It took 17 years to save $500,000, but only 3 years for that amount to double; many Americans are retiring early—here’s why…
“It took 17 years to reach the first $500,000, yet only three years to accumulate the next $500,000.” With the US stock market surging in recent years, many Americans have seen their retirement accounts swell rapidly. Economists have now observed an unexpected side effect of this wealth growth: a wave of Americans nearing retirement age are choosing to leave the workforce early.
A Reddit user shared their 401(k) records, noting that after roughly 20 years of consistent contributions—including employer matches and allocating 13% to 14% of their salary—the initial accumulation phase was relatively slow. It was only in recent years that the account balance began to “accelerate” significantly. They remarked that while it took about 17 years to amass the first $500,000, they added nearly another $500,000 in just three years.
This experience is not unique to a handful of investors. Citing a CNBC report, the financial news outlet TheStreet noted that Bank of America economists Stephen Juneau and Aditya Bhave have described the current situation as a “stock-fueled retirement party.” They pointed out that the labor force participation rate among Americans aged 55 and older is dropping rapidly, with the robust stock market likely playing a role.
Data shows that the labor force participation rate for the 55-and-older demographic has fallen from 38.6% in August 2024 to the current 37.2%. While an aging population naturally drives a wave of retirements, economists believe the “wealth effect” generated by the recent stock market rally is prompting workers already nearing retirement to make the decision sooner. As the value of stocks and retirement accounts surges, some individuals realize their assets are sufficient to support their retirement, leading them to retire before their originally planned age.
Underpinning this trend is the US stock market’s rare and sustained strong performance. According to data compiled by New York University finance professor Aswath Damodaran and cited by CNBC, the S&P 500 index—including dividend reinvestment—posted returns of approximately 26% in 2023, 25% in 2024, and 18% in 2025; as of September 21 of this year, it had risen another 16%. In other words, for individuals who have already accumulated hundreds of thousands—or even over a million—dollars in retirement assets, investment gains in recent years may well exceed their annual retirement contributions.
Aggregate data on retirement accounts also reflects this upward trend. The latest figures from Fidelity show that the average 401(k) balance reached $155,800 in the second quarter of this year—an all-time high—marking an increase of approximately 10% from the first quarter and 13% from a year ago. Fidelity noted that a strong stock market rebound, combined with continued saving, drove the rise in retirement account balances.