By Michelle Singletary
The Press Democrat, Santa Rosa, Calif.
(TNS)
Your daily latte habit is not keeping you from becoming a 401(k) millionaire. To reach that goal, you need three things: time, discipline and patience.
Fidelity Investments reported earlier this month that the number of 401(k) millionaires in the funds it manages reached a record high of 769,000 in the second quarter of this year. That’s a 19 percent increase from 646,000 in the previous quarter and a 30 percent jump year-over-year. While these figures reflect only plans managed by Fidelity, one of the nation’s largest 401(k) administrators, they provide useful insight into how workers are building retirement wealth.
Here’s how these folks joined the millionaire club.
- Time. The average 401(k) millionaire has contributed to their plan for 25 years, benefiting from compounding growth.
- Discipline. As they earn more money, these investors save even more, increasing their savings rate. Workers with seven-figure balances save at or above the 15 percent savings rate of pretax income recommended by Fidelity. That rate can be a combination of their own contributions and any matching employer contributions.
- More people are reaching that benchmark. The average 401(k) savings rate remained at a record level for the second consecutive quarter, according to Fidelity.
- Workers put away a record 9.6 percent of their income on average. Combined with a 4.8 percent employer match, that meant overall savings reached a record 14.4 percent, close to hitting the 15 percent goal.
- Patience. They stay calm during periods of market chaos. The 2020 pandemic crash, which then triggered high inflation and supply chain shocks, led to market swings that knocked some savers out of the 401(k) millionaire’s club. Yet time and again, history shows that investors who held steady through market volatility see their balances recover.
These savers are to be admired for their financial tenacity. They modeled the behavior that can help you reach your goal of retirement security.
However, while these seven-figure accounts grab the headlines, 401(k) millionaires represent just 3 percent of all Fidelity savers. Does this mean the remaining people are being reckless, wildly spending when they know they should be saving?
I’ve heard some experts berate people for the small expenses they contend are holding people back from joining the millionaire’s club.
A grande pumpkin spice latte at Starbucks costs about $6.50, depending on market pricing. Not factoring in holidays or vacation time, buying one every single workday would add up to about $1,690 a year. That’s not chump change, but it’s also not what’s stopping working families from building wealth.
Blaming anyone’s daily latte misses the point. It’s the bigger expenses that are eating up their paychecks, preventing them from saving for retirement.
According to the Harvard Joint Center for Housing Studies, nearly half of U.S. renters in 2024 qualified as “cost-burdened,” meaning they spent more than 30 percent of their income on housing. Nationwide, renter households that year had a median income of $53,700.
Home prices continue to spike, preventing many people from owning, according to the center’s report. The median sales price of an existing single-family home in 2025 was nearly five times the median household income, the report said.
The 30-year fixed-rate mortgage averaged 6.76 percent as of Sept. 10, according to Freddie Mac. But according to data from Mortgage News Daily, the rate slid past 7 percent this week ahead of an anticipated interest-rate hike by the Federal Reserve.
The analysis by the Joint Center for Housing Studies highlights the problem. Between the median rent of $1,900 for new apartments and the median price of a new single-family home at $417,000, newly built housing has become unaffordable for even median-income households.
It’s hard to invest for retirement when you can barely make your rent, or you’re struggling to manage a large monthly mortgage payment.
On top of housing, carrying student loan debt leads many young workers to delay signing up for a 401(k) altogether. And even when they do participate, many don’t save enough to receive their full employer match.
That missed match leaves an estimated $10 billion in free company money on the table every year, according to new research from the Employee Benefit Research Institute.
By the time workers hit their 40s, those with student loans have nearly half as much saved for retirement as those without debt. That lost compound growth could help them become a 401(k) millionaire. It’s a gap that skipped lattes can’t fix.
So, ditch the guilt about buying your favorite fall drink. If that caffeinated boost helps you power through when dealing with a bad boss or an exhausting co-worker, I’m going to need you to get that coffee.
Now, having said that, keep this quote from Benjamin Franklin in mind: “A small leak will sink a great ship.”
Unchecked splurges—eating out, entertainment and everyday luxuries—can quickly add up if you aren’t paying attention. By budgeting carefully, you can put money away for the long term while still having occasional treats.
Just keep in mind that while small leaks matter, heavier burdens such as high housing costs and education debt carry far more weight. Lecturing people about their latte habit isn’t saving the ship; it’s ignoring the iceberg.
ABOUT THE AUTHOR:
Michelle Singletary is a personal finance columnist for the Washington Post.
Photo credit: Monstera Production/Pexels
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© 2026 The Press Democrat (Santa Rosa, Calif.). Visit www.pressdemocrat.com. Distributed by Tribune Content Agency LLC.
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