401k participants and retirement savers alike have plenty to be thankful for this year. Account balances have reached another all-time high, nearly doubling since 2008’s economic downturn.
An analysis of third-quarter data by Fidelity found:
- The average 401k balance reached a record high of $106,500, surpassing the previous record of $104,300 from Q4 2017. The average balance is only 7 percent higher than a year ago, but represents an 87 percent increase from the average balance of $56,900 in Q3 2008.
- The average IRA balance increased to $111,000, almost a 4 percent increase from last quarter and more than twice the average of $52,000 in Q3 2008.
- The average 403b account balance reached a record high of $85,500, nearly two times the average balance of $43,300 in Q3 2008.
“One of the few positive outcomes from the financial crisis was that it caused individuals to take a closer look at their retirement accounts and educate themselves on some of the steps they should take to help protect and grow their retirement savings,” said Kevin Barry, president of workplace investing at Fidelity Investments. “Combined with some of the plan design benefits of the Pension Protection Act, we’ve seen an increasing amount of positive savings behavior over the last 10 years, which helped put many people back on track to reach their retirement goals.”
What’s more, loyal 401k participants who saved diligently for the past 15 years—undeterred by what went down in 2008—are faring even better.
Echoing a report released earlier this week by EBRI and ICI, average balances of consistent participants (those who remained in the same plan and contributed regularly for several years in a row) are through the roof compared to five, 10 and 15 years ago.
Fidelity’s analysis revealed:
- 15-year continuous savers saw a nearly ten-fold balance increase. Workers who have been in their 401k plan since Q3 2003 have seen significant increases in savings. The average balance for this group increased to $400,300 in Q3 2018, more than eight times the average balance of $47,800 for this same group in Q2 2003.
- The average balance for 10-year continuous savers topped $300,000. Among participants who have been in the same plan for 10 years, the average balance reached $305,400, nearly five times the average balance of $65,700 for this group 10 years ago.
- The average balance for Millennials who have been in their plan for five years straight topped $80,000. The average balance of all five-year savers reached $221,200 at the end of Q3, more than double the average of $103,700 five years earlier. Among Millennials within this category, the average balance reached $82,000, up from $20,600 five years ago.
“Most individuals will go through several periods of market volatility in their savings career, so it’s important to stay the course, not react to short-term market events and continue to take a long-term approach to retirement savings,” concluded Barry. “These groups of long-term savers are great examples of how a consistent approach to retirement savings can lead to significant financial gains over the long run.”