Gen Z makes bigger 401(k) gains than millennials, while Gen X leads boomers in major milestones, Fidelity says

In an analysis of its 23.3 million 401(k) participants at the end of the first quarter, Fidelity said Thursday that the average balance for Gen Z rose 15% from the fourth quarter to $11,300, compared with an 11% increase in $59,800 for millennials. .

Across all generations, the average balance increased 6% to $125,900. This suggests that Gen X’s average balance of $178,500 and boomers’ $241,200 did not grow as quickly as those of younger cohorts.

Given that younger workers tend to invest more aggressively, while older workers closer to retirement become more conservative, such generational differences should not be surprising.

But typical generational investment profiles may be changing as separate surveys have shown that younger Americans are particularly eager to retire early, with most millennials aiming for a $1 million-$2 million nest egg and Gen Zers shoot for $500,000-$1 million.

“We’re encouraged to see growth in account balances, providing strong evidence that retirement savers are staying invested and continuing to make consistent contributions — seeing the financial benefits as a result,” said Sharon Brovelli, president of Workplace Investing. at Fidelity Investments. transfer. “With continued participation across generations and income levels, retirement savers will continue to build better financial futures, which is essential to the financial health of so many Americans and our economy.”

Loyalty data also showed that Gen X has reached a milestone as retirement approaches for that generation, while more people are moving into their golden years.

Among long-term savers who have held the same 401(k) accounts for at least 15 years, the average balance for Gen X ($543,400) surpassed the average for boomers ($543,200) for the first time ever.

This marks a major turning point as it represents Gen Xers preparing to retire soon and save more in contrast to boomers who are already spending their savings after leaving the workforce.

But again, typical savings models may not apply to today’s group of retirees, as many increasingly look to “non-retirement plans” to stay active and avoid depression while working well into their 60s. and even their 70s.

Meanwhile, Fidelity said it had 485,000 401(k) millionaires in the first quarter, up 15% from the previous quarter and up 43% from a year earlier.

That’s despite a turbulent start to the year that saw financial markets sell off stocks and bonds amid growing doubts that the Federal Reserve will start cutting rates soon. To be sure, Fidelity’s 401(k) millionaires have been in it for the long haul, saving for an average of 26 years at an average contribution rate of 17%.

The average balance was $1.58 million, up from $1.55 million in the fourth quarter, a Fidelity spokesman told CNN.

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