As of June 30, there are 196,000 Fidelity 401(k) plan holders with a balance of $1 million or more, according to a report from Fidelity Investments released on August 21. The number of millionaires was up by 17 percent from 168,000 in 2018. Further, the number of individual retirement account millionaires also grow to an all-time high at 179, 700.
The report also noted that the number of those who hold less than a million of retirement savings plans reached more than six figures. One driver of growth was that about a third of account holders increased their contribution in 2018. That translated to 401(k) contribution rate of 8.8 percent which Fidelity Investments said is the highest percentage in the whole of the firms' history.
Still, balance-wise, the average 401(k) balance of $106,000 came short of the $106, 500 average balance in the third quarter of 2018, Fidelity noted in the report. Even the IRA balance of $110,400 in the second quarter was lower than the $111,000 in 2018, according to Fidelity.
Despite the larger number of millionaires this year, Katie Taylor, Fidelity vice president, said people are not saving at the rate they should be saving. The total contribution rate this year was only at 13.5 percent, including the 4.7 percent average contribution coming from their employers. Taylor said people should be saving 15 percent ideally.
Demographic wise, Fidelity noted that millennials had an average balance of $29,000 compared to the baby boomers who averaged $198,000. On the other hand, when it comes with the number of Roth IRA accounts receiving contributions, Fidelity said in a separate report released last month that millennials had the largest year-over-year increase at 13 percent. The demographic also has higher dollar contribution at 11 percent.
Compared to the 34 percent of accounts held by Generation X and 23 percent accounts held by baby boomers, millennials made up the largest percentage of Roth IRAs receiving contributions at 43 percent. As of July, millennials' dollar contribution to Roth IRAs was 38 percent compared to the 31 percent combined contribution coming from Generation X and baby boomers. Out of the new Roth IRA accounts in 2018, millennials mostly opened new accounts, more than 16 percent in 2018 than in 2017.
Boston-based Fidelity currently has $7.7 trillion in assets under management. Of that, the $2.8 trillion was only added in the period ending June 30, 2019. The American multinational financial services said it already helped more than 30 million people invest in life savings; 22,000 businesses manage employee benefit programs; 3,500 financial advisory firms assist their clients with managing their savings.
