The number of Fidelity's 401(k) millionaires has doubled over the past two years.

The company's vast retirement plan business included 72,379 accounts with million-dollar balances in 2014 -- up from 34,920 two years earlier, the custodian says. The average age of the millionaire account holders is 60.

"These are people who have been saving likely since the advent of the 401(k)" in the late 1980s, when the accounts became widely used, says Meghan Murphy, a Fidelity Investments director. "The power of compounding interest is your friend."


The rising numbers show the power of sustained saving, Murphy says -- and provide an example that advisors can show to clients to demonstrate the value of staying the course even through market meltdowns.

"A good portion of that increase is due to the upturn in the market," Murphy says. "It's pushing people over the edge."

Back in 2007, Fidelity was home to 29,979 $1 million-plus 401(k) account holders and looked poised for more growth. But the number fell by more than half during the recession, hitting 13,404 in 2008 and hovering around that level for the next two years. Finally, in 2011, it hit 24,793 and began to climb again.


A few characteristics of these account holders offer lessons for clients and other investors.

They are big savers: Their average annual contribution is $21,400, and the average employer contribution (i.e., company match) is $15,600 -- although, of course, not everyone gets a company match. By contrast, the average annual contribution for Fidelity 401(k) holders with less than $1 million was $6,050, with an average employer match of $3,580.

They are also big earners: Their average or median income level was $359,000, according to 2013 compensation data. "Compensation may be capped for purposes of receiving an employer match, and in these income ranges, that is relevant, so participants may have been receiving salary match on incomes less than $359,000," Fidelity's compensation team notes.

They are aggressive investors: On average, the millionaire account holders have 72% of their accounts allocated to equities. That's slightly lower than the average allocation across all of Fidelity's 401(k) accounts, which is 74%, the company says. "Their exposure may be a little high" for their age, Murphy says -- "but these are people who are making more money than the average person. ... They may have that ability and wherewithal to take a little more risk." (The data doesn't capture whether these account holders have counterbalancing outside assets, or perhaps a spouse with a greater allocation to fixed income, she says.)

Most are still working: 72% of the 401(k) millionaires are actively employed by their plan sponsor, Fidelity says. The remaining 28% are either retired, or are now working at another firm.

The lesson, Murphy says, is "Save early. Save often. Don't cash out."

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