401(k) Account Balances Reach Record Levels

Fidelity Investments

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Account balances rose to their highest levels since the fourth quarter of 2021, thanks to record-high contribution levels and positive market conditions, reports a new retirement analysis out today by Fidelity Investments.

Account balances improved across multiple savings vehicles. For 401(k) accounts, balances increased 6% from Q4 2024, to achieve $125,900. Individual retirement accounts (IRAs) saw a 10% rise and totaled $127,745 in Q1, while 403(b) accounts moved up 7% for a total of $113,000.

Long-term savers saw the greatest benefit out of all groups, especially those invested in their accounts for five years or more, reported Fidelity. According to the data, 401(k) account balances rose 42% since Q1 2014, while IRAs increased 29% and 403(b)s grew 60% in the same period.

401(k) savers were amongst those with the highest savings rates, reaching a record-high of 14.2%, thanks to both employee and employer 401(k) contributions. Fidelity reports this savings rate as the closest to its suggested rate of 15%.  

Fidelity experts believe the increases are an uplifting sign after years of high inflation and market uncertainty. Despite reports of continuing market fears, investors are staying the course and continuing to invest in their savings.

“We are encouraged to see account balances increase, providing solid proof that retirement savers are remaining invested and continuing to make steady contributions – while seeing the financial benefits as a result,” said Sharon Brovelli, president of Workplace Investing at Fidelity Investments. “With continued participation across generations and income levels, retirement savers will continue to build better financial futures, which is essential to the financial health of so many Americans and our economy.”

As a greater number of Gen Zers look to gig work and contractor roles rather than full-time, salaried positions, Fidelity finds that many are taking benefits into their own hands. The number of Gen Z Roth IRA accounts increased 71% in Q1 2024 compared to Q1 2023, with average contributions rising 11.1%. This was especially true for Gen Z women—IRA accounts owned by this group grew 60% over the last year.

Small business month

In honor of Small Business Month in May, Fidelity’s research also highlights the savings behaviors of small business retirement savers.

While past research from Fidelity reports that just 30% of small businesses offer a retirement savings benefit, data shows that employees who do receive the feature end up taking full advantage of it. According to Fidelity’s small business data, small business employees have an average account balance of $152,000, contribute an average rate of 8%, and have an average tenure of 9.9 years, compared to 8.6 years for employees with traditional 401(k) options.

“Small businesses are at the heart of American communities and it is encouraging to see that when small business employees are given the opportunity to save, they run with it,” says Roger Stiles, president of Fidelity Wealth. “Offering small businesses a variety of options to help meet their retirement needs is an important way to close any existing retirement coverage gaps and get more Americans saving for retirement.”

Fidelity’s data is based on 25,800 corporate defined contribution (DC) plans and 23.9 million participants as of March 31, 2024. Excluded from the behavioral statistics are non-qualified defined contribution plans and plans for Fidelity’s own employees.

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