401(k) Millionaires up 40% in 2023

There was good news in finance this week, at least for those fortunate enough to have a lot of it. Across 2023 more have a lot of it. Fidelity reported that the number of its customers who have retirement account balances of $1 million or more increased by 40% from a year earlier. Here's a chart of numbers published in this article in Yahoo! Finance (27 Feb 2024):



This isn't the first time Fidelity has published this kind of data, nor is it the first time multiple media outlets have excitedly reported it. (I chose Yahoo! Finance here because a) they made an insightful graph and b) they're not behind a paywall.) It's also not the first time I've written about these reports. When I wrote about Fidelity's report a year ago I was sour on the news coverage. Though that was because the articles I saw a year ago were poorly written, by authors who seemingly didn't understand what the data actually mean.

So, what do these numbers actually mean? What they are is a barometer of overall retirement account health. The number of people who have $1MM in one account, at one bank, went up 40% in a year. That's good news; don't get me wrong. But it's not an indicator of how many people overall have $1MM socked away for retirement, and it's not an indicator of how well the average person has saved for retirement.

I am part of this data set, BTW. I have a retirement account at Fidelity. Mine is one of those 45 million accounts mentioned in the citation in the chart above. But I am not one of the 401(k)/IRA millionaires in the headline.

Sad to say, I don't have $1MM in my Fidelity retirement account. I don't even have half that. And I'm better off, financially, than most Americans.

Part of that is that my retirement savings are split across multiple accounts at multiple financial institutions. Fidelity only sees a fraction of my portfolio. But even adding together all my retirement savings across 4 banks I'm still below $1MM currently. Will I get to a million eventually? Yes. I'm all but certain of that. But I'm not there yet.

So, what does it take for the approximately 813,000 people in Fidelity's report who are retirement millionaires? First, I'll just note that that's less than 2% of the total sample size. Those fortunate 2%, generally speaking, have been saving for many years to accumulate such balances. Fidelity says the average age of such accounts is 26 years. The account holders are mostly late career professionals or already retired. Fidelity says the average person in the set is 59 years old. They're likely also well paid— so they can afford to fund their 401(k)s aggressively— and benefited from things like employer matches. I say all this, BTW, as a well paid, late career professional who has saved aggressively— and isn't there yet. Like I said, I'm better off than most... but I'm not the top 2%.

Average 401(k) Account Balances

It's like a case of "Ask, and ye shall receive." After I posted earlier today about the increasing number of 401(k) millionaires and noted that that widely-reported news story only describes the top 2% of the population and doesn't say anything about how well the average American is saving for retirement, I see another article pop up in my newsfeed— this one also from Yahoo! Finance— about the median 401(k) balance (29 Feb 2024). This article shares data from another big brokerage, Vanguard, about the mean and median retirement account balances in 2023, broken down by age range:

Age	Average Account Balance	Median Account Balance
Under 25	$5,236	$1,948
25-34	$30,017	$11,357
35-44	$76,354	$28,318
45-54	$142,069	$48,301
55-64	$207,874	$71,168
65+	$232,710	$70,620

* I've copied the numbers directly from the Yahoo! Finance article cited above and cleaned up the formatting with a table

These figures, especially the median figure, are much more insightful into how the average American is saving for retirement. (As an aside, it's not surprising that the mean average is much higher than the median. I've noted before that mean and median are often very different when discussing wealth.) The news is way different from any kind of champagne cork popping about how many 401(k) millionaires there are. In these numbers we see that ordinary Americans at or near retirement age lack even one-tenth that much wealth.

A Weekend NOT Spent Doing Taxes

Normally I'd be doing taxes this weekend. As I've looked back across my records from the past several years, usually it's the last weekend of February and/or the first weekend of March that I set aside time to finish my tax forms and submit them. But not this time.



Have I found some way to avoid taxes? Hardly. Some way to streamline the work? Nope. Have I done them already? Also nope.

The fact is I'm not doing them right now because I can't. I'm still waiting on a form, a 1099, from one of my banks. It's a big one. I got part of my taxes done 2-3 weeks ago, but until I get this final form I can't get to the hardest bits.

The form should have been here by now. By law banks are supposed to get us out 1099s by mid-February. But by law banks can also file for an extension on that. Mine apparently has. They're saying "check back" late this coming week to see if it's ready.

So maybe— just maybe— I'll get to do my taxes next weekend. Yay? At least the 10 day weather forecast is showing partly crummy weather next weekend. Crummy weather will make it easier to spend a day indoors, doing taxes.