The number of 401(k) and IRA millionaires has declined sharply over the past year

Of the more than 35 million retirement accounts that Fidelity manages, there were 299,000 401(k) millionaires and approximately 280,300 IRA millionaires as of the fourth quarter of 2022. That’s compared to 442,000 or at the end of 2020, when Fidelity reported 334,000 401(k) millionaires and 288,300 IRA holders with 7-figure accounts.

It’s possible that some people have multiple accounts with Fidelity, so the actual number of those who have invested at least $1 million towards retirement could be higher. Overall, however, the decline isn’t exactly surprising given that the S&P 500 has lost around 20% over the past year. At the same time, many households are struggling with the ever-increasing cost of living and are saving to pay their monthly bills.

While the number of million-dollar funds is falling, it’s also far from the norm. The average IRA balance at the end of 2022 was $104,000 — down 20% from 2021 — while the average 401(k) balance was $103,900. A separate report by Vanguard also found that the average 401(k) balance fell by about a fifth in 2022.

A positive development? Gen Z is already prioritizing saving for retirement. The average bank balance of these young workers has increased by 14% since the end of 2021. Her bankrolls are still small given her age, but the shaky stock market hasn’t stopped her from investing young.

Although all savers face tough market conditions, that doesn’t seem to stop them investing in their retirement savings. More than a third actually increased their contribution rate over the past year, with the average 401(k) account holder increasing their contribution rate by 2.6%.

A $1 million retirement fund has long been a goal for savers. But some financial advisors are now saying some people should save well over $1 million for a comfortable retirement, depending on where they live, their lifestyle, and their other goals.