Fidelity 401(k) and IRA Balances Dipped Slightly in First Quarter
The average individual 401(k) and IRA balances of Fidelity clients dipped a bit in the first quarter of 2018 compared to the previous quarter, but year-over-year increases remained strong.
According to Fidelity Investments’ most recent quarterly analysis
of retirement savings trends and behaviors, the average 401(k) balance dropped to $102,900, about 1% lower than in the fourth quarter of 2017. That is still nearly an 8% increase from 2017’s first quarter balance of $95,500, the firm noted.
The average IRA balance also declined about 1% to $105,100 from last quarter, but increased 8% year-over-year from $97,800. The average 403(b) account was $82,100, down slightly from the fourth quarter of 2017, but up 9% year-over-year.
Overall, the average account balance at the end of first quarter of 2018 for individuals who save in both a Fidelity IRA and a Fidelity workplace savings account, climbed to $299,700 — a 9% increase over the 2017 first quarter average balance of $275,600.
Meanwhile, the total savings rate for 401(k) investors — combining the average employee contribution rate plus an employer’s 401(k) match — reached a record high of 13.2% at the end of the first quarter, up from 13% the previous quarter.
In addition, the analysis shows that 30% of 401(k) investors increased their contribution rate over the last 12 months. Millennials led the pack, 36% of whom increased their contribution rate.Long-Term Savers, Roths and TDF
Fidelity’s first quarter analysis also reveals that long-term 401(k) savers saw significant gains, demonstrating the positive impact of consistent, long-term savings behaviors:
- Individuals who saved in their company’s 401(k) for 10 years had a record high average balance of $290,100 at the end of the first quarter, compared to an average of $250,500 a year ago.
- Individuals who saved in their company’s 401(k) for 15 years had an average balance of $379,600 at the end of the quarter, up from $330,200 a year ago.
- The number of people with $1 million or more in their 401(k) increased to 157,000 at the end of the quarter — a 45% increase from the same period last year. (Fidelity’s internal analysis also shows that most 401(k) millionaires have been saving for about 30 years.)
Fidelity’s analysis also reveals that Roth investment options continue to increase in popularity, especially among Millennials. The first quarter data show that 75% 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%, which was a slight increase over the 6.6% contribution rate in the first quarter of 2017.
The analysis also shows continuing increases in the use of target-date funds, likely because of their widespread use as a default investment option. As of the end of the first quarter, 74% of individuals saving in a 401(k) or tax exempt plan had invested in a TDF — a 3 percentage point increase over last year. In addition, 52% of individuals held all of their savings in TDFs, but that number rose to 70% among Millennials.