Is it because of, or despite, President Trump? Probably neither, but a bull market doesn’t hurt (obviously).
401k investment overlord Fidelity, the nation’s largest 401k record keeper, reported record high average balances for the retirement accounts it manages, hitting $92,500 at the end of the fourth quarter, topping the previous high of $92,100 in the first quarter of 2015.
The Boston-based behemoth, generally considered a bellwether of 401k contribution and balance activity due to its size, attributes the climb to increasing contributions and stock market performance.
Contribution rates have rebound to pre-financial crisis levels, as participants re-focused on saving. The average contribution rate to Fidelity 401(k)s reached 8.4 percent in Q4, the highest level since the second quarter of 2008. Over the past 12 months, the total savings amount (employee contributions plus employer match, profit sharing) reached a record $10,200.
In a sign of more good news, the percentage of 401(k) loans drops to lowest level in seven years. As contribution rates increase, the portion of Fidelity account holders with an outstanding 401(k) loan dropped to 21 percent, the lowest level since 2009.
The average IRA balance of $93,700 is up $3,600 year-over-year.
“Key to a successful retirement strategy is having a solid contribution rate and not tapping your 401k for short-term expenses,” Kevin Barry, president of Workplace Investing with Fidelity Investments, said in a statement.
“More than one-in-four Fidelity 401k savers increased their savings rate in 2016−an all-time high, and the number of people with a 401k loan dropped to its lowest point in seven years,” he concluded. “This shows people are taking the right steps towards reaching their retirement savings goals and illustrates how the 401k is helping millions of people prepare for retirement.”