The number of 401(k) accounts with balances reaching $1 million on Fidelity's investment platform increased to 769,000 in the second quarter, a 19% increase from approximately 645,000 in the first quarter, marking the highest number on record and the largest quarterly increase since Q4 2023.

These accounts represent about 3% of Fidelity's 25.8 million 401(k) accounts. During the same period, the number of IRA million-dollar accounts rose to 684,140. The average age of million-dollar account holders is 58, with an average savings duration of 25 years and a personal savings rate of about 17.3%. Generation X accounts for about 62%, Baby Boomers about 31%, and Millennials about 6%. Fidelity manages over 55 million retirement accounts.

The stock market is the direct driver. The S&P 500 rose approximately 15% in the three months ending June 30, marking the strongest quarterly performance since 2020. The average 401(k) balance increased to $155,800, a 10.5% quarter-over-quarter increase, the largest quarterly increase since Q4 2020, and a year-over-year increase of 13.1%; the median balance is only $35,800. The average 403(b) balance is $145,000, and the IRA balance is $144,523, both at record highs. Balances in the first quarter had declined by about 4% due to market pullbacks.

Contributions have not declined. The average employee contribution rate remains at a record high of 9.6%, with an average employer match of 4.8%, totaling about 14.4%. 12.1% of participants increased their contribution rates, and 81% received full employer matching. The average balance for Millennials' 401(k) accounts increased by 14.2% in the quarter and 26.1% year-over-year. Women who have contributed for five consecutive years have an average balance of $273,400. Loans and hardship withdrawals have slightly increased.

Most people are still far from the million-dollar threshold. An NFP survey shows that about 70% of employees believe they are behind in retirement savings, and nearly 70% lack confidence in achieving a comfortable retirement. The million-dollar figure itself remains symbolic, but its distribution is highly skewed: the average is inflated by long-tail accounts, while the median shows that most accounts have not yet crossed the six-figure midpoint.

Mechanically, this is a market-driven account leap powered by the stock market beta, not a sudden doubling of wages. Buyers are salaried accounts that continuously invest a fixed percentage of their income into stocks, while sellers are passive index and target-date funds. Funds flow from payroll into equity positions, pushing critical accounts over the $1 million line within a 15% index gain. Beneficiaries are asset management firms managing target-date funds and matching contributions, while the pressure is on the majority of participants whose median balances stagnate and whose contributions are eroded by inflation and living costs; when the market turns, this 19% increase will likely be wiped out first.

Source: Public Information