401(k) & IRA Millionaires Soar to New Heights: What You Need to Know!
As the markets soar to new heights, retirement savers are cashing in big time. Can you believe it? The average 401(k) balance has skyrocketed to a staggering $132,300—up an astonishing 23% from just last year! That’s right, folks, we’re witnessing the highest average account balance ever recorded, thanks to the latest insights from industry titans.
And it’s not just the 401(k)s that are thriving! The average individual retirement account has also seen an impressive 18% boost year-over-year, reaching an average of $129,200 in the third quarter of 2024.
401(k) Millionaires on the Rise!
Hold onto your hats because the number of 401(k) millionaires has surged to a record-breaking 497,000 accounts, marking a 9.5% increase since last quarter! And that’s not all—IRA millionaires are also on the rise, climbing nearly 5% to hit 418,111. Talk about financial empowerment!
“The commitment to save for retirement is stronger than ever,” exclaimed a leading voice from the financial community. Contributions are not just steady; they’re climbing!
The average contribution rate for 401(k) plans—combining both employer and employee contributions—now sits at a solid 14.1%. That’s just shy of the ideal 15% suggested savings rate. What does this mean for you? If you keep up these contributions, you’re setting yourself up for success!
Experts highlight that while these historic highs can largely be attributed to market appreciation, the commitment to consistent contributions is a very positive indicator for future growth.
What’s the secret to this success? It’s simple: a long-term vision for savings pays off, and some savvy millennials are even breaking into millionaire territory!
More Savers Tapping Into Their 401(k)s
Despite the impressive gains, many savers are making withdrawals from their accounts. The percentage of workers taking loans from their 401(k) plans has risen to 18.7%—up from 17.6% last year. Wouldn’t it be great if these numbers dropped to zero?
Federal law allows workers to borrow up to 50% of their balance or $50,000, whichever is less. But experts advise against this option unless absolutely necessary, as it can jeopardize your future finances by sacrificing the power of compound interest.
Many households are also relying heavily on credit cards to stay afloat. Currently, Americans have hit a staggering record of $1.17 trillion in credit card debt—an 8.1% increase from last year!
In tough times, borrowing from a 401(k) may make more sense than racking up high-interest debt. Remember, when you borrow from your retirement savings, you’re essentially paying yourself back with interest—a much better deal than what credit cards offer!
