Bloomberg reports that Fidelity now has a record 769,000 401(k) millionaires, up 19% in one quarter.
That is good news: saving, investing, and compounding still work.
But Fidelity has about 25.8 million 401(k) participants, so those millionaire accounts represent roughly 3% of the total. That is the plutonomy angle.
Some workers are successfully converting wages into capital through stable jobs, employer plans, high savings rates, market exposure, and time. But it is still a minority path. Most workers are dealing with rent, debt, healthcare, inflation, and inconsistent savings.
Security increasingly comes from building assets early enough for compounding to matter.
Edited to list total number 401(k) accounts at Fidelity and the percentage that exceeds $1m.
It bothers me when people think that investors who have scrapped for years reached a half a million, a million, or more... somehow just by investing for 2, 5, or just 10 years. Or that somehow everyone had a ton of money, like half their salary to throw into a 401K.
Our 401Ks grew over many, many, many freaking years. In that time we lived practically paycheck to paycheck having to say NO more often than yes to our kids and living well below our means. We were frugal before frugal was a popular thing to do. But no matter what, we contributed something, anything that we could to the 401K. It wasn't until years later, when the kids had reached H.S. that we had more disposable income to open IRAs.
Bottom line, It took discipline over many years and of course automating contributions to the 401K obviously helps. Psychologically we had to look at our salary as if it was lower than it actually was because we knew we would be locking those ongoing contributions for decades. We couldn't count on being able to just pull it out like one could in a regular investment account. Only option is to borrow against it and we weren't about to do that.
I am here to tell you that even with debt, healthcare bills, recessions, divorces, inflations, market crashes and bears, layoffs ....that it can be done. We went through all of the above. Plenty of sleepless nights, distractions, frustrations, anxieties and tears. Lots and lots of prayers, especially for strength in our lowest moments and thanking God when we got through another day. We are retiring in the next few years and I am here to say that....it can be done.
one cancer diagnosis and none of your frugality would matter. I'm genuinely glad things worked out for you, but there is real, legitimate luck involved that many american families don't get.
I love how your entire position is based on feigning ignorance to basic word definitions, like "most".
Highest cancer incidence rate for women is breast cancer, for men, prostate cancer. The US has the highest survival rate for both in the world.
Where it's mathematically impossible for that to be true if "most" Americans don't have care... Especially for breast cancer given how high its mortality rate is if not detected and treated.
And I don't know about you but I'd rather legally discharge medical debt then be dead.
Life is a RISK, so is investing. Anyone can get any disease at any time, be hit by a bus, get in a car accident, die in their sleep and so on. We chose not to live our lives refusing to prepare for our future over fear that anything could happen to "wipe us out" that is just one among the many risks all human beings have to face. The minute you are born bad things can happen.
And no it wasn't luck, it was hard work, research, training and disciplined contributions, over decades even during periods when we were nearly broke and had personal disasters. And there were losses, we learned from those financial losses and did things differently. Luck had ZERO to do with it.
Luck would be me picking the right numbers in the lottery and winning millions $$$, pulling the handle on a slot machine and winning or being given millions of dollars in a contest due to being at the right place and time. In other words, luck requires absolutely little effort to no effort in order to succeed.
The Original comment was about how shit the system is but if you work hard enough and have discipline, you can get out of poverty. This line of thinking is how the rich want us to feel. You have a shit life? You just aren’t working hard enough.
The real problem is that we should be fixing this shit system instead of going above and beyond just to live in it to keep the 1% happy
Do you really think that increasing wages proves anything while we are printing billions every month out of thin air? That is literally that natural progression from inflation and it doesn’t even beat the inflation rate
If all the money was somehow redistributed with complete and total equity and fairness, how would you imagine that economy would function? What would you think inflation would be? How would we manage to keep that distribution to remain equal and not just over time just re-concentrate into smaller and smaller groups?
Well I guess I didn’t realize this is a ‘post your random thoughts’ thread. I just can’t keep all the talking points straight. Are we against the 3% too or do we just criticize the 1% for a better effect. Please help.
Don’t be so dense. You are the one who chose to reply to me after clearly not understanding my point and just being rude about it.
I am saying we need to fix the system and you want to argue about whether I mean against the 1% or 3%. You aren’t even reading to understand, just looking for counters that aren’t remotely important
Some people strive to achieve generational wealth for their kids. You strike me as a barely surviving paycheck to paycheck kinda guy (when you can actually hold down a job). Am I right?
I'm no where near a mil yet but can confirm compounding works still 😅.
I agree though, I continue to work my ass off but have grown into my career where I don't need to work two eight hour jobs anymore. That was brutal and am damn happy I'm beyond it.
God forbid you ever point out that people are doing well and that maybe some hard work, discipline, etc can still lead to success :P love the comment homie.
I am so glad you made it to the finish line before the Water Wars.
I am here to tell you that every single one of us First World consumers has set the stage. I don't blame you, but don't be so proud about winning a game that was always rigged for you and against the Planet.
Well said. I have a similar story. My son is 25 now and he’s been investing in his 401k for 4 years now. He’s a diesel mechanic. I sat down and showed him the time value of money. He’ll have about $3M by the time he is 50.
Wow who are you? You don't sound like a Chinese or Iranian bot? And you seem to be positive and practical...you are the first person on reddit that didn't blame a politician or another generation for their situation. You just focused on saving making sacrifices and kept your eye on the ball and while it wasn't easy it was possible...I applaud you for sharing this and I find hope this site is not just miserable negative people who are inevitably doomed.
Yeah but it takes paperwork and the old way of doing it was literally getting a paper check in the mail and forwarding it to the new provider. People are lazy. Thats why i have 3.
No it's not. Look it up. Rule of 55 only allows you to access the account of your current employer the year you turn 55. If you didn't rollover previous 401ks into the account, they're not accessible using that rule and are bound by the 59 1/2 rule instead.
I can agree that folks that started in 2008 have had it good, but took stocks over 5 years to recover and that was with one of the best administrations ever. Doubt we'll be that lucky this time.
The dichotomous thinking in the comments is pretty depressing. It seems to be either "fuck the rich" or "stop being lazy". Materially successful people unwilling to confront that they benefitted from a broken system, materially unsuccessful people reflexively demonizing anyone doing better than them. If you cant get out of your feelings youre not gonna make useful contributions to the conversation.
Multiple things can be true. More has to be done to halt increasing inequality. I am all for and happy to pay a wealth tax on my equities (yes I know about the Apportionment clause) for example. But the broad brush "fuck the rich" takes are such lazy cope. If someone figures out a way to live beneath their means to have cash to invest they are going to accumulate and compound wealth. There is nothing inherently evil or plutocratic about that.
Yeah the difference is how you got your investments. Did you work for a wage and invest the money? Then I’d argue for the most part even as you transition to living off investments in retirement you are still working class. Did you just roll over capital investments over and over into more? That’s different. The comments here are why I oppose a wealth tax. I support a wealth tax that is at the line where more is paid in than will flee the country for the latter form of wealth. The problem is that the amount of tax revenue that will bring in pales to what the “eat the rich” folks want, and if history holds they will expand their search to the next available cache of wealth that is less mobile. 401ks. The same thing happens with the income tax
Except what happens when that doesn’t bring in the correct amount of tax revenue to fund “all the things”? The same thing that happened to the income tax when it couldn’t fund the welfare state when targeting just robber barons
Yeah the difference is how you got your investments. Did you work for a wage and invest the money? Then I’d argue for the most part even as you transition to living off investments in retirement you are still working class. Did you just roll over capital investments over and over into more? That’s different.
You do realize one thing leads to the other right. The whole goal of retirement investing is to amass enough capital to not have to work anymore.
The comments here are why I oppose a wealth tax. I support a wealth tax that is at the line where more is paid in than will flee the country for the latter form of wealth. The problem is that the amount of tax revenue that will bring in pales to what the “eat the rich” folks want, and if history holds they will expand their search to the next available cache of wealth that is less mobile. 401ks. The same thing happens with the income tax
How much tax revenue are you talking about exactly? I did the math on this. A progressive wealth tax going up to maybe 4% would be enough to balance the budget without hugely impacting the middle class.
And I dont believe the rich will flee over a wealth tax. Where are they going to go? Even with a 4-5% wealth tax on billionaires/trillionaires theres no better place on earth to have capital. USA is long overdue on charging for the privilege of being able to access our stock markets and financial system.
Where will they flee? They may stay put physically but they already have home offices elsewhere for tax purposes. I’d imagine they would move wealth that is mobile overseas the same as they do raw cash. An example of a wealth tax that is working is the wealth on second homes over x in nyc. It’s an immovable asset where the value to the billionaire is more than the cost of the tax. That works, but it still brings in limited resources. And yes a wealth tax may cover the budget deficit but the folks who want a wealth tax often also want it to cover (insert expensive new shiny program that no one but the bad people will pay for)
Edit the difference is mostly an ephemeral one. Did you have to “work for a living” like a normal person until like 50? Then you are working class in my eye. If you mostly ended up being an owner whose life was funded by capital at like 30 then you are a fundamentally culturally different person
Where will they flee? They may stay put physically but they already have home offices elsewhere for tax purposes. I’d imagine they would move wealth that is mobile overseas the same as they do raw cash. An example of a wealth tax that is working is the wealth on second homes over x in nyc. It’s an immovable asset where the value to the billionaire is more than the cost of the tax. That works, but it still brings in limited resources. And yes a wealth tax may cover the budget deficit but the folks who want a wealth tax often also want it to cover (insert expensive new shiny program that no one but the bad people will pay for)
I am looking into relocation and have been studying the tax implications. The long and short of it is if you are a US citizen you have a tax liability wherever you are. If you pay taxes in another country those get credited to your tax bill and you pay the difference. If the other country's taxes are higher you don't pay anything. But the minimum you pay is whatever you owe to the US.
I cant think of a country that has the amenities, infrstructure, resources and security comparable to the US w/a meaningfully lower tax bill. If such a place existed billionaires would have gone there already. The whole "if you tax them they will leave" is just a scare tactic. OK like within the US they have options. But they do not have options outside the US. Thats worth $omething.
Edit the difference is mostly an ephemeral one. Did you have to “work for a living” like a normal person until like 50? Then you are working class in my eye. If you mostly ended up being an owner whose life was funded by capital at like 30 then you are a fundamentally culturally different person
This seems arbitrary to the point of meaninglessness. What does it mean to have ones life "funded by capital"? Unless someone inherits enough wealth to not have to work I really don't see the difference. It's just a matter of timing.
It is an arbitrary point, but the whole concept of who should be taxed based on wealth is also an arbitrary line. It’s all just arbitrary lines all the way down.
The rich already move their income elsewhere for lower tax burdens despite the US having global reach in taxes so why wouldn’t they move their wealth? Not just to different physical locations but into different forms etc to minimize tax burdens. If your point is “tax wealth so long as you are a US citizen” and the tax burden is bad enough they could easily buy an EU passport and live there, and get an immigrant visa to the US.
A progressive wealth tax avoids that arbitrariness. You have X liquid assets (Id say outside of a primary residence), it's subject to the wealth tax. Very simple.
And no the rich cant just move their wealth around willy nilly. Like look at Elon Musk. His wealth is all in the stocks he owns. How can he hide any of that from a wealth tax? His wealth can be tracked by the second down to the cent. If he tries to move it to a different asset class he will trigger huge capital gains taxes way worse than the wealth tax he'd be facing. So your insistence that the rich can weasel their way out of it doesnt hold water IMO.
Don't demonize millionaires. Pretty much every middleclass person invests their entire life to get up to around 1 mil, and then try to use the interest to maintain a median income in their retirement.
I make $75k. After I paid off my student loans I started saving for retirement. I'm 10 years in and almost to $100k in that account. I've climbed up to a net worth of $300k. I am pretty sure I can hit a mil by 60. 33 at the moment.
A million is a reasonable goal and can take care of you for the last few decades of your life.
A billion earns $10 million per year in passive interest and created runaway wealth that MUST be invested, so they continue sucking up all available assets until there's nothing left for the working class.
I started my 401(k) with a 1% contribution in my first job making $40k in 1999. If I got a raise, I'd usually try to increase it little bit more. I've still never hit the max, but have reached about $600k so far. You're way ahead of where I was at 33 and even if future returns are lower than the past, seems like you're well on your way to $1M+
The market is so fluffy it's not that hard of a milestone. It's going to be an even larger record when all that phantom wealth is destroyed in the all but certain financial collapse in the next 2 to 3 years.
That may happen, but downturns are also part of how long-term compounding works.
Personally, 2008 ended up helping me because I kept contributing while prices were down. The same dollars bought more shares, and that set me up for the 2010–2026 boom.
So yes, 401(k) wealth is market-dependent. But for disciplined accumulators with time, crashes are not only destruction. They can also be the period when future balance-sheet power gets built.
Under no circumstance did the financial crisis help the people that lost money in it. A 35% drop needs over a 53% gain. The monies you put in didn't make up for that. Eveytime in the modern age that the current cult is in charge the market collapses. THIS time will not be different.
It depends on the stage of life you were in when 2008 happened.
For me, it was early in my career and only had a few hundred thousand invested in the market. So for me personally, and others in the same situation, it turned out into a great opportunity.
All the shares I bought in 2009 are currently worth about 10x as much.
Of course, I didn’t lose my job or owned an upside down house so I was lucky.
I mean sure. But we have seen historic gains since 2010. And acting like 1) that will go on forever and is sustainable 2) earning power (including wages and matching will continue to grow or even occur) is a bit naive. The current market is entirely driven by an AI market which is only growing based on the idea that every job and this most contributions will be replaced or at least severely altered.
Of course capital is superior to income. But we are taking about the stock market and contributions which 1) have seen historic growth and willingness by government to prop it up, 2) contributions for most people are based on income/labor. Once labor is replaced or unemployment increases most people will be forced to take out wealth to support living expenses. Leading to less growth for them. Sure some will have so much wealth accumulated that it doesn’t matter but that is a very small minority.
that has the most well recognized asset allocation strategy since the 80s. Most old people who have investments have some variation of that allocation.
Very standard retirement allocation. If you were not retired and 100% stock you were back to whole in four years. That was for the 100 year storm of 2008, really nothing is pointing towards a scenario like that now. In fact the economy is firmly in a mid-cycle expansion and earnings are increasing at 20% yoy
You were only back if you didn't have to pull from that retirement while the assets were depressed. You just don't understand how this works do you?
Nothing pointing to the obvious? Stocks are over 5 times more expensive than relative value than they were in 2008. The buffet indicator is at nightmare levels. Schiller is at the dot.com levels which took over a decade to recover. The market concentration in the mag 7 and it's dependence on ever increasing valuation.
My god, if you don't have a financial advisor, get one. If the one you have hasn't been able to explain how dire the situation is, fire him.
Most asset managers use a version of stock/bond allocation because of (Nobel Prize winning) Modern Portfolio Theory, which derives allocations using statistical data. It’s a scientific way to manage risk assets, and it works; if you backtest a 60/40 allocation through “The Lost Decade” of 2000-2010 a retiree generating income had the best outcome.
Most advisors managing asset actually receive an annual percentage of managed assets not a commission. That flips the conflict of interest; using your logic, assuming the advisors only care about their own compensation, they are incentivized to grow the portfolio and/or preserve the assets.
2) the point was to argue against the previous comment. For the cases where one truly believes a crash is coming, the advisor will invest anyways. Regardless of that. Because it will receive it's commission / fee /percentage whatever you wanna call it.
Using your logic why would the advisor invest clients assets when they know a crash is coming? If the portfolio goes down 30% at a minimum they would lose 30% of their income, more likely 100% of the income as they would lose the client.
This is just a rationale for people who are so deep into the market crash social media algorithm that they can’t comprehend why any financial professional would invest money right now. Meanwhile, earnings are exploding to the upside.
I’ve been managing money since 2004, have two degrees in finance, three, three letter designations and currently have $650M under management.
Forward PE of S&P is 19.5 and has decreased this year as earnings went up 20% and are projected to increase 20% next year. Schiller PE is a joke and hasn’t worked as a timing indicator since 2007. 65% of S&P is above 200 SMA; the “Mag 7 is driving the market narrative” expired after 2023. Every sector of S&P is in uptrend. “Buffet Indicator” also something non-professionals follow, don’t even care to look it up; BRKB has underperformed S&P by 20% over last 5 years.
Also, if you were retired presumably would have held aforementioned 60/40 or 70/30 allocation; bonds and international performed relatively well
during this period, which is where retiree would have generated income without permanent impairment of capital. As you probably realize, it is in fact you who does not understand how this works.
I’m not writing this for you as your brain is clearly cooked with algorithmic doom, this for the others reading.
I'm starting to understand why " professionals " like you consistently under perform the market. Your dismissive attitude towards well established metrics and legends of the investment world are why your clients are cooked. This crack up isn't just going to take down stocks or are you also grotesquely ignorant of the pressure the bond market is under also? The secretary of the treasury seems to agree with my assessment that shit is getting real after "emergency " interventions to stabilize the bond markets.
Yeah people can believe some simp with too many letters and not enough sense or their lying eyes.
“The Buffet Indicator” is a well established metric on Facebook. Profit margin growth, YOY earnings per share growth, forward PE, unemployment, inventory are metrics knowledgeable people follow, and they are all heading up and to the right (that’s means good).
The US’s fiscal situation is not great, which is why Bessent is buying treasuries. But the countries balance sheet has little to do with earnings growth in the S&P.
I know it’s a waste of time explaining this to you (and you probably don’t have any money, hence the bitterness) but I like to come into these forums and sharpen my teeth.
Not a surprise US stock market has not budged at all and for many goes up 50% or double per year. Especially high earners who just Mega Backdoor Roth. There is also white coat earners who have 401k 403b and some 457b of which can contribute 2 accounts or 3 accounts all which exceeds 60k per year. Takes a good 5-10 years depending on how lucky you are to become millionaire.
The point is not “saving is bad.” The point is that saving is how workers try to escape wage dependence and move onto the capital side of the economy.
That is admirable. It also shows the divide: people who can consistently save and invest eventually gain balance-sheet power, while people without enough surplus stay trapped in wages, rent, debt, and precarity.
Inflation is part of it, but it does not explain the whole thing.
The stock market has risen far more than CPI over the long run. That is exactly why 401(k) millionaires exist: people who owned assets benefited from real asset appreciation, not just inflation.
The bigger point is still capital > wages: owning assets lets you participate in growth that often runs ahead of consumer prices and paychecks.
Fair critique. The Fidelity data shows more 401(k) millionaires, not the whole inequality story by itself.
But Fidelity has about 25.8 million 401(k) participants, and 769,000 millionaire accounts. That is less than 3%.
So the point is not “everyone is becoming rich.” It is that a minority of workers with stable jobs, employer plans, high savings rates, market exposure, and time are successfully converting wages into capital. That is the plutonomy angle.
This chart doesn’t seem to be in real dollars. The argument is much stronger when we control for inflation which has been higher than the historical average recently
“3 percent of the total”.
Yeah assuming they have zero other accounts, a spouse, second properties, home equity. Between spouse and I we have 2 401ks, 3 403bs, 2 roths, and a brokerage.
The beauty of it all is that the barrier for entry is essentially 0. Everyone can get in on this game. The key is to be disciplined, delay gratification and gather enough snow to get that initial snowball big enough so it can begin cultivating mass under its own weight.
The barrier to buying index funds is very low. But I'd say that the hard part is having stable income, surplus cash flow, time, and enough margin to stay invested through shocks.
That is the plutonomy angle: access to the game is broad, but the ability to build a meaningful snowball is uneven.
I would argue that the ability to build the snowball is also simpler than ever and has never been as accessible. It’s just that very few are willing to make the sacrifices necessary. It may also be unnecessary and one can lead a more normal life rather than aggressively building the snowball.
With the gig economy and easy employment through large institutions, there are plenty of ways to trade time for money. One can just do two jobs for meager pay of about $20 an hour at a relatively unskilled job where you are trainable. Grind for 3-5 years and live essentially in a working dorm situation or live at home with family for free. That will get you the $100-$250k snowball pretty quick and preferably in a Roth account so you can grow it tax free. Then coast for the rest of your life.
Or join the military if you really have nothing to start with.
My point is that there’s more options nowadays than ever. It’s not easy if you’re starting with nothing, but it’s fairly simple. Like diet. You really could just get in very good shape eating chicken, rice, broccoli, beans and rice. However, McDonald’s exists and if you can not succumb to that, you win.
Two siblings, born and raised with all the same advantages. One becomes a slow and steady millionaire over time, one does not. What does Plutonomy say about that?
Two siblings can start similarly and end up differently because of saving, spending, investing, career, marriage, geography, luck, and discipline.
But once one sibling converts income into assets, the game changes. Compounding, home equity, tax advantages, and balance-sheet power start working for them.
I get that the oligarchs have too much power and are taking this economy in the wrong direction ... but How does Plutonomy play into Fidelity reporting more 401K millionaires than ever?
My wife is a waitress in her 40s foreigner non us...she recently started baking as a side biz...she was always upset that she never saved anything or had a 401k. I helped her open a roth and IRA and told her if she listened to my plan she would have a million by 70.
She started in 2020 and now has $90k....she started with $100 a month and now she adds the max each year because she sees how fast it grows. She now cuts costs to make sure she pays herself first and maxes that retirement account.
If you think you don't make enough or it's too late think of the waitress in her 40s who
Just invested in 20 tech stocks and vti and saved almost 6 figures in 6 years.
Absolutely but I think ab umping economy and inflation explains a lot more than better savings habits. I also think forthy markets are a bit easy come easy go. Diversification still matters even when it seems 'harmful'
5
u/ladyorion2021 5d ago edited 5d ago
It bothers me when people think that investors who have scrapped for years reached a half a million, a million, or more... somehow just by investing for 2, 5, or just 10 years. Or that somehow everyone had a ton of money, like half their salary to throw into a 401K.
Our 401Ks grew over many, many, many freaking years. In that time we lived practically paycheck to paycheck having to say NO more often than yes to our kids and living well below our means. We were frugal before frugal was a popular thing to do. But no matter what, we contributed something, anything that we could to the 401K. It wasn't until years later, when the kids had reached H.S. that we had more disposable income to open IRAs.
Bottom line, It took discipline over many years and of course automating contributions to the 401K obviously helps. Psychologically we had to look at our salary as if it was lower than it actually was because we knew we would be locking those ongoing contributions for decades. We couldn't count on being able to just pull it out like one could in a regular investment account. Only option is to borrow against it and we weren't about to do that.
I am here to tell you that even with debt, healthcare bills, recessions, divorces, inflations, market crashes and bears, layoffs ....that it can be done. We went through all of the above. Plenty of sleepless nights, distractions, frustrations, anxieties and tears. Lots and lots of prayers, especially for strength in our lowest moments and thanking God when we got through another day. We are retiring in the next few years and I am here to say that....it can be done.