4 Surprisingly Easy Things You Can Learn From Millennial Millionaires
Written by
Andrew Lisa
Edited by
Angela Corry
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The millennials are millionaires — or at least some of them are. According to data from Fidelity Investments, those born between 1981 and 1996 are finally trickling into the class of 401(k) millionaires — those who have leveraged their workplace retirement plans to build seven-figure nest eggs.
The average millennial has just $66,500 in a 401(k), but the high achievers with two-comma balances tend to share a few common traits and most aren’t reinventing the wheel.
Here are the surprisingly simple habits of the emerging millennial millionaire class that you can use to grow your own seven-figure fortune.
Give Compounding Time To Work Its Magic By Starting Early
According to Fidelity, the overall population of 401(k) millionaires grew by 9.5% in the third quarter of 2024. While it’s true that they’re riding an ongoing equities boom, Fidelity reports that most share one common trait that has nothing to do with recent stock market performance — they have contributed consistently for many years without regard to market results. Like the Gen Xers and boomers ahead of them, millennials with at least 15 years of continuous contributions are much more likely to be approaching millionaire status than those without.
“So the first thing here is to start early,” said Arron Bennett, who provides tax planning and CFO services through his firm, Bennett Financials. “The earlier people start, the quicker they’re going to be able to get into the millions of dollars.”
Never Leave Your Boss’s Money on the Table
The Fidelity report shows that the average millennial receives an employer contribution of 4.6%. Gen Xers and boomers are getting a little more at 5% and 5.1%, respectively, and Gen Zers are getting a little less with an average company match of 3.8%. However, all age groups have one thing in common — if they’re leaving employer contributions on the table, they’re committing a cardinal sin of 401(k)-based wealth building.
“Making sure they’re always matching contributions to the maximum amount is crucial so they get the most out of the 401(k) plan from the company,” said Bennett.
Grow Your Savings, Not Your Lifestyle
Growing your nest egg is one reason to squirrel away as much of your paycheck as possible into a retirement fund. Another is that those who keep extra earnings on hand — millennials or otherwise — tend to find a reason to spend it. As people earn more, their spending typically increases to match their newfound buying power. One way to resist lifestyle inflation is to secure extra income from raises and bonuses in an account that attaches stiff penalties to early withdrawals.
“Starting early not only helps grow wealth but also ensures you don’t feel the financial burden of Parkinson’s Law,” said Bennett. “This principle suggests that expenses will rise to meet income, so if you never receive that money in the first place, you’ll naturally spend less. Ensuring you start early and leverage Parkinson’s Law is a major piece of building seven-figure wealth in a 401(k).”
If you spend more as you earn more, debt could follow you and your nest egg into retirement — unless, of course, your nest egg is the source of the debt. According to Fidelity, more than one in four Gen Xers has borrowed against their own 401(k) compared to just 18.1% of millennials, which might account for some of their saving success.
Think Beyond the 401(k)
The modern 401(k) is a savings vehicle that can shelter your nest egg from taxes while your employer helps it grow — but it’s hardly the only game in town.
“Now, 401(k)s are great, but they also allow people to stack more and more cash into them,” said Bennett. “However, one thing to consider is that sometimes it’s not always good to put everything into a 401(k) from a tax perspective. Sometimes, it’s better to put money into a Roth account. The average millennial with $66,500 saved in a 401(k) also has more than $24,000 in an IRA.”
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