Hundreds of thousands of Americans have reached one of the most important milestones in their retirement savings: amassing a fortune of $1 million to be able to retire without financial worries.
In fact, a record number of people have reached that goal of reaching $1 million, according to a study by Fidelity Investments.
A company spokesman said they counted 485,000 401(k) retirement accounts during the first quarter of 2024, 15% more than the last quarter of 2023 and 43% more than a year earlier
The most interesting thing of all is that savers are contributing an incredible 17% of their income per year, which is a healthy savings rate for this type of retirement plans.
Fidelity also found that record levels of contributions were shown, which play in favor in a market where there are positive conditions for investing in these retirement savings. Fidelity’s metrics come from an analysis of 23 million 401(k) participants.
The average 401(k) balance in the first quarter was $125,900, up 16% from 2023.
It’s Always a Great Time to Save in Your Retirement Plan
One of the positive aspects of the American economy is that retirement plan savers are actually taking advantage of 401(k) plans. The outlook is expected to have improved over the past two years, because a 2022 measurement found that 58% of baby boomers and 56% of Gen X Americans owned at least one type of retirement account.
On the other hand, less than half of millennials had a retirement savings account, as did only 7.7% of younger adults, Generation Z, but the latter are saving from earlier in their life compared to baby boomers
Is It Possible to Reach $1 Million in a Retirement Account?
We can’t give you specific financial advice, because we are not professional advisors, but we can share with you some of the strategies that thousands of savers are using to improve the prospects of their retirement plan.
What many 401(k) savers have done is to start as early as possible.More years of savings and more years of compound interest can do wonders for your retirement savings. Even if you can only save small amounts each month, time will accumulate the money and its respective interests.
In combination with the above idea, thousands have used an additional and complementary strategy: to increase savings gradually over time and as their monthly income increases. If you contribute more per month next year, you will have more money that will earn interest over the years.
Grab Your Employer’s Matching Contributions
The third strategy that can work to boost the chances of having a luxurious retirement is to take advantage of your employer’s contributions. If your employer offers a retirement plan with matching contributions, be sure to take advantage of it. It’s free money that will help you achieve your retirement goals.
If you are not sure how to save for retirement, you can always (and it is advisable) consult with a financial advisor. A consultant can help you create a personalized plan that fits your specific needs and goals.
Never invest in a plan if you don’t know how to do it: don’t be ashamed to ask a financial or retirement expert, they are the ones who know about the subject and can look for the best options for you.
