The number of 401k millionaires increased in the final quarter of 2024 according to Fidelity Investments. Based on its analysis of nearly 27,000 retirement plans and close to 25 million participants, the number of 401k millionaires rose 27% to 537,000, roughly 2.2% of the surveyed population. The average 401k balance over the analyzed participants was $131,700.
A bunch of thoughts jumped into my mind. First, a million dollars on paper is not the same as a million in the bank. Past performance is no guarantee of future results. A rough market could impact a 401k balance.
Second, what does it mean to have a million dollars? In San Francisco, where the average home price is $1.45 million, a million dollars does not mean very much. In fact, a person in that situation could find themselves house-rich, cash-poor.
Third, a million dollars at retirement might not be all that much money depending on familial longevity and lifestyle. If you live 30 years in retirement, a million dollars stretched over that time is not a lot of money. Depending on lifestyle and retirement goals (ie, travel) and you might find that your million dollars may not last long.
Fourth, as I reflect on the passing of a client, I was thinking that while it is important to have money, it is equally important to make an impact or difference in the world. To quote Bob Marley, "My richness is life". True wealth is not measured by material possessions, but by the richness of life itself. The tale of Ebenezer Scrooge in "A Christmas Carol" might be more relatable to some. The point is the same. What is the point of having a pile of money if you have done nothing to better the world around you?
Each of us has a date of birth and eventually a date of death. Between those two dates is a dash. Your riches in life can be seen through your dash. Granted that is not easy to measure!
Fifth, I can't help but ponder the US wealth inequality gap. The U.S. has one of the highest wealth inequality gaps due to a combination of structural, economic, and policy-driven factors:
Financialization of the Economy – A significant portion of wealth is tied up in stocks, real estate, and financial assets, which disproportionately benefit the wealthy who own most of these assets. Meanwhile, wages for lower-income workers have stagnated relative to productivity.
Tax Policy Favoring the Wealthy – The U.S. tax system, especially after reforms like the 2017 Tax Cuts and Jobs Act, provides significant breaks for corporations, capital gains, and inheritance, benefiting the wealthy more than the middle and lower classes.
Decline of Unions and Worker Bargaining Power – The weakening of labor unions has led to slower wage growth for middle- and low-income workers, reducing their ability to accumulate wealth.
Racial and Historical Disparities – Generational wealth accumulation has been heavily skewed due to systemic barriers, such as redlining, discriminatory lending practices, and unequal access to quality education.
Automation and Globalization – Manufacturing jobs that once provided stable middle-class incomes have been outsourced or replaced by automation, leading to wage polarization.
Education and Healthcare Costs – Skyrocketing tuition and healthcare costs trap lower-income individuals in debt, limiting their ability to build wealth.
Monopolization and Corporate Power – Market consolidation in industries like tech, finance, and pharmaceuticals concentrates profits among a small group of corporate executives and investors, exacerbating the divide.
To point, while it is good to celebrate the millionaires, their discipline and ability (privilege) at being able to save, and the favorable market, I would enjoy celebrating more when everyone is able to retire with dignity.