There’s nothing glamorous about socking away a few hundred dollars a month in a 401(k), but it’s a habit many Americans are using to build wealth.

After analyzing its 45 million retirement accounts, Fidelity Investments reported that the average 401(k) account balance was $118,600 by the end of 2023—up 14.1% from a year earlier.

The average 403(B) account—which is a registered plan offered by public schools and certain tax-exempt organizations—increased by 14.5% to $106,100.

The total savings rate for 401(k) holders was 13.9%, compared to 11.5% for 403(B)s.

Notably, Fidelity reported that the number of 401(k) balances of $1 million or more increased by 11.5% compared to 2022, including a 20% jump from the third quarter of 2023.

The gains were driven by stellar returns in the stock market, with the technology-heavy Nasdaq soaring 43%, the S&P 500 gaining 24%, and the Dow rising more than 13% in 2023.

“Positive market conditions and consistent contributions helped boost average account balances to their highest level in almost two years,” Fidelity said in its report.

Americans under age 70 also maintained a “saver’s mindset” throughout the year, resisting the urge to withdraw funds early. According to the report, more than 4.7 million workers have been in their 401(k) plan for at least five years.

Experts have long advocated for Americans to take retirement planning into their own hands, but over the next few decades, doing so could mean the difference between a happy retirement and a miserable one.

Relying on Uncle Sam is a bad idea

When it comes to securing Americans’ retirement, there’s a growing sense of urgency in Congress to address the elephant in the room: Social Security is at risk of being depleted in a decade.

As Creditnews reported, Rep. Angie Craig of Minnesota has tabled new legislation to keep Social Security alive for the next two decades.

The “You Earned It, You Keep It Act” proposes to erase federal taxes on Social Security recipients while increasing taxes on high-income earners.

As things currently stand, certain Social Security trust fund reserves are at risk of running out by 2034. If that happens, retirees would only receive about three-quarters of their scheduled benefits—a huge blow to Americans who’ve spent their entire working lives paying into the system.

“No major Social Security legislation has been passed at all since the early 1980s,” said Alicia H. Munnell, director of the Center of Retirement Research at Boston College. “[W]e do have this event coming up that forces Congress either to do something or most people’s benefits are going to be cut by [nearly] 25%.”

Despite Rep. Craig’s best efforts, young Americans aren’t convinced there will be any money left in the Social Security pot when it comes time to retire. Millennials, in particular, appear to be taking no chances.

Not taking any chances

Although Millennials have been priced out of housing and face an uncertain jobs market, they’re doubling down on retirement savings.

According to Vanguard data, early Millennials are on track to replace 58% of their pre-retirement earnings once they reach their golden years. That’s higher than the 50% replacement rate for Baby Boomers.

Vanguard said automatic 401(k) contributions are the main reason why younger Americans are getting ahead.

“The combination of these enhancements has made it easier for retirement savers to join their workplace plans, increase their savings rates over time, and invest in diversified portfolios appropriate for long-term financial goals,” the asset manager reported.

Savers who increase their contributions rarely regret their decision, according to Colin Day, a financial adviser at Correct Capital Management.

“I have never run into someone who said they wished they didn’t save that money if they were auto-enrolled or increased through an automated feature,” he said.

It’s probably no coincidence that Millennials are increasing their retirement contributions as confidence in the system continues to decline. According to a Nationwide and Harris Poll survey, 39% of Millennials believe they won’t see a penny of Social Security once it’s their turn to collect. Nearly half (45%) of Gen Z feel the same.