A positive stock market and steady contributions meant retirement account balances once again rose in the second quarter of this year.
Fidelity Investments’ quarterly analysis of the savings behaviors and account balances of retirement accountholders found double digit growth—including a 66% increase among Gen Z workers.
More specifically, the average retirement account balances increased for the third straight quarter. The average 401(k) balance increased to $112,400, up 4% from Q1 2023, an 8% increase from five years ago and 39% increase from 10 years ago.
For 403(b)s, the average account balance increased to $102,400, up 5% from last quarter, up 23% from five years ago, and a 65% increase from 10 years ago.
Average Retirement Account Balances
| Q2 2023 | Q1 2023 | Q2 2022 | Q2 2018 | Q2 2013 | |
|---|---|---|---|---|---|
| 401(k) | $112,400 | $108,200 | $103,800 | $104,000 | $80,800 |
| 403(b) | $102,400 | $97,900 | $93,300 | $85,300 | $63,200 |
| IRA | $113,800 | $109,000 | $110,800 | $106,900 | $80,600 |
Source: Fidelity
In addition, 401(k) balances increased across every generation. Gen Z saw a 66% increase, Millennials saw an increase of 24.5%, and Gen X savers increased 14.5%. Boomer balances also increased from Q2 2022 by 6.3%.
Total 401(k) savings rates remained high at 13.9%, mirroring the savings rate of Q2 2022. This is slightly lower than last quarter’s 14% rate, but higher than the previous quarters.
However, it wasn’t all great news. Mirroring a Bank of America report released last week, outstanding 401(k) loans increased slightly to 17.1% in Q2, compared to 16.6% last quarter, which was an all-time low. The company also said the percentage is well below the number of outstanding loans observed pre-pandemic.
Finally, the number of retirement millionaires jumped this quarter, with a 10% increase in millionaires holding 401(k) accounts (378,000 in Q2 2023 compared to 340,000 in Q1).
Student Debt and Retirement Savings
The student loan repayment pause is good for retirement saving, and Fidelity said many student loan borrowers have used the recent payment pause to focus on retirement savings, with 72% of student loan borrowers contributing at least 5% to their 401(k), compared to only 63% prior to the payment pause.
Additionally, there has been a 5.8 percentage point decrease in student loan borrowers with a loan out against their 401(k) during the pause (13.1% compared to 18.9% previously).
