pushed average account balances to their highest levels since the fourth quarter of 2021.

In the most recent quarter, total average 401(k) savings rates reached a record high of 14.2 percent, driven by employee and employer 401(k) contributions.

This savings rate is a milestone. It’s the closest it has ever been to Fidelity’s recommendation that workers contribute at least 15 percent of their gross income to their workplace plan. This could include a combination of their savings and a matching contribution from their employer.

Most employers offer a program whereby employees can sign up for an “automatic increase.” To ease the shock to your budget, you might direct your employer to boost your contribution by 1 or 2 percent annually. Or after receiving a raise or jump in income, you take part of that money and boost your contribution level.

They grab the match

If there’s a company match, 401(k), millionaires take advantage of the benefit.


Over the last 12 months, 81 percent of workers in a 401(k) and 403(b) received some type of employer contribution either through company match or profit-sharing, according to Fidelity.

The most popular match is a dollar-for-dollar match on the first 3 percent and then 50 cents on the dollar on the next 2 percent.

They don’t panic at market downturns

These investors don’t let turbulence in the stock market or bear markets — a period of falling stock prices — chase them away from equities. In fact, they see tumbling markets as a flash sale. It’s an opportunity to buy more stock shares at lower prices.

They leave the money alone

Understandably, when money is tight, many workers look to their retirement accounts for a bailout.

Keep your retirement money invested. Don’t cash out when changing jobs, a move that would result in a 10 percent early withdrawal penalty if you are under 59½ years old.

If you can, leaving the money to grow gives you the best opportunity to become a millionaire. It’s a slow and steady pace that may not be exciting, but it has allowed ordinary investors to become extraordinarily wealthy.

Advice | Here’s how long it takes workers to become 401(k) millionaires (2024)
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