Average 401(k) balances were down in the first quarter, but retirement savings rates moved to record levels, according to a new report.
The total savings rate for 401(k) savers, which combines individual contributions plus employer contributions (such as a company match and profit sharing), reached a record 12.7% in Q1, topping the previous record high of 12.5% in Q1 2008, according to Fidelity’s quarterly analysis of its 401(k) and IRAs.
In addition, Fidelity notes that a record 13.6% of 401(k) investors increased their savings rate in Q1, an increase from the previous high of 12.9% a year earlier.
The average balance for people who have been in their 401(k) continuously for 10 years increased 2% year-over-year to $240,700. For long-term savers between the ages of 35-39 the average balance was $131,000 at the end of Q1.
As individuals change jobs and leave the workforce, the number of IRAs has also expanded. The number of people in both an IRA and a 401(k) at Fidelity increased 7% in 2015 to almost 1.3 million individuals. While the average combined IRA/401(k) balance declined 2% year-over-year from $267,200 to $260,900, the average combined contribution amount increased 3%, from $11,300 to $11,600.
And while the broader averages of 401(k) balances, which generally include a wide range of age, tenures, and matching levels, don’t shed much light on retirement readiness, among Fidelity’s database, the average 401(k) balance dipped slightly at the end of Q1 and is down roughly 5% from the record high balance at the end of Q1 2015. The average IRA balance also decreased at the end of Q1, and is also down 5% from one year ago, according to the report.
Self-Employed Savers
For insight on retirement savings trends among the country’s small business retirement plans, Fidelity conducts a yearly analysis of trends and behaviors for self-employed 401(k) accounts, self-employed (SEP) IRAs and Savings Incentive Match Plan for Employees (SIMPLE) IRAs. While the average account balance for small business retirement plans was lower in 2015, contributions increased in every plan category. For example:
- The average balance for self-employed 401(k) plans at the end of 2015 was $140,800, a 2% decrease from 2014. However, the average contribution increased to $23,300 in 2015, a 4% increase from 2014. The number of people contributing to a self-employed 401(k) plan increased 1% in 2015.
- For SEP IRAs, the average balance at the end of 2015 was $88,800, a 1% decrease from 2014. Average contribution increased 2% to $14,300 in 2015 and the number of contributors increased 4%.
- The average balance for SIMPLE IRAs at the end of 2015 was $36,400, a 4% decrease from 2014. The average contribution for 2015 was $6,380, a 2% increase from 2014. The number of people contributing to a SIMPLE IRA in 2015 increased 4%.
