Gen Z workers who are saving for retirement saw their 401(k)s grow faster than millennials’ did last quarter, while Gen X topped baby boomers on another milestone, according to data from Fidelity.
In an analysis of its 23.3 million 401(k) participants at the end of the first quarter, Fidelity said Thursday that the average balance for Gen Z increased 15% from the fourth quarter to $11,300, compared to an 11% increase to $59,800 for millennials.
Across all generations, the average balance rose 6% to $125,900. That suggests Gen X’s average of balance of $178,500 and boomers’ $241,200 didn’t grow as fast as those of the younger cohorts.
Given that younger workers tend to invest more aggressively while older workers closer to retirement get more conservative, such differences between generations shouldn’t be surprising.
But typical generational investing profiles could shift as separate surveys have shown that younger Americans are especially eager to retire early, with most millennials aiming for a nest egg of $1 million-$2 million and Gen Zers shooting for $500,000-$1 million.
“We are encouraged to see account balances increase, providing solid proof that retirement savers are remaining invested and continuing to make steady contributions—while seeing the financial benefits as a result,” Sharon Brovelli, president of Workplace Investing at Fidelity Investments, said in the report. “With continued participation across generations and income levels, retirement savers will continue to build better financial futures, which is essential to the financial health of so many Americans and our economy.”
Fidelity data also showed Gen X has reached a key milestone as retirement approaches for that generation while more boomers transition to their golden years.
Among long-term savers who have maintained the same 401(k) accounts for at least 15 years, the average balance for Gen X ($543,400) surpassed the average for boomers ($543,200) for the first time ever.
That marks a major tipping point as it represents Gen Xers getting ready to retire soon and saving more in contrast with boomers who are already spending down their savings after leaving the workforce.
But again, typical saving patterns may not apply to the current batch of retirees, as many boomers look to “unretirement plans” to stay active and avoid depression, working well into their 60s and even 70s.
Meanwhile, Fidelity said there were 485,000 401(k)-created millionaires in the first quarter, up 15% from the prior quarter and 43% from a year ago.
That’s despite the topsy-turvy start to the year that financial markets saw as stocks and bonds sold off amid growing doubts the Federal Reserve would start cutting rates soon. To be sure, Fidelity’s 401(k) millionaires have been in it for the long haul, saving for an average of 26 years with an average contribution rate of 17%.
The average balance was $1.58 million, up from $1.55 million in the fourth quarter, a Fidelity spokesperson told CNN.
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FAQs
Gen Z makes bigger 401(k) gains than millennials, while Gen X tops boomers on key milestone, Fidelity says. The average 401(k) balance increased 15% from the previous quarter to $11,300 for Gen Z savers compared to an 11% increase to $59,800 for millennials.
What are the milestones for 401k by age? ›
By age 40, you should have three times your annual salary already saved. By age 50, you should have six times your salary in an account. By age 60, you should have eight times your salary working for you. By age 67, your total savings total goal is 10 times the amount of your current annual salary.
Can I retire at 62 with $400,000 in 401k? ›
If you have $400,000 in the bank you can retire early at age 62, but it will be tight. The good news is that if you can keep working for just five more years, you are on track for a potentially quite comfortable retirement by full retirement age.
How much should I have saved for retirement by age 55? ›
By age 35, aim to save one to one-and-a-half times your current salary for retirement. By age 50, that goal is three-and-a-half to six times your salary. By age 60, your retirement savings goal may be six to 11-times your salary. Ranges increase with age to account for a wide variety of incomes and situations.
How many people have $1,000,000 in retirement savings? ›
If you have more than $1 million saved in retirement accounts, you are in the top 3% of retirees. According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.
How aggressive should my 401k be at age 50? ›
So someone who earns $100,000 per year will want to have around $1.5 million in their retirement fund by age 65. At age 50, then, many experts suggest that this retiree would need to have – at a bare minimum – around $600,000 up in a 401(k), or other tax-advantaged account.
Is $1500 a month enough to retire on? ›
While $1,500 might not be enough for non-housing retirement expenses for many people, it doesn't mean it's impossible to stick to this or other amounts, such as if you're already retired and don't have the ability to increase your budget.
How much money will I lose if I retire at 62 instead of 65? ›
A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent. Starting to receive benefits after normal retirement age may result in larger benefits. With delayed retirement credits, a person can receive his or her largest benefit by retiring at age 70.
What is a good monthly retirement income? ›
More? Financial planners often recommend replacing about 80% of your pre-retirement income to sustain the same lifestyle after you retire. This means that, if you earn $100,000 per year, you'd aim for at least $80,000 of income (in today's dollars) in retirement.
What is the average Social Security check? ›
As of March 2024, the average retirement benefit was $1,864.52 a month, according to the Social Security Administration. The maximum payout for Social Security recipients in 2024 is $4,873 a month, and you can only get that by earning a very high salary over 35 years.
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
How long can you live on $1 million in retirement? ›
A recent analysis determined that a $1 million retirement nest egg may only last about 20 years depending on what state you live in. Based on this, if you retire at age 65 and live until you turn 84, $1 million will probably be enough retirement savings for you.
How long will 300k last in retirement? ›
If you have $300,000 and withdraw 4% per year, that number could last you roughly 25 years. Thats $12,000, which is not enough to live on its own unless you have additional income like Social Security and own your own place. Luckily, that $300,000 can go up if you invest it.
How much will a 401k grow in 20 years? ›
As a very basic example, if you had $5,000 in your 401(k) today, and it grew at an average rate of 5% per year, it would be worth $10,441 in 20 years—more than double. If you withdraw those funds early, however, you're not only facing a stiff tax penalty, you're losing all of that additional growth.
What is the ideal 401k contribution by age? ›
However, the general rule of thumb, according to Fidelity Investments, is that you should aim to save at least the equivalent of your salary by age 30, three times your salary by age 40, six times by age 50, eight times by 60 and 10 times by 67.
At what age should you have 100K in your 401k? ›
Kevin O'Leary: By Age 33, You Should Have $100K in Savings — How To Get Started. If you're just starting out in your career, $100,000 might seem like a lot of money. After all, the median salary of a 20- to 24-year-old, according to Bureau of Labor Statistics data, is just $37,024.
At what age should you start taking money out of your 401k? ›
The IRS allows penalty-free withdrawals from retirement accounts after age 59½ and requires withdrawals after age 72. (These are called required minimum distributions, or RMDs). There are some exceptions to these rules for 401(k) plans and other qualified plans.
