By Paul Davidson, Feb 2, 2017, USA Today
Americans are again socking away money for retirement at record levels. Fidelity Investment’s average 401(k) balance hit an all-time high of $92,500 at the end of last year, up 4,300 from a year ago and above the previous high of $92,100 in early 2015. Fidelity, one of the nation’s largest investment firms, cited both increasing contributions and rising stock prices.
The average contribution rate reached 8.4% in the fourth quarter, highest since the second quarter of 2008. And more than one in four of Fidelity’s 401(K) customers stepped up their savings rate last year, the most ever. “This shows people are taking the right steps towards reaching their retirement savings goals,” says Kevin Barry, Fidelity’s president of workplace investing.
People with retirement plans outside of work are also ratcheting up their contributions. The average balance in Fidelity’s Individual Retirement Accounts (IRA) was $93,700 at the end of 2016, up $3,600 from a year earlier. Nearly 500,000 IRA accounts were added last year, bringing the total on the firm’s platform to a record 8.5 million.
National data reflect similar trends. Total 401(k) plan assets in the U.S. hit a record $4.8 trillion in the third quarter and total IRA assets reached a record $7.8 trillion, according to the Investment Company Institute.
Many Americans scaled back their contributions to retirement accounts during and after the 2008 financial crisis and recession. With the 4.7% unemployment rate near prerecession and stocks at all-time highs, workers are again putting away large sums for their golden years.
An Ipsos/USA Today survey in mid-January found that 65% of 45- to 65-year-olds are very or somewhat likely to put at least $100 toward retirement over the next six months.
Americans are also less likely to borrow from their 401(k)s to pay living expenses. The share of Fidelity account holders with an outstanding 401(k) loan fell to 21% in the fourth quarter, lowest since late 2009.
To Your Successful Retirement!
Michael Ginsberg, JD, CFP®