Gen X just saw a big bump in 401(k) millionaires

Wall Street is hitting new record highs on a regular basis these days—and that’s making a strong case for people to invest in their retirement plans. A new report from Fidelity finds that the number of 401(k) accounts that are worth $1 million or more increased 9.5% in the third quarter.

Some 544,000 people (out of the 24 million who have their retirement plans with Fidelity) have crossed over into millionaire territory. That compares to 497,000 in the second quarter. IRA-created millionaires were up 5% from 398,594 to 418,111.

No group benefited more than Generation X, the investment firm said. People born between 1965 and 1980, who have been in their plan for 15 years, saw their 410(k) savings jump 6% in the past three months, with an average balance of $586,100 (compared to $554,400 last quarter).

Gen Xers who have an IRA with Fidelity have seen an average increase of 35% in the past year. And they’re adding more to those accounts, as well. Fidelity says the number of Gen X IRAs that received contributions in the third quarter was up 23% from Q3 of last year.

“We are pleased to see Gen X retirement savers continue to make solid gains with their retirement savings,” says Roger Stiles, president of Fidelity Wealth, in a statement. “The oldest individuals of this generation will be approaching retirement in the next five to 10 years, making this the perfect time to focus on securing a nest egg that can help them live more comfortably throughout their retirement years.”

At the end of the third quarter, the average balance of the 401(k) millionaires stood at $1.616 up from $1.595 million at the end of June and $1,581 million at the end of Q1.

Gen Z workers have seen some impressive returns as well. Those who have been saving continuously for five years have seen their average balance reach $51,800.

Millennials, meanwhile, have an average balance of $66,500—and, along with Gen Z, are the most likely to contribute to a Roth IRA.

All totaled, Fidelity manages more than 49 million IRA, 401(k), and 403(b) retirement accounts.

The state of retirement savings

New millionaires might be exciting, but average retirement savings balances for the remaining accounts have also seen notable gains, even if the raw numbers are significantly lower. The average IRA account stands at $129,200, an 18% increase over one year ago. The average 401(k) comes in at $132,300, a 23% jump. And the average 403(b) stands at $119,300, also a 23% increase.

Americans, on the whole, are seemingly taking seriously the warnings about not being able to maintain their current standard of living in retirement. Total savings rates for the quarter stood at 14.1% when employer-matching to 401(k) accounts is accounted for. That’s basically even with Q2’s 14.2%. Financial experts recommend 15%, but that number is rarely hit in overall averages, due to the wide range of contributor ages.

Fidelity, in its update, also noted that 2 out of 5 workers typically “cash out” their 401(k) when changing jobs, instead of rolling them over to an IRA or their new employer’s retirement plan. While account holders might view that as a cash bump, perhaps in a time when finances are lean, it can be costly in several ways. An early disbursement subjects people to a 10% early-withdrawal penalty if they’re under 59.5 years of age. And they’ll also face income tax charges for cashing out.

Longer term, they won’t be able to take advantage of tax-deferred growth on that money.

That could cause problems down the line. A recent study by the National Council on Aging found that 80% of households with older adults—some 47 million—are either financially struggling or at risk of doing so.