Record-breaking: Fidelity 401(k) Plan Millionaires Reached an All-time High by 41% Percent

Don’t have any plans for your retirement funds yet? Then you better start saving for your retirement funds now.

The current performance of the stock market and mutual funds show how the number of 401(k) plan holders with more than $1 million balance surged by 41% percent, an astounding new all-time high performance recorded in the year 2018.

New All-time High

Despite the public’s anxiety about the looming trade war which can hurt the U.S. economy, the stock market continues to surge with new all-time highs as well as the S&P 500’s performance increasing up to 5.4%, which indicate your investments and retirement savings are reaping these benefits as early as this year.

Coincidentally, the number of Fidelity 401(k) plans to have a balance of $1 million or more jumped up to 168,000 in the second half of 2018 compared to 119,000 a year prior.

According to the financial experts, the number of 401(k) plan millionaires surged by an astounding 41%.

Fidelity Investments President Kevin Barry says the stock market’s performance for the past several years has helped the retirement savers build their retirement funds.

He also says now is a good time for the investors to take advantage of their retirement funds performance and make sure they use their money to meet their retirement goals.

The Astounding Numbers

Fidelity added that around three in every 10 savers had increased their contribution rate since last year, averaging at 8.6% as of second quarter of 2018, and this does not include the employer’s counterpart yet. Barry says more and more employees are putting enough money in their 401(k) plans to meet their employer or company’s match.

According to Barry, the current 401(k) plans contribution rate is the highest percentage recorded for the past decade.

He claims that millennials nowadays are taking advantage of their salary to build their retirement funds early, as they will likely be ineligible for pensions or other guaranteed benefits the retirees currently enjoy.

Aside from that, the average number of workers aging from 18-34 years old and have started saving for their retirement account increased up to 19% since 2017. Moreover, the average retirement savings balances have also reached six figures according to Fidelity. In fact, the average 401(k) balance is now at $104,000, while the average IRA balance is currently at $106,900.

How To Grow Your 401(k) Plans?

According to the vice president of Fidelity Investments Jeanne Thompson, the market volatility should not hinder the savers and investors from building their retirement funds. He says that investing in long-term can help minimize the loss you’ve acquired when the stock market drops. According to him, the best time to invest in your retirement is when you’re still under 40.

Thompson shared some tips on how to grow your retirement funds:

Start Building Your Retirement Funds As Early as Possible

According to Thompson, growing your money takes time, so you should start saving as early as possible to take advantage of the power of compounding. The earlier you start the habit of saving, the earlier you can accumulate a $1 million balance in your 401(k) plans. If you delay your savings, it’ll take more years for you to become a 401(k) plan millionaire.

Take Advantage of a company Match.

According to Fidelity, around one of every five workers are still not contributing enough in their retirement funds to get a company match.

This is because many companies auto-enroll their 401(k) plans lower than the matching ceiling. To prevent this from happening, Thompson suggests you increase your savings and contribute rate at 1% per year until you reach your 15% target and be eligible for a company match.

Take Manageable Risks.

Most young investors tend to shy away from stocks thinking that they need a hefty amount to start investing, not to mention they’re afraid of taking risks on losing their invested money. This causes most young investors to invest in bonds with lower risk rate.

While investing in bonds is good, Thompson said you could do better with your money and investment if you start investing in stocks too. The stock market is good not only in gaining high-returns but also in growing your retirement funds on a long-term basis. If you want to be a millionaire like them, better start investing in the stock market now!