Saving at Record Levels.
Byline: Javier Simon
Summary paragraph: Fidelity finds that people squirrel away an average 12.9%
A benefits analysis survey by Fidelity Investments found 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 this year. The previous high was seen 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 through 24-saved an average of 6.2%. Those between 35 and 39 saved on average 7.5%. Participants nearing traditional retirement age-60 through 64-on average saved 10.8%. However, participants working past retirement age contributed the largest deferrals. Those 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 ages 20 and 24 increased their savings rates, and 15.5% of those 70 and older 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-20 through 24-had an average balance of $4,200. The average balance for those 30 through 34 was $28,600; for those 60 through 64, it was $163,700; and for those 70 and up, $173,600.
"It's encouraging to see the growing 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 [individual retirement account] or both-can have a significant, positive impact on your long-term retirement success."
Moreover, Fidelity also found that more participants now contribute to both a 401(k) and a HSA (health savings account). Despite the fear that saving to both vehicles would lessen what participants contribute to their 401(k), Fidelity reports that savers to both put more into their 401(k) on average than did those contributing only to that plan. Barry adds: "HSAs and 401(k)s can contribute to financial wellness."