More millennials are breaking their way into the 401(k) millionaire club than ever. How you can steal their strategy

Since millennials took shape following the 2008 financial crisis, they have faced significant challenges in achieving financial stability. Issues such as a sluggish job market, housing affordability problems, and high student loan debt have hindered their progress. Nevertheless, the tide is beginning to turn. A recent Fidelity Investments report revealed that the number of 401(k) millionaires surged to 645,000, marking a 26% increase from the previous year.

Fidelity attributes this growth to improved contribution rates and sustained market gains. Interestingly, millennials are now joining this elite club, albeit in small numbers.

Among 401(k) millionaires aged 29 to 44, representing about 4% of Fidelity's total, this achievement is noteworthy. Millennials with a consistent savings approach can undoubtedly replicate the success of these millionaires. Notably, nearly 20% of millennial 401(k) savers have increased their savings rate in the past year. Moreover, employer contributions have reached an all-time high of $2,080.

Additionally, millennials currently hold an average of $82,600 in their 401(k) accounts. However, those who have been diligently saving for over a decade have seen their balances soar to $391,300. This suggests that the average millionaire has likely been diligently funding their 401(k) for an extensive period.

Experts advise aiming to save 15% of your pre-tax income annually. Millennials are already close to this target, saving an average of 14.4%. Taking full advantage of any 401(k) employer match is also crucial, as it essentially provides free money. To reach millionaire status, consider a 10% annual return on a $400 monthly contribution over 41 years.

This would result in an initial $196,800 investment, which could potentially grow to over $2.4 million due to compound interest. If the contribution period is shortened to 31 years, the balance would still reach approximately $912,000.

Warren Buffett's advice to consistently invest in an S&P 500 low-cost index fund emphasizes the importance of a low-cost, diversified approach to investing. Automation through apps like Acorns can facilitate regular investments, even with small amounts. Acorns allows users to invest spare change from everyday purchases, rounding it up to the nearest dollar and investing the remainder into a diversified portfolio of ETFs.

Starting with as little as $5, this investment strategy can accumulate over time. For those willing to venture beyond index funds, some experts suggest reserving a portion of the portfolio for potential multibaggers, or stocks with the potential to multiply in value over time.