Average 401(k) and IRA Balances Continue to Hit Record Highs

Helped by a strong stock market performance, the average account balances of 401(k)s and IRAs reached all-time highs for the fourth consecutive quarter, a quarterly analysis finds.

Fidelity Investments’ new report reveals that the average 401(k) and IRA balances for the third quarter of 2017 increased 10% over the last year, with the average 401(k) balance rising to $99,900 and the average IRA balance climbing to $103,500.

And even though the average 401(k) and IRA balances increased for every generation over the last year, Gen X investors apparently experienced the most growth. According to Fidelity’s data, the average IRA balance for Gen X investors increased 16.5% to $51,500, while the average Gen X 401(k) balance increased 18% to $98,800.

Perhaps even more encouraging is that in addition to the strong gains in the stock market, the increases are also due to people putting more money aside for retirement. Fidelity notes that the average 401(k) contribution rate reached the highest percentage in almost 10 years, rising 8.5% in the third quarter, and more than one in four savers (29%) increased their contribution rate over the last year. The data further shows that the amount contributed to IRAs year-to-date increased 12%, while Roth IRA contributions alone increased by 13%.

Not surprisingly, the report also confirms that an increasing percentage of workers are using target-date funds for 401(k) savings, helping them maintain an age-appropriate asset allocation within their accounts. At the end of the third quarter, 29% of all Fidelity 401(k) assets were held in TDFs, up from 18% during the same time period in 2012. Moreover, nearly half of all workers (48%) hold all of their 401(k) savings in a TDF, up from 30% in 2012.

Also encouraging is that Fidelity’s data further shows that workers with both an HSA and 401(k) contribute more than workers with just a 401(k). While the number of HSA account holders on their platform increased 35% over the last year, Fidelity’s analysis reveals that workers who contribute to their HSA are not doing so at the expense of their 401(k) contributions. In fact, individuals who contribute to both their HSA and 401(k) contributed an average of nearly 10% at the end of the third quarter, compared to an 8.5% contribution rate for individuals who contribute only to their 401(k).

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