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Americans are taking advantage of healthy markets to continue building their nest eggs.
In the third-consecutive quarter of retirement savings growth, the number of 401(k) accounts with at least $1 million rose another 2.5% to 497,000 in the second quarter, according to Fidelity Investment’s latest retirement analysis report released Wednesday.
Despite being less extreme than what the asset management firm saw in previous quarters, this increase in savings resulted in the third-highest average account balances on record, with an average 401(k) balance of $127,100 for the quarter.
“Although increases were modest, retirement savers in the second quarter of 2024 benefited from the continued upswing of the previous quarter, when contribution levels and average account balances reached record highs,” Sharon Brovelli, president of workplace investing at Fidelity, said in a statement.
Total average 401(k) savings rates grew slightly to 14.2%, thanks to employee and employer contributions remaining at last quarter’s record levels, Fidelity said. This savings rate is the closest it has ever been to Fidelity’s suggested 15%.
This savings growth was comparable across Fidelity’s other retirement account offerings, including the IRA and 403(b). A 401(k) gives employees of for-profit companies the ability to invest retirement savings; a 403(b) works similarly but is for employees of non-profits; and an IRA is set up by an individual at their financial institution and is tax-free.
But savings figures across the board continue to fall short of the amount Americans actually believe they’ll need to retire comfortably. That figure, known as the “magic number,” hit $1.46 million this year, according to a recent study by financial service firm Northwestern Mutual.
What’s more, the Social Security Administration has warned that the trust funds that some 66 million Americans rely on will be depleted in 2034 due to an overburdened social security system unable to keep up with the growing number of retirees and people living far longer than they used to.
This year, more than four million Americans will turn 65, the average retirement age — the largest wave of Americans reaching the retirement age in history, Northwestern Mutual said.