At the end of the fourth quarter 2011, the average 401(k) balance was $69,100, up nearly 8% from the end of the third quarter.
According to the report, more participants benefited from employer contributions. Eighty-two percent of active participants received employer contributions—typically a company match or profit sharing—during 2011, up from 79% in 2010. Seventy-five percent of employers made contributions to eligible participants last year, averaging $3,270, up from $3,170 the year before.
Target-date funds helped drive improved diversification and asset allocation. One in four participants invested 100% of their 401(k) assets in this option, with nearly half of participants age 35 or younger investing all their plan assets in the option.
Very few participants made exchanges last year. Only one in 10 participants made an exchange—the transfer of money from one investment option to another—during a year of significant market volatility, down from 15% in 2006. Much of the reduction in exchanges may be attributed to the increased use of target-date funds and an appreciation of a long-term, steady approach to retirement saving. Over the past few quarters, when investors made exchanges, more assets moved out of equities toward conservative holdings such as short-term, stable value and fixed-income options.
“It’s very encouraging that savings levels actually held up during the intense market volatility of last year and a sluggish economic environment,” said James M. MacDonald, president, Workplace Investing, Fidelity Investments. “Increases in savings levels, however small, can make a significant impact over time.”