Average 401(k) balances hit record high, Fidelity says

Business Wire

Average 401(k) balances set a record in the fourth quarter of 2016, according to Fidelity Investments' 401(k) and Individual Retirement Account analysis.

The Boston-based investment company found that increasing contributions and stock market performance drove the average 401(k) balance to an all-time high of $92,500 at the end of the fourth quarter, topping the previous high of $92,100 in the first quarter of 2015.

At the new record level, the average balance had increased $4,300 from a year earlier.

For IRAs, the average balance came in at $93,700 during the fourth quarter, up from $90,100 during the year-earlier period but down from $94,100 in the third quarter of 2016.

The analysis also found that the number of IRA accounts that Fidelity handles topped 8.5 million. Nearly a half million IRA accounts were added in 2016 on Fidelity's platform.

The average contribution rate to Fidelity 401(k)s reached 8.4 percent in the fourth quarter, the highest level since the second quarter of 2008. During the past 12 months, the average total savings amount, including employee contributions and employer match/profit sharing, reached a record $10,200.

Also, the percentage of 401(k) loans dropped to the lowest level in seven years. As contribution rates increase, the portion of Fidelity account holders with an outstanding 401(k) loan dropped to 21 percent, the lowest level since the fourth quarter of 2009.

"Key to a successful retirement strategy is having a solid contribution rate and not tapping your 401(k) for short-term expenses," says Kevin Bany, president of Workplace Investing, Fidelity Investments. "More than one in four Fidelity 401(k) savers increased their savings rate in 2016, an all-time high, and the number of people with a 401(k) loan dropped to its lowest point in seven years. This shows people are taking the right steps toward reaching their retirement savings goals and illustrates how the 401(k) is helping millions of people prepare for retirement."

The need for retirement savings information and education is increasing, and Fidelity is developing content targeted to a people's situations and life stage to help them understand their next steps.

Web-based tools also are proving effective, the company asserts, as more retirement savers are attending online seminars on how to set goals for retirement and increase their savings, and learn the importance of asset allocation, Social Security strategies, and more. In the first half of 2016, attendance at live Web sessions was up 52 percent and use of on-demand seminars was up 62 percent.

Fidelity's interactive Money Checkup, which helps individuals understand their financial wellness and where they need to take action, has been completed by more than 300,000 people since its launch last June. Fidelity's retail planning tools saw a 41 percent increase in traffic in 2016, with more than half of visitors creating, modifying, or monitoring their retirement goals.

"These results show the value in continually innovating around how we educate people about retirement and their financial wellness," Barry says.

With assets under administration of $5.7 trillion, including managed assets of $2.1 trillion as of last Dec. 31, Fidelity is helping more than 25 million people invest and nearly 20,000 businesses manage employee benefit programs, as well as providing more than 12,500 financial advisory firms with investment and technology services.