Fidelity’s 401(k) and IRA ‘millionaires’ are at record levels on strong markets and contribution, but separate surveying reveals millionaires still suffer from financial uncertainty.
Although the number of retirement-created millionaires has reached an all-time high, many of these individuals do not consider themselves “wealthy” and continue to have pressing questions about their financial future, according to recent studies.
In the second quarter of 2024, the number of 401(k) millionaires increased by 2.5% to 497,000 from 485,000 in Q1, while the number of IRA millionaires saw a 6% rise, reaching 398,594, compared with 376,275 in the previous quarter, according to Fidelity Investments’ update from its participant pool. These record milestones in 401(k)s and IRA holdings were achieved largely by those who began saving early and consistently contributed over many years, as outlined in Fidelity’s Q2 2024 retirement analysis.
This marks the third consecutive quarter of growth for retirement savers’ assets, according to Fidelity. Although the growth in this quarter was smaller than in the previous two, the report stated the trend has been driven by strong contribution levels and favorable market conditions. This has led to the third-highest average account balance on record.
| Q2 2024 | Q1 2024 | Q2 2023 | Q2 2019 | Q2 2014 | |
| IRA | $129,200 | +1% | +14% | +17% | +40% |
| 401(k) | $127,100 | +1% | +13% | +20% | +39% |
| 403(b) | $114,700 | +2% | +12% | +29% | +57% |
Notably, Generation X account holders made significant strides in their retirement savings, with current IRA contributions at the highest level observed in the past five years, Fidelity reported.
Millionaire Insecurity
Despite these gains among savers, only one-third (32%) of American millionaires consider themselves “wealthy,” and nearly half (48%) believe their financial plans need improvement, according to Northwestern Mutual’s “2024 Planning & Progress Study” released Wednesday.
Among the top concerns for millionaires—as defined by all assets held, though excluding pensions and employer-sponsored retirement plans—is the impact of taxes on their retirement savings.
The research showed that the No. 1 “burning question” among these individuals is: “How will taxes impact me?” After tax concerns, millionaires are wondering, “How much money will I need to retire comfortably?” and “Is it possible I could outlive my savings?” Accordingly, 61% of millionaires say they have a plan to reduce the taxes they will owe on their retirement savings.
In response to these retirement concerns, millionaires are pursuing various plans of action:
| Plans of Action | Millionaires (%) |
| Making withdrawals strategically from traditional and Roth accounts to stay in a lower tax bracket | 44% |
| Using a mix of traditional and Roth retirement accounts | 37% |
| Making charitable donations strategically, for instance: taking advantage of bunching itemized deductions | 27% |
| Using a health savings account or other tax-advantaged health care account | 24% |
| Using products like permanent life insurance or annuities for their tax benefits | 24% |
| Making Roth conversions prior to taking RMDs or Social Security | 23% |
| Using qualified charitable distributions from an IRA | 22% |
| Making contributions to other tax-advantaged accounts like a 529 | 17% |
| Using the basis paid into the cash value of permanent life insurance to stay in a lower tax bracket | 19% |
| Taking advantage of a qualified longevity annuity contract to set aside funds for later in retirement | 17% |
Many millionaires are turning to financial advisers to help navigate their concerns. Northwestern Mutual’s study found millionaires are significantly more likely to work with a financial adviser, with 69% doing so—more than double the rate of the general population (33%).
Fidelity’s insights were gathered from the firm’s quarterly analysis of more than 48 million IRA, 401(k) and 403(b) retirement accounts. Northwestern Mutual’s survey was conducted in early 2024 among 4,588 U.S. adults aged 18 or older.
Source: Planadviser
