Number of 401(k), IRA millionaires surge
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.