The number of 401(k) and IRA millionaires reach record high amid pandemic
The number of retired investors with at least $ 1 million on their Fidelity Investment accounts hit a record high in the third quarter, although the second wave of the pandemic was approaching and the economic outlook remained uncertain.
The number of so-called 401 (k) millionaires rose by 17% from 224,000 in the second quarter to 262,000. This comes from an analysis of more than 30 million retirement accounts at Fidelity, which were exclusively made available to Yahoo Money. The number of IRA millionaires also rose 15% from 204,000 in the second quarter to 234,000, an increase of 15%.
The previous records for both were in the fourth quarter of 2019 when there were 233,000 401 (k) millionaires and 208,000 IRA millionaires.
The number of retirement investors with at least $ 1 million in their accounts hit a record high in the third quarter, although the second wave of the pandemic was approaching and the economic outlook remained uncertain. (Source: Getty Creative)
"There are a few things at play here, including fundamental market growth," said Emily Franco, financial advisor with Fort Pitt Capital Group. "When comparing the third quarter of 2019 with the third quarter of 2020, we found that the [stock market] indices hit near all-time highs this spring and summer despite the bumpy ride."
The increases came in July, August, and September when more than 14 million Americans were filing unemployment claims, according to the Federal Bank of Saint Louis. At the same time, the Standard and Poor's 500 Index rose 8.1%.
The retirement accounts have received a boost overall
For all retirement investors, their average account balance also increased. IRA balances increased 6% from $ 115,000 in the second quarter to $ 117,700. That was a 7% increase over the previous year to $ 110,200.
401 (k) balances had a slightly smaller increase. The average balance increased 5% to $ 109,600 in the third quarter, up from $ 104,400 in the second quarter and 4% year over year.
The number of so-called 401 (k) millionaires rose by 17% from 224,000 in the second quarter to 262,000. This comes from an analysis of more than 30 million retirement accounts at Fidelity Investments, which were made available exclusively to Yahoo Money.
About 9 out of 10 investors also left their contribution rate on their retirement accounts unchanged, which despises the unprecedented environment.
"It is encouraging to see the average bank balance increase slightly over the quarter and many individuals continue to save amid the challenges of the pandemic, especially as many companies and their employees are struggling in the current business environment." said Kevin Barry, President, Workplace Investments, Fidelity Investments.
Many boomers have too many shares allotted
The study also found that 38% of baby boomers were overly invested in stocks because of their age. But that kept them able to reap the gains from near-market highs. Around every twelfth boomer was 100% invested in stocks.
Yahoo Money's sister site, Cashay, has a weekly newsletter.
About a third of boomers invested some of their savings in more conservative investments during the pandemic, according to the study.
Those on the higher-income end of the spectrum would be more likely to invest a generous amount in stocks, Franco said.
"While this is of course a much easier goal if you're a high-income person, it doesn't mean it is out of reach for someone on a more modest income," Franco said. "By maximizing your annual pension contributions and staying invested during a market downturn, you increase your chances of having enough retirement assets to both secure your own retirement and pass it on to future generations."
Retirement: According to the study, the average savings of boomers would be only seven years
Biden's social security and SSI plan would lift 1.4 million people out of poverty, according to the study
Social Security Insurance: The company offers products to protect against excess surpluses
Most Americans haven't tampered with their retirement plans even during a pandemic, study results found
Read the latest financial and business news from Yahoo Finance and Yahoo Money
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube and reddit.
Click to receive the most important news as a notification!
13 little-known facts about Severus Snape that 'Harry Potter' fans probably don't know
Hong Kong democracy fighter Agnes Chow will mark her 24th birthday in prison
Kardashians Terrify Dave Chappelle, The Biebers And Tristan Thompson With FaceTime Prank
The 14 Best Eye Creams for Dark Circles
Anne Hathaway and Ben Stiller Heist Film ‘Lockdown’ Swiped by HBO Max
The White Stripes’ Archivist Ben Blackwell Reveals the Stories Behind Their Greatest Hits