America’s ranks of so-called 401(k) millionaires are dwindling after last year’s stock market rout.
The number of 401(k) accounts with at least $1 million in retirement savings fell 32% last year, to 299,000, from 442,000 in 2021, according to new data from Fidelity Investments.
The decline in the number of 401(k) millionaires comes after the S&P 500 fell 19.4% last year and entered the longest bear market since the 2008 financial crisis. The downturn marked a marked change compared to the previous decade, when a bull market boosted investment portfolios and seemed to put a comfortable retirement within reach for many workers.
The average balance of a 401(k) plan fell 20.5% in 2022, reducing the typical employee nest egg to $103,900 by the end of 2022, according to Fidelity.
Retirement worries are on the rise after tough conditions last year, including inflation that hit a 40-year high, experts say. A recent study found that workers now expect to need $1.25 million for a comfortable retirement — a 20% jump from 2021.
With declining retirement savings, the “retirement gap” – the gap between the amount of money people need to fund their golden years versus what they’ve actually saved – is shrinking. expands. And the challenge is greater when many workers struggle to pay for basics like food and housing, let alone plan for retirement.
Certainly, even with the drop in the number of 401(k) millionaires last year, there are still more than in 2019, when there were 233,000 accounts with at least $1 million in savings, according to Fidelity. .
Notably, stashing $1 million or more in a 401(k) plan is rare. According to data from Fidelity, only about 1.4% of the financial services company’s 401(k) accounts held more than $1 million in assets at the end of 2022.
Fidelity also noted a drop in the number of IRA accounts with at least $1 million in assets. At the end of 2022, there were 280,320 such accounts, down 25% from the previous year.
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