Please ensure Javascript is enabled for purposes of website accessibility
401(K) Accounts Hit Records as Workers Sock Away More, Stocks Jump
gvw_ap_news
By Associated Press
Published 5 years ago on
February 13, 2020

Share

NEW YORK — How’s your 401(k) doing?
President Donald Trump likes to ask that question around the country, sometimes throwing out big gains like 90% or 95%. The average 401(k) did indeed hit a record last year, although its growth was considerably less than that.
The average 401(k) balance rose 17% last year to $112,300 from the end of 2018, according to a review of 17.3 million accounts by Fidelity Investments. The average individual retirement account, or IRA, balance rose the same percentage to $115,400.
Those figures are averages, not medians, and the typical 401(k) might be closer to a quarter of that. The top 1% of 401(k) savers has more than $1 million in each of their accounts, which skews the average higher.
Surging markets around the world were a big reason for growth across accounts in 2019: The S&P 500 index had one of its best years in decades with a 31.5% return. Investments of all types logged gains, from junk bonds to stocks from developing economies.
But workers’ better savings habits also played a big role.

In Many Cases, Workers May Not Even Realize They’re Saving More

Fidelity said the average worker set aside 8.9% of their pay in their 401(k) in the fourth quarter, a record. Combined with employer matches, the average total savings rate was 13.5% in the quarter, tying its record last reached in the spring of 2019.

“Nobody can control the market, so the behaviors of people contributing to their 401(k)s are what get us the most excited. We have people saving 13.5%, which is really close to the 15% that we recommend. That’s a great story.” — Katie Taylor, vice president of thought leadership at Fidelity 
“Nobody can control the market, so the behaviors of people contributing to their 401(k)s are what get us the most excited,” said Katie Taylor, vice president of thought leadership at Fidelity. “We have people saving 13.5%, which is really close to the 15% that we recommend. That’s a great story.”
In many cases, workers may not even realize they’re saving more. Most employers give the option for workers to automatically increase their contributions each year, without having to do anything. Some employers even automatically sign up their employees for these auto-escalation programs, requiring them to opt out if they don’t want their contribution levels to steadily rise.
Such features are on top of programs where employers automatically enroll new hires in the 401(k) plan. They all lean on the power of inertia to help workers build up bigger nest eggs. It’s a sharp turnaround from earlier years when workers had to take an extra step to join the 401(k) plan and fill out paperwork whenever they wanted their contribution levels to change.
“There’s always a way, if you don’t want to do it, where you can unenroll, but these automatic programs have been a game changer,” Taylor said.
Consistent contributions — and giving them time to grow — are keys to building bigger portfolios. Among workers who have been in their 401(k) plan for 10 straight years, the average balance rose to a record $328,200, according to Fidelity.

Other Investment Firms Have Similar Chasms Between Median and Average Balances

That figure is the average, which means big portfolios of just a few savers can skew the number higher. Fidelity said it counts 233,000 people with $1 million or more in their 401(k) accounts, or 1.3% of all its participants.
The median, which shows the midpoint of what savers have, is much lower. Across all the 401(k) accounts Fidelity surveyed, the median balance was $27,000. That’s also a record and up nearly 18% from a year earlier.
Fidelity says it prefers looking at average figures because the median is also skewed by people who have $0 balances in their 401(k) after they started a new job or rolled their 401(k) savings into another account.
Other investment firms have similar chasms between median and average balances. At Vanguard, the median balance was $22,217 in 2018, well below the average of $92,148, for example.
Such figures also , though, count only people who have a 401(k). Many lower-income workers, particularly at smaller employers, could not save in a 401(k) even if they wanted to because their companies don’t offer access to one. Legislation passed late last year aims to make it easier for smaller employers to band together and offer plans.
Nearly half of all U.S. households aged 55 and over, 48%, had no retirement savings at all as of 2016, according to estimates from the Government Accountability Office.

RELATED TOPICS:

DON'T MISS

Merced’s Iconic Laura Fountain Returns to Splendor With $300K Restoration

DON'T MISS

If You Thought Trump Wasn’t Serious About Deportations, Look at His First Appointments

DON'T MISS

Biden EPA to Charge First-Ever ‘Methane Fee’ for Emissions Waste by Oil and Gas Companies

DON'T MISS

Trump Picks Former Arkansas Gov. Mike Huckabee to Be Ambassador to Israel

DON'T MISS

At the Pandemic’s Start, Americans Began Drinking More. They Still Are.

DON'T MISS

Last GOP Congressman Anchored in Democratic LA County Concedes in Race Against Former NASA Exec

DON'T MISS

Aid Groups Say Israel Misses US Deadline to Boost Humanitarian Aid Entering Gaza

DON'T MISS

Speaker Mike Johnson Says Republicans Are ‘Ready to Deliver’ on Trump’s Agenda

DON'T MISS

Wall Street Slips as the Trump Trade Cools

DON'T MISS

49ers Coach Kyle Shanahan Says Players’ Sideline Spat Has Been ‘Squashed’

UP NEXT

When to Catch the Last Supermoon of the Year

UP NEXT

Mattel Says It ‘Deeply’ Regrets Misprint on ‘Wicked’ Dolls Packaging That Links to Porn Site

UP NEXT

Trump to Target Iran’s Oil Trade in Renewed ‘Maximum Pressure’ Campaign

UP NEXT

4B Movement: After the Election, a Call for Women to Swear Off Men

UP NEXT

FBI Thwarts Iranian Murder-for-Hire Plan Targeting Donald Trump

UP NEXT

Wave of Racist Texts After Election Prompts FBI Scrutiny

UP NEXT

Americans Seek Fresh Start Abroad as Election Sparks Expat Interest

UP NEXT

Trump Promises to Bring Lasting Peace to a Tumultuous Middle East. But Fixing It Won’t Be Easy

UP NEXT

Trump Threatens 25% Tariff on Mexico to Curb Immigration

UP NEXT

North Korea’s Long-Range Missile Test Signals Its Improved, Potential Capability to Attack US

Trump Picks Former Arkansas Gov. Mike Huckabee to Be Ambassador to Israel

42 mins ago

At the Pandemic’s Start, Americans Began Drinking More. They Still Are.

1 hour ago

Last GOP Congressman Anchored in Democratic LA County Concedes in Race Against Former NASA Exec

1 hour ago

Aid Groups Say Israel Misses US Deadline to Boost Humanitarian Aid Entering Gaza

2 hours ago

Speaker Mike Johnson Says Republicans Are ‘Ready to Deliver’ on Trump’s Agenda

2 hours ago

Wall Street Slips as the Trump Trade Cools

2 hours ago

49ers Coach Kyle Shanahan Says Players’ Sideline Spat Has Been ‘Squashed’

2 hours ago

Cowboys QB Dak Prescott Will Have Season-Ending Surgery on Torn Hamstring

2 hours ago

Judge Delays Ruling on Whether to Scrap Trump’s Conviction in Hush Money Case

2 hours ago

Songwriters Hall of Fame Unveils Star-Studded 2025 Nominees, From Eminem to Janet Jackson

2 hours ago

Merced’s Iconic Laura Fountain Returns to Splendor With $300K Restoration

A landmark from days of old when Merced was known as “Fountain City” is back, fully restored for new generations to appreciate. ...

29 mins ago

29 mins ago

Merced’s Iconic Laura Fountain Returns to Splendor With $300K Restoration

33 mins ago

If You Thought Trump Wasn’t Serious About Deportations, Look at His First Appointments

41 mins ago

Biden EPA to Charge First-Ever ‘Methane Fee’ for Emissions Waste by Oil and Gas Companies

Republican presidential nominee former President Donald Trump talks with former Arkansas Gov. Mike Huckabee during a roundtable at the Drexelbrook Catering & Event Center, Tuesday, Oct. 29, 2024, in Drexel Hill, Pa. (AP Photo/Julia Demaree Nikhinson)
42 mins ago

Trump Picks Former Arkansas Gov. Mike Huckabee to Be Ambassador to Israel

1 hour ago

At the Pandemic’s Start, Americans Began Drinking More. They Still Are.

1 hour ago

Last GOP Congressman Anchored in Democratic LA County Concedes in Race Against Former NASA Exec

2 hours ago

Aid Groups Say Israel Misses US Deadline to Boost Humanitarian Aid Entering Gaza

2 hours ago

Speaker Mike Johnson Says Republicans Are ‘Ready to Deliver’ on Trump’s Agenda

Search

Send this to a friend