Americans in their 30s, 40s are finally breaking their way into the 401(k) millionaire club — here’s what they’re doing and why you should start copying in 2025

401(k) millionaires on the rise

During the third quarter of 2024, Fidelity reports the number of 401(k) millionaires increased by 9.5% from the previous quarter. All told, there were 544,000 people in that category during the past quarter, compared to 497,000 in Q2.

It's also worth noting that the average 401(k) balance on a whole was up 23% from a year ago. As of this past quarter, it sat at $132,300.

Balances are also up among savers who have continuously funded their 401(k)s for many years. The average balance for the Gen X workers who’ve been saving in their 401(k) for 15 years in a row grew to $586,100 during the last quarter. This tells us that the average 401(k) millionaire has likely been funding their account for a considerably longer period of time.

Among millennials, the average 401(k) balance now sits at $66,500. Given that the oldest millennials are only halfway through their careers and the youngest still have the majority of their working years ahead of them, it’s fair to assume that the average balance among 28- to 43-year-olds will continue to grow over time.

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How to become a 401(k) millionaire yourself

Becoming a 401(k) millionaire may be more feasible than you’d think. But the key is to save consistently and, if you haven’t missed that boat already, start young.

Let’s say you're able to earn a 7% annual return in your 401(k), which is reasonable among many target date funds (a common “set it and forget it” type of investment found in these workplace retirement plans). If you contribute $400 a month to a 401(k) over a 41-year period, you’ll be putting about $197,000 into your workplace plan in total. But thanks to the power of compounded returns, at 7%, you’re looking at growing your balance to just over $1 million.

The numbers don’t look as rosy if you only contribute that $400 a month for 31 years, though. At the same 7% return, you’re looking at about $490,000, which highlights the importance of saving consistently and saving over many years.

Of course, not everyone can put $400 a month into a 401(k) from the moment they start working. If that's the case, start slowly and aim to increase your savings rate over time. One good bet is to send your annual raise directly into your 401(k) if you can afford to do so.

It also pays to take full advantage of any 401(k) match your company offers. That’s as close as it gets to free money for your future self.

Finally, don’t play things too safe in your 401(k). A target date fund may produce reasonable returns, but an S&P 500 index fund may deliver stronger returns at a lower cost to you in terms of fees. You’ll just need to make a point to shift over to safer investments in your workplace plan once you get closer to retirement.

In fact, it’s not a bad idea to work with a financial adviser to manage your 401(k). They can help you choose investments that carry an appropriate amount of risk for your age so you’re not shorting yourself on returns. They can also help you identify which 401(k) investments are most cost-effective in terms of fees that could eat away at your returns if you aren’t careful.