The average 401(k) account balance grew by nearly a quarter from a year ago, according to data released today from Fidelity Investments.
As of the end of the second quarter, that balance was $129,300, up from $123,900 at the end of the first quarter and $104,400 as of the second quarter of 2020. Meanwhile, the average individual retirement account balance at Fidelity reached $134,900, up by 21% from a year earlier, the company reported.
403(b) account balances were slightly lower on average, at $113,300, up 24% from the second quarter of 2020.
Aside from strong market gains over the year, part of the reason for significant growth is an apparent push by baby boomers to squirrel away more savings. In IRAs, the size of contributions from boomers increased by 17% over a year, according to Fidelity. More than 18% of boomers made catch-up contributions to their 401(k)s, with 58% of those who did putting in the maximum of $6,500 in 2020, the report noted.
Among all 401(k) participants who have had accounts for at least 10 years, the average balance was nearly $403,000, the first such time it surpassed $400,000, according to Fidelity. Among 403(b) participants, that average balance was more than $233,000.
Savings rates also went up during the pandemic, with 38% of people upping their 401(k) contributions. Younger workers ramped up savings the most, with 54% of those in Gen Z and 43% of millennials increasing their 401(k) deferrals over the past year, according to Fidelity.
The changes coincide with improving sentiments, the company found in a recent survey of more than 1,500 people. In May, about 27% of people said they felt stressed, down from 41% in November, while the percentage of those feeling hopeful over that timeframe went from 32% to 42%, the company reported. According to that survey, as many as one in four people do not plan on returning to life as it was before the pandemic, indicating potential career changes or flexible work arrangements.
A separate finding from Fidelity’s retirement data report is that employers are increasingly adding managed accounts as an option, although workers are generally uninterested in them.
This year, more than 36% of plans at Fidelity include managed accounts, up from 33% in 2020. However, just 3.6% of participants have signed up for them, compared with 3.5% last year.
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