Finance

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

Published

1 year 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

BofA revises Harley-Davidson stock price after latest announcement

Published

6 hours ago

May 9, 2026

Press Room

BofA revises Harley-Davidson stock price after latest announcement

Harley-Davidson’s new CEO wants to transform how people think about the iconic motorcycle brand, so the company is trying something different.

This week, Harley announced a new strategy that focuses on lower-priced bikes, rather than relying on older, more affluent customers to buy its higher-margin touring models.

“Back to the Bricks builds on our core strengths and competitive advantages, harnessing the passion of our riders to deliver profitable growth for the Company and both our dealers and shareholders,” Harley CEO Artie Starrs said this week. “As we drive towards this new phase of growth, we remain committed to the craftsmanship and dedication that define our brand.”

Entry-level Harley-Davidsons cost about $13,000, while the higher-end Adventure Touring models average about $23,250, and the Premium Range &CVO models cost about $38,500, according to Reuters.

Harley’s new strategy targets a core profit of over $350 million from its motorcycle business by 2027 and over $150 million in cost reductions.

To kick off the new strategy, Harley is introducing Sprint, a new entry-level model powered by a smaller 440cc engine, later in the year.

Harley-Davidson is going after a younger demographic with its new strategy. Photo by Raivo Sarelainens on Getty Images

What is Harley-Davidson’s “Back to the Bricks” strategy?

Harley’s new strategy relies on more than just pushing buyers toward cheaper vehicles to increase volume. The 123-year-old company has a set of five pillars on which it is building its future.

Harley-Davidson “Back to the Bricks” 5-point plan

Deep appreciation of Harley-Davidson’s competitive advantages and legacy: The Company’s iconic brand, diversified and powerful revenue channels, and best-in-class dealer network provide a powerful foundation for growth.
Renewed commitment to exclusive dealer network to drive enterprise profitability: Harley-Davidson’s dealers are a competitive advantage. The Company is planning actions to enable dealers to double profitability in 2026 and then double it again by 2029.
Immediate actions to recapture share in areas where Harley-Davidson has right to win: Harley-Davidson has strong legacy equity in existing markets including new motorcycles, used motorcycles, Parts & Accessories, and Apparel & Licensing. The Company’s new strategy is focused on positioning the Company to regain share and drive meaningful volume growth in categories where it benefits from credibility, scale, and deep rider connection.
Strong financial position with a path to stronger free cash flow and EBITDA margin: Cost and restructuring actions already underway support a path to stronger free cash flow and EBITDA margin over time.
Bolstered management team with balance of fresh perspectives and institutional knowledge: Harley-Davidson has made a number of leadership appointments that support the Company as it leverages its innate strengths.

Finance

What is Considered a Good Dividend Stock? 2 Financial Stocks That Fit the Bill

Published

18 hours ago

May 9, 2026

Press Room

What is Considered a Good Dividend Stock? 2 Financial Stocks That Fit the Bill

Source: Getty Images

Written by Jitendra Parashar at The Motley Fool Canada

Dividend investing can be one of the simplest ways to build long-term wealth while creating a steady stream of passive income. But in my opinion, a good dividend stock is about much more than just a high yield. Beyond dividend yield, investors should also look for companies with durable businesses, reliable cash flows, and a history of rewarding shareholders consistently over time.

That’s exactly why many investors turn to financial stocks. Banks and asset managers often generate recurring earnings through lending, investing, and wealth management activities, allowing them to support stable dividend payments even during uncertain market conditions.

Two Canadian financial stocks that stand out right now are AGF Management (TSX:AGF.B) and Toronto-Dominion Bank (TSX:TD). Both companies offer attractive dividends backed by solid financial performance and long-term growth strategies. In this article, I’ll explain why these two financial stocks could be worth considering for income-focused investors right now.

AGF Management stock continues to reward shareholders

AGF Management is a Toronto-based asset manager with businesses across investments, private markets, and wealth management. Through these divisions, the company offers equity, fixed income, alternative, and multi-asset investment strategies to retail, institutional, and private wealth clients.

Following a 59% rally over the last 12 months, AGF stock currently trades at $16.67 per share with a market cap of roughly $1.1 billion. At current levels, the stock offers a quarterly dividend yield of 3.3%.

One reason behind AGF’s strong recent performance is its increasingly diversified business model. The company has expanded its investment capabilities and broadened its geographic reach, helping it perform well across varying market environments.

In the first quarter of its fiscal 2026 (ended in February), AGF posted free cash flow of $36 million, up 14% year over year (YoY), driven mainly by higher management, advisory, and administration fees. These fees climbed to $92.5 million as demand for the company’s investment offerings strengthened.

AGF has also been focusing on expanding its alternative investment business and introducing new investment products. With strong cash generation and growing demand for alternative investments, AGF Management looks well-positioned to continue rewarding investors over the long term.

TD Bank stock remains a dependable dividend giant

Toronto-Dominion Bank, or TD Bank, is one of North America’s largest banks, serving millions of customers through its Canadian banking, U.S. retail banking, wealth management and insurance, and wholesale banking operations.

Following a 70% jump over the last year, TD stock currently trades at $148.14 per share and carries a massive market cap of $247 billion. It’s also continuing to provide investors with a quarterly dividend yield of 3%.

TD’s latest results show why it remains a dependable dividend stock. In the February 2026 quarter, the bank’s reported net income jumped 45% YoY to $4 billion, while adjusted earnings rose 16% to a record $4.2 billion.

Similarly, the bank’s Canadian personal and commercial banking segment delivered record revenue and earnings with the help of higher loan and deposit volumes. Meanwhile, its wealth management and insurance business also posted record earnings, while wholesale banking benefited from strong trading and fee income growth.

Notably, TD ended the quarter with a strong Common Equity Tier 1 capital ratio of 14.5%, giving it a solid capital cushion. While the bank continues to spend on U.S. anti-money-laundering remediation and control improvements, its strong earnings base, large customer network, and diversified operations continue to support its dividends.

The post What is Considered a Good Dividend Stock? 2 Financial Stocks That Fit the Bill appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has positions in Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2026

Finance

UK watchdog says car finance legal challenge hearing unlikely before October

Published

1 day ago

May 8, 2026

Press Room

UK watchdog says car finance legal challenge hearing unlikely before October

Britain’s financial watchdog said on Friday a tribunal hearing on ‌legal challenges to its compensation scheme for mis-sold car loans was unlikely before October, and told lenders to prepare for a possibility that the scheme could be scrapped entirely.