Finance

Surging market, steady saving yields new crop of 401(k) millionaires

Published

8 months ago

February 27, 2025

Surging market, steady saving yields new crop of 401(k) millionaires

The number of retirement savers sitting on a million bucks or more in their 401(k)s, 403(b)s, or IRAs lifted off last year.

The band of 401(k)-created millionaires jumped by 27% in 2024, increasing from 422,000 to 537,000, while the number of IRA-created millionaires bumped up 8% over the year from 318,863 to 344,413, according to a new analysis by Fidelity Investments.

The average 401(k) balance of $131,700 at the end of 2024 ranks as the second-highest average on record for the firm and is an 11% increase from the start of 2024. The average IRA balance was $127,534, up 8% for the year.

Gen X savers had the most bulging balances — average account balances were up 18% from a year ago, $508,000 vs. $589,400. For those Gen Z savers who held their 401(k) for five years, accounts popped to an average of $52,900 — an increase of 66% over the past year.

“Retirement savers experienced positive growth in 2024, which means that the number of individuals who have a million dollars or more in their retirement savings also increased,” Michael Shamrell, vice president of Workplace Thought Leadership at Fidelity Investments, told Yahoo Finance.

The driver: A robust economy, lower inflation, and the Federal Reserve’s interest-rate cuts totalling one percentage point.

The S&P 500 (^GSPC) ended the year with a gain of 23%. The Dow Jones Industrial Average (^DJI) jumped nearly 13%, and the Nasdaq (^IXIC) ballooned close to 29%.

Here’s how 401(k)-created millionaires break down by generation: More than 4 in 10 are boomers: 41%, Gen X: 57%, and millennials: 2%. “Boomers have already started drawing from their retirement savings, which is why the number is lower than Gen X at this point,” Shamrell said.

Read more: What is a 401(k)? A guide to the rules and how it works.

One thing of note: “More millennial savers than ever before are now using Roth 401(k)s, removing the burden that taxes could pose on their savings when they enter retirement and begin to draw from their nest egg,” Shamrell said. “The millennial generation is making smart investment decisions now that they know will benefit them even further 20 or 30 years down the road when they ultimately enter retirement.”

Fidelity’s analysis covers more than 50 million IRA, 401(k), and 403(b) retirement accounts.

Retirement saving is a long-term game.

“The important thing to keep in mind when it comes to 401(k)-created millionaires is that these individuals have been saving for a long time,” Shamrell said. “The average 401(k)-created millionaire has been in their plan for 26 years and has an average contribution rate of almost 18%.”

Regular contributions are key because you’re consistently and continuously adding funds to your accounts regardless of market gyrations. That discipline has a snowballing impact, which is the spine of wealth-building.

The average 401(k)-created millionaire has been in their plan for 26 years and has an average contribution rate of almost 18%, per Fidelity. (Getty Creative) · Kamon Supasawat via Getty Images

How much you set aside each year is a factor that’s in your control. Total average 401(k) savings rates ticked to 14.1%, according to Fidelity’s data, up slightly from a year ago. That rate is a combo of employee and employer 401(k) contributions of 9.4% and 4.7%, respectively. While that’s decent, it’s still below the 15% of pre-tax income each year, including any match, most financial advisers recommend.

Read more: How much should I contribute to my 401(k)?

Taking money out early from a retirement account is rarely advisable, but it’s sometimes a necessary last resort when money gets tight or an emergency hits.

Bank of America compiled data which found that, compared to the third quarter, fewer participants borrowed from their retirement accounts, 2.2% vs. 2.5%, and loan amounts were smaller. The average loan per participant was $8,950, down slightly from $9,100.

And the percentage of loans in default dropped from 12.6% a year ago to 11.1%.

According to the Bank of America survey, the average worker hardship withdrawal from a 401(k) plan was $5,730, roughly the same as a year ago.

Withdrawals should be a last resource for savers. The biggest hit is that you forfeit future retirement savings, but you could also be nicked with taxes and penalties.

A withdrawal from your 401(k) account is usually taxed as ordinary income. Also, you’ll pay a 10% early withdrawal penalty before age 59½, unless you meet one of the IRS exceptions. These include certain medical expenses, qualified tuition payments, and up to $10,000 for first-time homebuyers. Some employer plans, too, will allow a non-hardship withdrawal.

A loan is a better option if you need the money because you pay yourself back, typically within five years, with interest — the loan payments and interest go back into your account.

One caveat: If you part ways with your employer, you might have to repay your loan in full. When you can’t repay the loan, it’s considered defaulted, and you’ll owe both taxes and a 10% penalty if you’re under 59 ½.

Read more: What is the retirement age for Social Security, 401(k), and IRA withdrawals?

Most workers tap their health savings accounts to pay for current medical bills foregoing investing contributions. (Getty Creative) · Tetra Images via Getty Images

I recently wrote about another pathway to a cool million in retirement: a health savings account.

If you start early, contribute the maximum pretax contribution annually, add in any catch-up contributions, and let it ride for four decades without tapping it to cover healthcare expenses, you have a shot at doing just that, according to a new analysis by the nonpartisan Employee Benefit Research Institute (EBRI). Families can save nearly twice as much.

“The study is all about the potential,” Paul Fronstin, director of health benefits research at EBRI and an author of the report, told Yahoo Finance. “Under the best possible circumstances.”

The problem is many HSA account holders don’t invest their HSA savings. Only about 3.2 million health savings accounts have at least a portion of their HSA dollars invested, according to HSA advisory firm Devenir. Most park the money in cash, depriving themselves of the account’s key advantages.

Per Bank of America’s survey, there is a dollop of good news here. About 4 in 10 participants contributed more than they withdrew from their health savings account. The average HSA account balance at year-end was $5,000, up year over year from $4,400, according to the report.

Have a question about retirement? Personal finances? Anything career-related? Click here to drop Kerry Hannon a note.

Here’s the niggle: Only 14% of account holders invested their HSA for future growth, although up from 12% a year ago, many employees are not taking advantage of HSA’s investing potential, according to the report.

Lisa Margeson, managing director of Retirement Research & Insights at Bank of America, told Yahoo Finance, there’s clearly “a lot of room for improvement.”

“It’s important that employees understand the benefits of an HSA — from its triple-tax advantage to its ability to grow over time — so they can be well prepared for healthcare costs in retirement, a cost employees tend to underestimate.”

Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.” Follow her on Bluesky.

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Finance

How AI can expose hidden Hezbollah and Hamas networks | The Jerusalem Post

Published

12 hours ago

November 3, 2025

Press Room

How AI can expose hidden Hezbollah and Hamas networks | The Jerusalem Post

Hezbollah and Hamas thrive on shadowy financial networks-charities, trade deals, crypto wallets. But every transaction leaves a trace and AI can spot the patterns no human ever could.

Terror finance patterns

(photo credit: Courtesy)

ByYARON HAZAN

NOVEMBER 3, 2025 16:49

Updated: NOVEMBER 3, 2025 17:12

Finance

The New Hampshire Business Finance Authority honors lenders at the 5th annual Granite State Awards

Published

1 day ago

November 2, 2025

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Hoskinson Gives Insight on Cardano DeFi and ADA Holders

Published

2 days ago

November 1, 2025

Press Room

Hoskinson Gives Insight on Cardano DeFi and ADA Holders

Cardano founder Charles Hoskinson has responded to renewed criticism about the network’s total value locked (TVL) and relatively sluggish decentralized finance (DeFi) growth.

On October 31, Hoskinson acknowledged the gap between Cardano’s DeFi activity and leading blockchains like Ethereum and Solana. However, he said the numbers fail to capture the network’s broader participation and governance strength.

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Cardano Bets on Bitcoin Interoperability to Unlock Billions in DeFi Liquidity

Hoskinson pushed back on the long-standing belief that introducing major stablecoins such as USDT or USDC would automatically transform Cardano’s DeFi ecosystem.

“No one’s ever made the argument and explained how the existence of one of these larger stablecoins is magically going to make Cardano’s entire DeFi problem go away, make the price go up, massively improve our MAUs, our TVL, and all these other things,” he said.

He argued that their arrival alone would not solve the network’s structural challenges or guarantee growth.

According to him, Cardano already has native, asset-backed stablecoins like USDM and USDA that can be minted at will and rarely lose their peg.

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Instead, Hoskinson pointed to user behavior as the main reason Cardano’s DeFi TVL remains small.

For context, he noted that the network has about 1.3 million users who stake or participate in governance, collectively holding more than $15 billion in ADA.

However, those figures don’t count toward TVL metrics, and most ADA holders remain passive participants rather than active liquidity providers.

“Cardano has a fertile ecosystem. There’s a lot of people floating around. There’s a lot of people who hold ADA, who have Cardano wallets, who have been in our ecosystem — in many cases more than five years. But not a lot of those people have crossed the chasm to use DeFi in Cardano,” he stated.

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He added that this distinction creates a “chicken-and-egg” loop for Cardano’s ecosystem. According to Hoskinson, the network’s low activity deters partnerships and liquidity, while the lack of external integrations further limits on-chain adoption.

To counter these limitations, Hoskinson outlined a multi-year roadmap that ties DeFi growth to real-world finance and Bitcoin interoperability.

He highlighted the Midnight network—a privacy-focused sidechain—and RealFi, a microfinance platform targeting African markets, as key initiatives.

Both will integrate with Bitcoin DeFi, allowing ADA and BTC to be lent, converted into stablecoins, and used in real-world lending products.

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Hoskinson expects this combination to drive “billions of dollars” in new liquidity while attracting Bitcoin’s vast capital base. He also cited ongoing projects such as Leios, as proof that Cardano continues to evolve at the protocol level.

Still, he conceded that Cardano’s core issue is coordination and accountability, not technology.

“It’s not a technology problem. It’s not a node problem. It’s not a problem of imagination and creativity. It’s not a problem of execution. We can pretty much do anything. It’s a problem of governance and coordination and ultimately accountability and responsibility,” Hoskinson said.

To fix this, he proposed delegating clear responsibility for ecosystem expansion. He also called for targeted marketing and event strategies to mobilize ADA holders toward DeFi participation.

“The problem isn’t the ability to do a marketing campaign. The problem isn’t our ability to ship great software. It’s that there’s no one accountable to actually conceive of it, execute it, and be held accountable to the outcome of it. That’s the problem in a nutshell. So that is the problem we have to solve next year as we look to 2026,” He stated.