401(k) participants saving more than ever
Millennials are leading the charge when it comes to increasing their retirement account contributions, according to Fidelity Investments.
Employees are socking away a record amount of
money in their 401(k) accounts.
The average 401(k) contribution reached a record 13.2% of pay in the first quarter of 2018, according to new research out by Fidelity Investments. Over the past year, 30% of 401(k) savers increased their contribution rates, with millennials leading the charge at 36%.
Meanwhile, investors also increased their IRA contributions: The average first quarter contribution was $3,180, a 3% increase over the average contribution amount in the first quarter of 2017. The percentage of people contributing to their IRA in the first quarter increased 14% from a year ago.
Those statistics show that “retirement savers stayed on track and continued to contribute to their IRAs and workplace savings plans” despite market volatility at the beginning of 2018, says Kevin Barry, president of workplace investing at Fidelity Investments.
“In addition, an increasing number of savers are contributing to both their IRA and workplace savings plan. Combining the benefits of these two savings vehicles helps build a diversified retirement savings strategy and can provide a significant boost to an individual’s retirement savings efforts.”
People who save money in both an IRA and a workplace savings account saw their account balances jump 9% in the first quarter of 2018 compared with the first quarter of 2017. Account balances rose to $299,600 from $275,700 in the past year.
People who have been saving for retirement for at least 10 years saw their 401(k) balances reach a record high $290,100 at the end of the first quarter, compared to an average of $250,500 a year ago. For those who have saved in their 401(k) for 15 years, account balances rose to $379,600 at the end of the first quarter compared with an average $330,200 a year ago.
Fidelity found that the number of 401(k) millionaires increased to 157,000 at the end of the first quarter, a 45% increase from the first quarter of 2017. Most of the 401(k) millionaires identified by Fidelity had been saving for about 30 years.