Another quarter of strong contribution levels and positive market conditions led to 401(k) and 403(b) account balances recordkept by Fidelity reaching the highest average on record.
Fidelity Investments’ Q3 2024 Retirement Analysis, released today, shows that the average balances for more than 49 million 401(k), 403(b) and IRA retirement accounts have increased by 18% to 23% over the past year.
The average 401(k) balance at Fidelity grew from $127,100 in Q2 2024 to $132,300 as of Q3 2024. That’s up 23% from Q3 2023 and 48% from Q3 2014. For comparison, in November Bank of America reported that average 401(k) account balances at the end of Q3 2024 was $102,660. The record 401(k) balance in Q3 surpassed the previous record high of $130,700 in Q4 2021.
The average balance for all individuals who have been saving in their 401(k) for 15 years continuously with Fidelity grew to $558,300 ($586,100 among Gen X savers). Among Gen Z workers who have been saving for 5 years continuously, the average balance reached $51,800.
The percentage of employers that are offering a Roth option and managed accounts within their 401(k) continues to increase, and 1 in 5 (20.7%) plans automatically increases the employee contribution rate for workers who are auto enrolled in their plan.
403(b) balances at Fidelity jumped from $114,700 to $119,300, also up 23% from a year ago and up 68% from 10 years ago. The record 403(b) balance in Q3 surpassed the previous record of $115,100 from Q4 2021.
Average IRA balances, on the other hand, remained at $129,200—same as Q3 2024 and up 18% from a year ago (and 41% from 10 years ago).
401(k) and IRA Millionaires
The number of 401(k)-created millionaires at Fidelity (someone who has at least $1 million in their retirement account) increased by 9.5% (544,000) from Q2 (497,000). The average balance in that group was $1.616 million, up from $1.595 million in Q2. The average 401(k) millionaire has been contributing to their account for 25.7 years and has a total savings rate of 17% of their income.
Similarly, IRA-created millionaires increased by nearly 5% (418,111 vs. 398,594). Buoyed by market gains, these individuals are able to reach this level of retirement savings by starting early and contributing consistently over many years.
Savings rates hold steady
Total average 401(k) savings rates held steady in Q3 at 14.1%, driven by employee (9.4%) and employer (4.7%) 401(k) contributions. The report notes that this savings rate continues to be very close to Fidelity’s suggested savings rate of 15%, which includes both employee and employer contributions.
Gen X socking away more
Additionally, the analysis found that Gen X account holders continue to make positive strides with retirement savings, with increases in both IRA contributions and the number of IRA accounts receiving contributions.
“We are pleased to see Gen-X retirement savers continue to make solid gains with their retirement savings.”
Fidelity’s Roger Stiles
“We are continuing to observe a dedication to saving for retirement, with contributions to these vehicles holding steady if not increasing,” said Sharon Brovelli, president of Workplace Investing at Fidelity Investments. “This is meaningful as retirement savers prepare to close out 2024 and establish new budgets and financial goals for the coming year.”
She added that while consistent retirement contributions during various market cycles is important, maintaining this commitment in the long run is what will help set Americans up for a future of financial wellness and security.
“We are pleased to see Gen-X retirement savers continue to make solid gains with their retirement savings,” added Roger Stiles, president of Fidelity Wealth. “The oldest individuals of this generation will be approaching retirement in the next five to 10 years, making this the perfect time to focus on securing a nest egg that can help them live more comfortably throughout their retirement years.”
Plans adopting auto portability
This quarter’s retirement analysis also puts a spotlight on auto portability. Recent studies have shown that 41% of workers “cash out” their 401(k) savings when changing jobs, which can often result in unnecessary taxes and penalties—not to mention the high loss potential of retirement savings.
As a result of SECURE 2.0 legislation, Fidelity collaborated with Retirement Clearinghouse (RCH) to create a consortium of workplace retirement plan recordkeepers called the Portability Services Network (PSN). The purpose of the PSN is to accelerate the adoption of “Auto Portability,” which can help workers avoid cashing out when changing employers by automatically rolling over their savings to their new workplace account. For plan sponsors, auto Portability is an optional feature that can be added to a retirement plan at no cost. As of October 2024, more than 6,000 Fidelity plans adopted auto portability, with 2.2 million active participants in the Fidelity network.
PSN reported this week that more than 15,000 defined contribution plans have signed up for auto portability during the network’s first year, meaning that plans at Fidelity accounted for more than a third of the total.
Boston-based Fidelity Investments reports assets under administration of $15 trillion, including discretionary assets of $5.8 trillion as of September 30, 2024. The company’s full analysis of savings behaviors and account balances for its more than 49 million IRA, 401(k), and 403(b) retirement accounts can be found here.
SEE ALSO:
• Retirement Accounts on Continued Upswing in Q2: Fidelity
• Auto Portability Adoption Surges with Portability Services Network Launch
• 401(k) Balances at Bank of America Spike 11% in Q3
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
