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Only 3.2% of American retirees have $1 million or more in retirement accounts.
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The average retirement savings for households aged 65 to 74 is $609,000, while the median is only about $200,000.
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In 2024, the number of “401(k) millionaires” in the United States will reach a record high of approximately 497,000.
Many Americans dream of having a $1 million retirement nest egg—in fact, many Americans believe that retirement requires about $1.5 million—but the reality is very different.
Only about 2.5% of Americans actually have $1 million or more in retirement accounts, according to the latest data from the Federal Reserve’s Survey of Consumer Finances.
Among actual retirees, only 3.2% reached the $1 million threshold.
Slightly more than half of Americans (54.3%) have a retirement account, and less than one-twentieth of those (4.7%) have reached the $1 million mark, according to the Federal Reserve. If all assets, including real estate and other savings, are included, that number rises to 18% of U.S. households.
Households ages 65 to 74 have median retirement savings of $200,000. For those 75 and older, it’s just $130,000.
Several factors explain why million-dollar retirement accounts are rare. Income plays the most obvious role, with high-income households typically saving an average of $769,000, compared with just $79,500 for middle-income households.
Education can also have a huge impact. A typical college graduate’s median retirement savings is three times that of a high school graduate (but not a college graduate) ($141,700 vs. $44,000, respectively).
Homeownership also significantly impacts retirement savings, with homeowners holding an average of $303,000 in retirement accounts, more than 2.5 times that of renters.
Although the overall percentages are different, the growth at the high end of the market is significant. Fidelity Investments reports that as of 2024, there will be a record number of “401(k) millionaires” at about 497,000 Americans, nearly 399,000 of whom also have at least $1 million in individual retirement accounts (IRAs) — two groups that often overlap.
The key to reaching these amounts is to start early and keep donating over the years—according to Fidelity, it takes about 27 years on average to reach $1 million.
“I’ve seen clients start with six figures of debt and very few assets and end up with a net financial wealth of $500,000 (or more),” David Tenerelli, a certified financial planner at Value Added Financial Planning, tells us. Investment Encyclopedia. He points out that it’s easier to achieve this if you’re a high-earning professional. “But a high income isn’t the only path to financial prosperity; living frugally, investing wisely and optimizing taxes are all important factors for anyone to build financial wealth.”