A 55-year-old engineer in Dallas who started maxing out her 401(k) in her late twenties recently watched her balance cross seven figures. A 38-year-old warehouse worker in Ohio, employed by a company that offers no retirement plan, has $900 in a savings account and no investment portfolio at all. Both are real composites drawn from federal data, and both exist inside the same retirement system.
In early 2025, Fidelity Investments reported that the number of 401(k) accounts on its platform holding at least $1 million reached a record 665,000, driven by a stock market rally that pushed the S&P 500 up roughly 23% in 2024 alone. But the Federal Reserve’s 2022 Survey of Consumer Finances tells a different story for the broader workforce: only about 54% of U.S. families had any retirement account at all, and once you factor in the tens of millions with nothing saved, the effective median retirement balance for working-age Americans falls well below $45,000.
Those two realities coexist in the same 401(k) framework, and the distance between them reveals more about how the system actually functions than either number does alone.
Who are the 401(k) millionaires?
The 665,000 figure comes from Fidelity’s quarterly retirement analysis, which tracks balances across more than 49 million workplace accounts. It reflects Fidelity’s book of business, not the entire 401(k) universe, but Fidelity is the largest plan administrator in the country, making its data a reliable barometer. Vanguard’s annual “How America Saves” report documents a similar concentration of wealth at the top among its own participants.
The profile of a seven-figure 401(k) holder is remarkably consistent across both providers. These are overwhelmingly workers in their 50s and 60s who have contributed steadily for 25 years or more, often at or near the IRS maximum. In 2025, the annual contribution limit for workers under 50 is $23,500, with an additional $7,500 catch-up allowance for those 50 and older. Many millionaire accounts also reflect years of employer matching and the compounding effect of heavy equity exposure during a prolonged bull market.
Consider a simplified example: a worker who began contributing $15,000 a year in 2000 (roughly the maximum at the time), increased contributions as IRS limits rose, and stayed invested in a broad U.S. stock index fund. That worker rode through the dot-com crash, the 2008 financial crisis, the 2020 pandemic sell-off, and the 2022 bear market. Because markets recovered each time and contributions continued through the downturns, the account would have crossed $1 million by the early 2020s. Consistency and time in the market, not stock-picking, drove the result.
Why so many workers are still far behind
The Federal Reserve’s Survey of Consumer Finances, conducted every three years, is the most comprehensive government measure of household wealth. The 2022 edition found that among families who did hold retirement accounts, the median balance was about $87,000, a figure that spans all age groups and includes young workers just starting out alongside those nearing retirement. For families headed by someone aged 55 to 64, the median was higher but still well short of what most financial planners recommend.
A Congressional Research Service analysis of the same data identified several structural reasons for the gap. Workers in lower-paid jobs are far less likely to have access to an employer-sponsored plan. Part-time and gig workers are frequently excluded entirely. Even when a plan is available, lower-income employees contribute at lower rates, partly because they have less disposable income and partly because they are more likely to withdraw funds early to cover emergencies.
The four-decade shift from traditional pensions to 401(k)-style defined-contribution plans has placed more responsibility on individual workers to save, invest, and avoid tapping their accounts. That system works well for high earners with stable employment and financial literacy. For everyone else, the results have been uneven at best. And for the roughly 46% of families with no retirement account at all, the system has not engaged them in the first place.
What the market rally did and didn’t fix
The S&P 500 gained roughly 23% in 2024 after rising about 24% in 2023, a back-to-back surge that lifted account balances across the board. Fidelity reported that the average 401(k) balance among its participants rose to approximately $131,700 by the end of 2024, up from around $107,700 a year earlier.
But market gains are distributed proportionally, and that math matters. A worker with $500,000 in equities who earned a 20% return added $100,000 to their balance. A worker with $10,000 in the same fund added $2,000. The rally widened the dollar gap between large and small accounts even as both grew in percentage terms. Workers with no retirement account gained nothing.
There is also a timing problem that cuts both ways. The 2022 SCF captured household finances during a year when the S&P 500 fell nearly 20%, so some of the low balances in that survey reflected temporary market losses that have since reversed. Conversely, the record millionaire count reported in early 2025 reflects a market peak. By spring 2025, tariff-driven volatility had already shaken equity prices, and as of mid-2025, it remains unclear whether the millionaire count will hold at that level when Fidelity publishes its next update. Neither snapshot should be treated as permanent.
The rollover problem and why counts can mislead
One complication flagged by the CRS is that 401(k) balances do not capture a household’s full retirement picture. When workers change jobs, they often roll old 401(k) funds into an IRA. That transfer reduces the balance visible in workplace plan data without changing the household’s total savings. Conversely, a worker who consolidates several old IRAs back into a current employer’s 401(k) can push a single account over the million-dollar mark even though no new money was saved.
These mechanical shifts mean that the count of “401(k) millionaires” is a useful but imperfect metric. It tells you something real about the upper tier of savers, but it can be inflated or deflated by account movements that have nothing to do with actual wealth accumulation. The more meaningful question is how much total retirement wealth a household holds across all account types, and that question can only be answered reliably by broad surveys like the SCF, which will next be updated with 2025 data in a future release.
What workers can actually do about the gap
The SECURE 2.0 Act, signed into law in December 2022, introduced several provisions designed to expand access and encourage saving. Starting in 2025, new 401(k) and 403(b) plans established after December 29, 2022, are required to automatically enroll eligible employees at a contribution rate of at least 3%, with annual escalation up to at least 10%. Existing plans are exempt from the mandate, which limits its immediate reach but sets a new default for the growing share of employers launching plans for the first time. The law also created a “super catch-up” contribution for workers aged 60 to 63, allowing them to defer up to $11,250 in additional contributions in 2025.
Auto-enrollment has been shown in multiple studies to significantly increase participation rates, particularly among lower-income workers who might not opt in on their own. Vanguard’s data show that plans with automatic enrollment have participation rates above 90%, compared with roughly 65% for voluntary-enrollment plans.
For workers who do not have access to an employer plan, traditional and Roth IRAs remain available with a combined contribution limit of $7,000 in 2025 ($8,000 for those 50 and older). Several states, including California, Illinois, and Oregon, have also launched mandatory auto-IRA programs that require employers without their own plans to enroll workers in a state-facilitated Roth IRA. These programs are still scaling up, but early data from Oregon’s OregonSaves program show that even modest automatic contributions can build meaningful balances over time for workers who previously saved nothing.
None of these measures will close the retirement savings gap quickly. But they represent the most significant policy push in years to bring more workers into the system.
The role Social Security still plays
Any honest accounting of retirement readiness has to include Social Security, which remains the single largest source of income for most American retirees. According to the Social Security Administration, about 40% of aged beneficiaries rely on the program for at least half of their income, and for many lower-wealth households, it is essentially the entire retirement plan.
That reliance makes the program’s long-term funding shortfall a critical variable. The Social Security Trustees’ 2024 report projected that the combined trust funds will be depleted around 2035, after which incoming payroll taxes would cover only about 83% of scheduled benefits. Congress has not yet enacted a fix. For workers with little or no 401(k) savings, any reduction in Social Security benefits would hit hardest.
Two systems running on the same track
The record count of 401(k) millionaires is real, and the workers who built those balances earned them through decades of disciplined saving. But the system that produced those outcomes is the same one that leaves tens of millions of workers with little or nothing set aside. The difference is not primarily about investment skill. It is about access, income, employment stability, and time.
As of mid-2025, the retirement landscape in the United States is best understood not as a single story of success or failure but as two parallel realities sharing the same infrastructure. For the roughly 665,000 workers at the top of Fidelity’s ledger, the 401(k) has delivered exactly what it was designed to do. For the far larger group still below $45,000 in total savings, the question is whether recent policy changes, broader plan access, and a stable Social Security system will shift the trajectory before they run out of working years.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
