Baby boomers are joining the ranks of the million dollar retirement club in record numbers, thanks to powerful growth in market values over the last decade.
Fidelity Investments says the number of customers with 401(k) accounts totaling over $1 million in value exploded by 84% over the past twelve months, while IRAs of similar value grew an impressive 64%. There is now a record number of million-dollar account balances.
Even investors with smaller account balances have reason to be happy, as many have watched their investments rebound strongly since the March 2020 COVID market slump.
While there is still a substantial wealth gap between men and women, women are doing better. Now, 25% of women participating in Fidelity 401(k) retirement plans can boast million-dollar retirement balances. A decade ago, that percentage was only 14%.
Have you got your sights on building a $1,000,000 balance in your retirement account?
Here are some tips:
♦ Contribute the maximum every year, including the “catch up” amount if you are age 50 or over. If you can’t afford the maximum, strive to get 15% of your salary into your workplace plan. If you can’t afford 15%, start with 5% or 10% and work your way up. The bottom line? Just get going. Many workers aren’t investing at all, “making them unable to benefit from recent stock market gains,” writes Alicia Adamczyk of CNBC.com’s ‘Make It.’
♦ Self-employed? Even better. Many self-employed people can set up their own retirement plan, opening the door to extremely generous tax deductions with no administrative or reporting fees. Ask your financial advisor for guidance.
♦ Invest to fit your risk tolerance, timeline and goals. Most people in retirement plans are investing for a very, very long time horizon, as their money needs to keep growing until they reach their 90s or their final life expectancy. Don’t use short-term investments when you have long-term goals. If you’re not sure how to meet your retirement savings targets, talk to your financial advisor or other investment pro. A retirement lasting thirty or more years is too important to leave to chance.