A benefits analysis survey by Fidelity Investments finds that its clients’ participants are saving more than ever before. The total average savings rate for 401(k) investors, combined with employer matches and profit sharing, reached a record high of 12.9% in the first quarter of 2017. The previous high was seen back in Q1 2006, when the total average savings rate was 12.8%.
The average employee deferral rate was 8.4% with an average employer match of 4.5%.
Savings rates were highest among older age groups. The youngest cohort for which Fidelity tracked data (ages 20-24) saved an average of 6.2%. Those between the ages of 35 and 39 saved on average 7.5%. Participants nearing traditional retirement age (ages 60-64) on average saved 10.8%. However, participants working past retirement age contributed the largest deferrals. Those ages 70 and older contributed the peak average of 12.3%.
Across all age groups, Fidelity found 27% of participants increased their savings rates in the past 12 months. Almost half (43.4%) of participants between the ages of 20 and 24 increased their savings rates, and 15.5% of those at least 70-years-old increased their rates as well.
In addition, Fidelity found the average 401(k) balance hit a record high of $95,500 – up from $74,900 five years ago. The firm attributes these results to positive equity performance and participant behavior. The youngest savers (ages 20-24) had an average balance of $4,200. Those between the ages of 30 and 34 had an average balance of $28,600. Those nearing retirement (ages 60-64) had an average balance of $163,700. Those ages 70 and older had the highest average balance of $173,600.
“It’s encouraging to see the increasing number of people who contributed to their retirement savings this quarter,” says Kevin Barry, president, Workplace Investing, Fidelity Investments. “While retirement account balances were aided by positive stock market performance in the first quarter, consistent saving in a retirement savings account – any account, whether that’s a 401(k), IRA or both – can have a significant, positive impact on your long-term retirement success.”
Moreover, Fidelity also finds that more participants are contributing to a 401(k) and an HSA. Despite the fear that participants saving in both vehicles would cut back from their 401(k)s, Fidelity reports participants saving in both are contributing more to their 401(k) on average than those contributing to only the employer plan.
Barry adds, “Health savings accounts and 401(k)s can contribute to an employee’s financial wellness, so it’s encouraging to see more employers and employees understand and embrace the complementary nature of these accounts.”