401(k) par­tic­i­pants sav­ing more than ever

Employee Benefit News - - Contents - By Paula Aven Gla­dych

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.

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