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.
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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.”
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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.
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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%.
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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.
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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.
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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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My spreadsheet reviewed a WalletHub ranking of financial distress for the residents of 100 U.S. cities, including 17 in California. The analysis compared local credit scores, late bill payments, bankruptcy filings and online searches for debt or loans to quantify where individuals had the largest money challenges.
When California cities were divided into three geographic regions – Southern California, the Bay Area, and anything inland – the most challenges were often found far from the coast.
The average national ranking of the six inland cities was 39th worst for distress, the most troubled grade among the state’s slices.
Bakersfield received the inland region’s worst score, ranking No. 24 highest nationally for financial distress. That was followed by Sacramento (30th), San Bernardino (39th), Stockton (43rd), Fresno (45th), and Riverside (52nd).
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Southern California’s seven cities overall fared better, with an average national ranking of 56th largest financial problems.
However, Los Angeles had the state’s ugliest grade, ranking fifth-worst nationally for monetary distress. Then came San Diego at 22nd-worst, then Long Beach (48th), Irvine (70th), Anaheim (71st), Santa Ana (85th), and Chula Vista (89th).
Monetary challenges were limited in the Bay Area. Its four cities average rank was 69th worst nationally.
San Jose had the region’s most distressed finances, with a No. 50 worst ranking. That was followed by Oakland (69th), San Francisco (72nd), and Fremont (83rd).
The results remind us that inland California’s affordability – it’s home to the state’s cheapest housing, for example – doesn’t fully compensate for wages that typically decline the farther one works from the Pacific Ocean.
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A peek inside the scorecard’s grades shows where trouble exists within California.
Credit scores were the lowest inland, with little difference elsewhere. Late payments were also more common inland. Tardy bills were most difficult to find in Northern California.
Bankruptcy problems also were bubbling inland, but grew the slowest in Southern California. And worrisome online searches were more frequent inland, while varying only slightly closer to the Pacific.
Note: Across the state’s 17 cities in the study, the No. 53 average rank is a middle-of-the-pack grade on the 100-city national scale for monetary woes.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
The up-and-coming fintech scored a pair of fourth-quarter beats.
Diversified fintech Chime Financial(CHYM +12.88%) was playing a satisfying tune to investors on Thursday. The company’s stock flew almost 14% higher that trading session, thanks mostly to a fourth quarter that featured notably higher-than-expected revenue guidance.
Sweet music
Chime published its fourth-quarter and full-year 2025 results just after market close on Wednesday. For the former period, the company’s revenue was $596 million, bettering the same quarter of 2024 by 25%. The company’s strongest revenue stream, payments, rose 17% to $396 million. Its take from platform-related activity rose more precipitously, advancing 47% to $200 million.
Image source: Getty Images.
Meanwhile, Chime’s net loss under generally accepted accounting principles (GAAP) more than doubled. It was $45 million, or $0.12 per share, compared with a fourth-quarter 2024 deficit of $19.6 million.
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On average, analysts tracking the stock were modeling revenue below $578 million and a deeper bottom-line loss of $0.20 per share.
In its earnings release, Chime pointed to the take-up of its Chime Card as a particular catalyst for growth. Regarding the product, the company said, “Among new member cohorts, over half are adopting Chime Card, and those members are putting over 70% of their Chime spend on the product, which earns materially higher take rates compared to debit.”
Today’s Change
(12.88%) $2.72
Current Price
$23.83
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Key Data Points
Market Cap
$7.9B
Day’s Range
$22.30 – $24.63
52wk Range
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$16.17 – $44.94
Volume
562K
Avg Vol
3.3M
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Gross Margin
86.34%
Double-digit growth expected
Chime management proffered revenue and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for full-year 2026. The company expects to post a top line of $627 million to $637 million, which would represent at least 21% growth over the 2024 result. Adjusted EBITDA should be $380 million to $400 million. No net income forecasts were provided in the earnings release.
It isn’t easy to find a niche in the financial industry, which is crowded with companies offering every imaginable type of service to clients. Yet Chime seems to be achieving that, as the Chime Card is clearly a hit among the company’s target demographic of clientele underserved by mainstream banks. This growth stock is definitely worth considering as a buy.
ROCHESTER, N.Y. — Student athletes are now earning real money thanks to name, image, likeness deals — but with that opportunity comes the need for financial preparation.
Noah Collins Howard and Dayshawn Preston are two high school juniors with Division I offers on the table. Both are chasing their dreams on the field, and both are navigating something brand new off of it — their finances.
“When it comes to NIL, some people just want the money, and they just spend it immediately. Well, you’ve got to know how to take care of your money. And again, you need to know how to grow it because you don’t want to just spend it,” said Collins Howard.
What You Need To Know
High school athletes with Division I prospects are learning to manage NIL money before they even reach college
Glory2Glory Sports Agency and Advantage Federal Credit Union have partnered to give young athletes access to financial literacy tools and credit-building resources
Financial experts warn that starting money habits early is key to long-term stability for student athletes entering the NIL era
Preston said the experience has already been eye-opening.
“It’s very important. Especially my first time having my own card and bank account — so that’s super exciting,” Preston said.
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For many young athletes, the money comes before the knowledge. That’s where Glory2Glory Sports Agency in Rochester comes in — helping athletes prepare for life outside of sports.
“College sports is now pro sports. These kids are going from one extreme to the other financially, and it’s important for them to have the tools necessary to navigate that massive shift,” said Antoine Hyman, CEO of Glory2Glory Sports Agency.
Through their Students for Change program, athletes get access to student checking accounts, financial literacy courses and credit-building tools — all through a partnership with Advantage Federal Credit Union.
“It’s never too early to start. We have youth accounts, student checking accounts — they were all designed specifically for students and the youth,” said Diane Miller, VP of marketing and PR at Advantage Federal Credit Union.
The goal goes beyond what’s in their pocket today. It’s about building habits that will protect them for life.
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“If you don’t start young, you’re always catching up. The younger you start them, the better off they’re going to be on that financial path,” added Nihada Donohew, executive vice president of Advantage Federal Credit Union.
For these athletes, having the right support system makes all the difference.
“It’s really great to have a support system around you. Help you get local deals with the local shops,” Preston added.
Collins-Howard said the program has given him a broader perspective beyond just the game.
“It gives me a better understanding of how to take care of myself and prepare myself for the future of giving back to the community,” Collins-Howard said.
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“These high school kids need someone to legitimately advocate their skills, their character and help them pick the right space. Everything has changed now,” Hyman added.
NIL opened the door. Programs like this one make sure these athletes walk through it — with a plan.
