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

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

California Is a Donor State, but Can It Stop Sending Its Tax Dollars to DC?

DON'T MISS

Marines Prepare to Deploy in LA as More Protests Planned Across US

DON'T MISS

Harvey Weinstein Convicted of Sex Crime Amid Contentious Jury Deliberations

DON'T MISS

Federal Raids Threaten California Businesses as Immigrant Workers Vanish From Job Sites

DON'T MISS

Water Scarcity Is Forcing Tough Decisions. This Legislation Can Keep Our Family Farm Afloat

DON'T MISS

Arizona Governor Vetoes Bill to Ban Teaching Antisemitism in Arizona’s Public Schools

DON'T MISS

Brian Wilson, Summer’s Poet Laureate of the Beach Boys, Dies at 82

DON'T MISS

Russian Attacks Kill 3 and Wound 64 as Drones Hit Kharkiv and Other Parts of Ukraine

DON'T MISS

World’s Most Popular TikTok Star Khaby Lame Leaves the US After Being Detained by ICE

DON'T MISS

Elon Musk Backs Off From Feud With Trump, Saying He Regrets Social Media Posts That ‘Went Too Far’

UP NEXT

Trump Warns Protests at Army Parade Will Be Met With Force

UP NEXT

Do Americans Support Trump’s Use of Marines in LA? The Numbers Might Shock You

UP NEXT

Marines Will Deploy to LA for 60 Days, Costing Taxpayers $134 Million

UP NEXT

First the National Guard, Will the Marines Be Next at LA Riots?

UP NEXT

Sights & Sounds: The 2025 Fresno Rainbow Pride Parade and Festival

UP NEXT

Doctors Were Preparing to Remove Their Organs. Then They Woke Up.

UP NEXT

FDA’s AI Assistant ‘Elsa’ Fails Its First Day on the Job

UP NEXT

8 Ways Musk and Trump Could Inflict Pain on Each Other

UP NEXT

D-Day Veterans Return to Normandy to Mark 81st Anniversary of Landings

UP NEXT

Lambda Legal, a Nonprofit Supporting LGBTQ+ Rights, Exceeded Fundraising Goal by $105M

Federal Raids Threaten California Businesses as Immigrant Workers Vanish From Job Sites

1 hour ago

Water Scarcity Is Forcing Tough Decisions. This Legislation Can Keep Our Family Farm Afloat

2 hours ago

Arizona Governor Vetoes Bill to Ban Teaching Antisemitism in Arizona’s Public Schools

2 hours ago

Brian Wilson, Summer’s Poet Laureate of the Beach Boys, Dies at 82

2 hours ago

Russian Attacks Kill 3 and Wound 64 as Drones Hit Kharkiv and Other Parts of Ukraine

3 hours ago

World’s Most Popular TikTok Star Khaby Lame Leaves the US After Being Detained by ICE

3 hours ago

Elon Musk Backs Off From Feud With Trump, Saying He Regrets Social Media Posts That ‘Went Too Far’

3 hours ago

US Stocks Drift Near Their Record Following an Encouraging Inflation Update

3 hours ago

Trump Hails Favorable Federal Appeals Court Ruling on His Sweeping Tariff Policy as a ‘Great’ Win

3 hours ago

LA Police Swiftly Enforce Curfew as Protests Against Trump’s Immigration Crackdown Continue

3 hours ago

California Is a Donor State, but Can It Stop Sending Its Tax Dollars to DC?

Gov. Gavin Newsom fired back at President Trump’s threat to cut federal funding to California by highlighting the state’s signif...

17 minutes ago

17 minutes ago

California Is a Donor State, but Can It Stop Sending Its Tax Dollars to DC?

Military Vehicles on LA Freeway 101
29 minutes ago

Marines Prepare to Deploy in LA as More Protests Planned Across US

1 hour ago

Harvey Weinstein Convicted of Sex Crime Amid Contentious Jury Deliberations

1 hour ago

Federal Raids Threaten California Businesses as Immigrant Workers Vanish From Job Sites

2 hours ago

Water Scarcity Is Forcing Tough Decisions. This Legislation Can Keep Our Family Farm Afloat

Arizona Democratic Gov. Katie Hobbs, center, applauds for those affected by the Los Angeles area wildfires as she gives the State of the State address in the House of Representatives at the state Capitol with Speaker of the House Rep. Steve Montenegro, R-Litchfield Park, left, and Senate President Warren Petersen, R-Gilbert, flanking the governor on Jan. 13, 2025, in Phoenix. (AP File)
2 hours ago

Arizona Governor Vetoes Bill to Ban Teaching Antisemitism in Arizona’s Public Schools

Brian Wilson obit
2 hours ago

Brian Wilson, Summer’s Poet Laureate of the Beach Boys, Dies at 82

3 hours ago

Russian Attacks Kill 3 and Wound 64 as Drones Hit Kharkiv and Other Parts of Ukraine

Help continue the work that gets you the news that matters most.

Search

Send this to a friend