Fidelity Q2 Retirement Analysis: Balances Again Reach Record Levels, While Many Workers Aren’t Taking Full Advantage of Company Match

Rising stock markets could lead to overexposure in equities; target date funds, managed accounts can help keep investors on track

BOSTON--(BUSINESS WIRE)-- Fidelity Investments^® today released its quarterly analysis of its 401(k) and Individual Retirement Accounts (IRA). The analysis¹ reveals:

• Retirement account balances reached all-time highs for the third consecutive quarter. Positive stock market performance and increasing contributions drove the average 401(k) and IRA balances to record levels. The average 401(k) balance hit $97,700, while the average IRA balance climbed to $100,200.

• The average 401(k) account balance triples for long-term savers. People in their 401(k) for 10 years straight saw their balance increase to a record average of $266,100, up from $78,800 in Q2 2007. The ten year growth is attributed to 53 percent market action and 47 percent employee contributions, which shows the benefit of saving and investing with a long-term view.
• Small business retirement accounts see double-digit growth. Fidelity’s yearly analysis of small business retirement plans, which includes self-employed 401(k) accounts, self-employed (SEP) IRAs and Savings Incentive Match Plan for Employees (SIMPLE) IRAs, indicates average balances have increased by double digits since Q2 2016. The average balance for self-employed 401(k)s increased 10 percent to $162,700, while the average balance for SEP IRAs increased 14 percent to $100,400. The average balance for SIMPLE IRAs grew to $39,000, an increase of 10 percent from Q2 2016.
• One in five workers still aren’t taking full advantage of their 401(k) company match. Over the last 12 months, employees contributed a record average of $5,850² to their 401(k), up 4 percent from one year prior. But many employees are not taking full advantage of their employer’s matching contributions. Fidelity research shows³ more than one in five employees (21 percent) did not contribute enough to their 401(k) to take full advantage of their company’s matching contributions, potentially missing out on thousands of dollars in matching contributions over the course of a year.

“While many employers have made it easier to enroll and get started in their 401(k) plans, employees need to verify they are they are taking full advantage of their company’s matching contributions,” said Kevin Barry, president, Workplace Investing, Fidelity Investments. “Nearly 90 percent of employees are eligible for some sort of company match, so it’s important to know what your company offers and make every effort to save enough to get the full match. If not, you’re essentially leaving free money on the table.”

While Balances Increase, Savers Need to Ensure They Are Not Over-Exposed to Stocks

The stock market’s performance over the last several years means people may have a greater allocation of stocks⁴ in their 401(k) accounts than Fidelity recommends⁵. This could expose their retirement savings to unnecessary risk in the event of a market downturn.

Fidelity found that 40 percent of those who managed their own 401(k) asset allocation – as opposed to have their savings in a target date fund or managed account – had a stock allocation in their 401(k) that was higher than recommended, up from 38 percent in Q2 2016.

“Having the right balance of stocks, bonds and cash in your retirement savings is just as important when the market swings up as when it goes down. While we’ve had several years of positive market performance and are experiencing record growth in account balances, it’s important for retirement savers to make sure they are within the recommended asset allocation to help protect their savings,” continued Barry.

About Fidelity Investments
Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $6.2 trillion, including managed assets of $2.3 trillion as of June 30, 2017, we focus on meeting the unique needs of a diverse set of customers: helping more than 26 million people invest their own life savings, 23,000 businesses manage employee benefit programs, as well as providing more than 12,500 financial advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for 70 years, Fidelity employs more than 40,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.

Past performance is no guarantee of future results.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917

Fidelity Investments Institutional Services Company, Inc.
500 Salem St., Smithfield, RI 02917

811707.1.0

© 2017 FMR LLC. All rights reserved.

¹ Analysis based on 22,200 corporate defined contribution plans and 15 million participants, as of June 30, 2017. These figures include the advisor-sold market, but exclude the tax-exempt market. Excluded from the behavioral statistics are non-qualified defined contribution plans and plans for Fidelity’s own employees. Fidelity’s IRA analysis based on 8.78 million IRA accounts. Small business data based on 687,000 small business retirement accounts.
² Average yearly employee contribution amount for the 12-month period ending June 30, 2017. Average also includes employees who did not make any contribution to their 401(k) in the previous 12 months.
³ Data based on Fidelity analysis of all record kept plans with a company match formula available and among active participants with >$0 DC account balance and >=1% pre-tax employee deferral rates as of March 31, 2017. Data reflects 2.6 million participants contributing to plans that offer an employer matching contribution whose match rates are tracked.
⁴ Equities consist of domestic and international equity investment options, company stock, specialty, and the equity portion of blended investment options, such as target date funds and balanced funds as well as a portion of self-directed brokerage assets.
⁵ Based on asset allocation data relative to Fidelity’s age-based equity rolldown schedule (or “glide path”), assuming age retirement at age 67.

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Fidelity Investments

Corporate Communications, 617-563-5800

fidelitycorporateaffairs@fmr.com

or

Mike Shamrell, 617-563-1996

michael.shamrell@fmr.com

Source: Fidelity Investments