In a good sign for retirement savers, the average 401(k) account balance reached a record high of $106,500 at the end of the third quarter.
That’s just one of the upbeat findings from Fidelity Investments’ latest quarterly analysis of retirement saving trends for its 30 million holders of 401(k) or IRA accounts.
The record balance for workers with 401(k) plans marks a nearly 7 percent increase from a year earlier and tops the prior record balance of $104,300 from last year’s final quarter. Account balances at the end of September were nearly double the average balance of $56,900 401(k) back in the third quarter of 2008 during the financial crisis, Fidelity said.
The average IRA balance also notched a record, climbing to $111,000, more than double the $52,000 balance from the third quarter of 2008.
Stocks, however, have turned volatile in the final quarter of 2018. In October, the benchmark U.S. stock index, the Standard & Poor’s 500, briefly fell into correction territory, defined as a 10-percent drop from a prior high. Heading into Monday’s trading session, the S&P 500 was down 7.1 percent from its record.
One of the positives of the financial crisis was that it motivated investors to educate themselves about the steps they should take to “protect and grow” their retirement savings, said Kevin Barry, president of workplace investing at Fidelity.
“We’ve seen an increasing amount of positive savings behavior over the last 10 years, which helped put many people back on track for their retirement savings goals,” he said.
Savers have also benefited from new 401(k) plan benefits, such as automatic enrollment as well as employers placing workers that don’t select specific types of investments into so-called default options like target-date funds. These funds have skyrocketed in popularity. They have a more aggressive mix of assets — including a bigger helping of stocks — when people are younger but they become more conservative as workers near retirement.
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Shared from: usatoday.com