“Another record high” typically sends shivers to our spine, especially when it involves market performance, but Fidelity Investments is once again reporting just that.
The Boston-based recordkeeper found that increasing contributions and a strong stock market drove the average 401k balance over six figures for the first time.
Accounts hit $104,300 in the fourth quarter, 13 percent higher than Q4 2016. The average IRA balance climbed to $106,000, which is also a 13 percent year-over-year increase.
In addition, long-term 401k savers saw “significant increases” in their average account balance.
For workers who have been contributing to their 401k for 10 consecutive years, the average 401k account balance increased to $286,700, up from $233,900 a year earlier.
For individuals who have been in their 401k plan for 15-straight years, the average balance rose to $387,100, up from $318,500 in the fourth quarter of 2016.
- Individuals continue to increase their contributions to retirement accounts. In addition to the stock market’s performance, retirement account balances were buoyed by increasing contribution rates. Nearly one third (30 percent) of 401k savers increased their savings rate in 2017, which rose to 8.6 percent in Q4 2017, an increase from 8.4 percent a year ago. The average IRA contribution rate increased to $1,730 in the fourth quarter of 2017, up from $1,590 a year ago.
- A growing number of retirement accounts reach $1 million. The number of 401k savers with at least $1 million in their 401k increased to 150,000 at the end of 2017, up from 93,000 a year ago. The number of investors with $1 million in their IRA account rose to 152,000, an increase from 109,000 at the end of 2016.
“2017 was a good year for retirement savers—not only because of the stock market’s performance, but because many investors took positive steps towards managing their retirement savings, such as increasing their contribution rate,” Kevin Barry, president of workplace investing at Fidelity Investments, said in a statement.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
Yeah except this week, they lost A LOT of those gains….