[May 17, 2018] |
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Fidelity Announces Q1 2018 Retirement Data: Saving Rates Hit Record High and Account Balances Continue to Increase over Long-Term
Fidelity
Investments® today released its quarterly analysis
of retirement savings trends and behaviors, including account balances,
contributions, savings behavior and details on workplace savings plan
design. Overall, the average account balance at the end of Q1 2018 for
individuals who save in both a Fidelity IRA and a Fidelity workplace
savings account, such as a 401(k) or a 403(b), rose to $299,600, a 9
percent increase over the average balance of $275,700 at the end of Q1
2017.
Additional highlights from Fidelity's Q1 analysis reveal:
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Average individual 401(k),
403(b) and IRA account balances increased year-over-year,
but dipped slightly from Q4 2017. The average 401(k) balance
dropped to $102,900, about 1 percent lower than Q4 2017 but an 8
percent increase from Q1 2017. The average IRA balance also dipped
about 1 percent to $105,100 from last quarter, but increased 8 percent
year-over-year. The average 403(b) account was $82,100, down slightly
from Q4 2017 but up 9 percent year-over-year.
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Average Retirement Account Balances
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Q1 2018
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Q4 2017
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Q1 2017
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Q1 2013
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401(k)1
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$102,900
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$104,300
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$95,500
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$81,200
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IRA2
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$105,100
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$106,000
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$97,800
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$80,500
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403(b)3
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$82,100
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$83,200
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$75,200
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$61,700
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401(k) savings rates continue to increase. The total savings
rate for 401(k) investors, which combines the average employee
contribution rate plus an employer's 401(k) match, reached a record
high of 13.2 percent at the end of Q1, up from 13.0 percent the
previous quarter. In addition, 30 percent of 401(k) savers increased
their contribution rate over the last 12 months, with Millennials
leading the charge (36 percent increasing their contribution rate).
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IRA
contributors grow by double digits. Among IRA holders, the average
contribution amount in Q1 was $3,180, a 3 percent increase over the
average contribution amount of $3,100 a year ago. The percentage of
people who contributed to their IRA in Q1 increased 14 percent over a
year ago. Among Millennials, IRA contributions increased 27 percent,
while the contribution amount increased 34 percent compared to a year
ago.
"Despite some market
volatility at the beginning of 2018, retirement savers stayed on
track and continued to contribute to their IRAs and workplace savings
plans," said 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."
Long-Term 401(k) Savers See Significant Gains
In an effort to demonstrate the positive impact of consistent, long-term
saving behaviors, Fidelity's Q1 analysis also reveals:
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10-year account balances reach record levels. Individuals who
have saved in their company's 401(k) for 10 years had a record high
average account balance of $290,100 at the end of Q1, compared with an
average of $250,500 a year ago.
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15-year account balances up 9 percent. Individuals who have
saved in their company's 401(k) for 15 years had an average balance of
$379,600 at the end of Q1, up from $330,200 a year ago.
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401(k) millionaires increasing. The number of people with $1
million or more in their 401(k) increased to 157,000 at the end of Q1,
a 45 percent increase from Q1 2017. Based on Fidelity's internal
analysis4, most 401(k) millionaires have been saving for
about 30 years.
"Especially during periods of market volatility, it's important to take
a long-term approach to retirement savings" continued Barry. "Making
regular contributions over time is a key part of building your savings,
especially a retirement nest egg."
Increasing Use of Roth Options, Managed Accounts and Target (News - Alert) Date Funds
Fidelity's Q1 analysis also examines the different types of accounts and
retirement plan design features that are available to meet the varying
needs of investors.
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Roth investment options continue to increase in popularity. Roth
IRAs continued to be a popular savings option, especially
among Millennials. As of Q1, 75 percent of all IRA contributions from
Millennials went into Roth IRAs. In addition, the average contribution
rate to Roth 401(k) plans rose to 6.7 percent, a slight
increase over the 6.6 percent contribution rate in Q1 2017. And Fidelity's
Roth for Kids, which allows an adult custodian to contribute the
lesser of the child's earned income or $5,500 to an account, had a 78
percent increase in the number of accounts with contributions.
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More employers are offering a workplace managed account to help
keep savings on track. Workplace managed accounts, which are an
increasingly popular way for individuals to leverage professional
investment expertise to help manage their retirement savings, are now
offered by more than 5,300 employers1, more than double the
percentage offering a managed account option five years ago. Among
large employers (more than 50,000 employees) with a Fidelity 401(k)
plan, nearly 50 percent offer a managed account.
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Increasing use of target date funds to help manage savings. With
98 percent of employers offering target date funds and 89 percent
using them as the default investment option1, an increasing
percentage of individuals are leveraging target date funds to help
keep their asset allocation on track, and many individuals keep all of
their retirement savings in a target date fund. As of the end of Q1,
74 percent of individuals saving in a 401(k) or tax exempt plan had
invested in a target date fund, a 3 percentage point increase over
last year. In addition, 52 percent of individuals held all of their
savings in target date funds - among Millennials, that number rose to
70 percent.
"Today's retirement savings plans have a variety of features and options
that are designed to help individuals with a range of savings goals,
strategies and levels of expertise," concluded Barry. "Leveraging these
features can help individuals feel more confident about their retirement
savings efforts and help keep them on track to reach their retirement
goals."
For additional details on Fidelity's Q1 analysis, please click here
to access Fidelity's "Building Futures" overview, which provides
additional information insight on retirement trends and data.
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 $6.9 trillion,
including managed assets of $2.5 trillion as of March 31, 2018, we focus
on meeting the unique needs of a diverse set of customers: helping more
than 27 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.
Keep in mind that investing involves risk. The value of your investment
will fluctuate over time, and you may gain or lose money.
Target Date Funds are an asset mix of stocks, bonds and other
investments that automatically becomes more conservative as the fund
approaches its target retirement date and beyond. Principal invested is
not guaranteed.
Fidelity Brokerage Services LLC, Member NYSE, SIPC 900 Salem
Street, Smithfield, RI 02917
Fidelity Investments Institutional Services Company, Inc., 500
Salem Street, Smithfield, RI 02917
National Financial Services LLC, Member NYSE, SIPC, 200 Seaport
Boulevard, Boston, MA 02110
845932.1.0
© 2018 FMR LLC. All rights reserved.
1 Analysis based on 22,600 corporate defined contribution
plans and 15.8 million participants as of March 31, 2018. 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. 2 Fidelity's
IRA analysis is based on 9.7 million IRA accounts, as of March 31, 2018. 3
Analysis based on 10,700 defined contribution plans, including
403(b), 401(a), 401(k) and 457(b) qualified plans, and 5.6 million
participant accounts, in the tax-exempt market, as of March 31, 2018. 4
Fidelity Investments analysis of 401(k) participants with 401(k) assets
in excess of $1M as of September 30, 2017.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180517005777/en/
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