Num­ber of 401(k), IRA mil­lion­aires surge

Employee Benefit News - - Contents - By Paula Aven Gla­dych

Re­tire­ment bal­ances are on the rise, while auto-en­roll­ment is play­ing a ma­jor role in in­creas­ing em­ploy­ees’ sav­ings, Fidelity says.

De­fined con­tri­bu­tion and IRA ac­count bal­ances are not only on the rise over­all, but a record num­ber are hit­ting seven fig­ures, ac­cord­ing to Fidelity In­vest­ments’ lat­est quar­terly re­port.

The aver­age 401(k) bal­ance rose to $104,000, a 6% in­crease from the sec­ond quar­ter of 2017. The aver­age IRA bal­ance in­creased nearly 7% from the sec­ond quar­ter of 2017 to $106,900. The aver­age 403(b) ac­count held at $83,400, a 5% in­crease from $78,900, in the sec­ond quar­ter of 2017.

What’s more, the num­ber of Fidelity 401(k) plans with a bal­ance of $1 mil­lion or more jumped to a record 168,000 in the sec­ond quar­ter, up from 119,000 a year ear­lier. That’s a 41% surge. The num­ber of IRA mil­lion­aires also grew, hit­ting 156,000.

“The stock mar­ket’s per­for­mance over the past sev­eral years has def­i­nitely helped re­tire­ment savers, but now would be a good time for investors to take a mo­ment and make sure they are do­ing their part to meet their re­tire­ment goals,” says Kevin Barry, pres­i­dent of work­place in­vest­ing at Fidelity In­vest­ments.

More good news from Fidelity: Fewer em­ploy­ees are dip­ping into their re­tire­ment ac­counts. The num­ber of work­ers who take loans from their work­place de­fined con­tri­bu­tion plans has dropped to its low­est level since 2009, ac­cord­ing to Fidelity In­vest­ments, with only 20.5% of work­ers hav­ing an out­stand­ing plan loan. Fidelity points out that Gen Xers are the most no­to­ri­ous re­tire­ment plan loan tak­ers, and even they ex­pe­ri­enced a drop in the sec­ond quar­ter, with only 26.4% hav­ing an out­stand­ing loan from their 401(k) plan.

The per­cent­age of new plan loans dropped to 9.7%, the low­est it has been since the first quar­ter of 2017.

An­other trend spot­ted by Fidelity in its sec­ond quar­ter anal­y­sis is that more millennials are sav­ing for re­tire­ment through ei­ther a tra­di­tional or Roth IRA. The aver­age IRA bal­ance for millennials jumped 9% in the sec­ond quar­ter to $15,150, and the num­ber of millennials jump­ing on the IRA band­wagon in­creased 19% over a year ago, says Fidelity.

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