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United States : FidelityA 401(K) Participants with Health Savings Accounts Continue to Outpace Average 401(K) Savings Levels.

Fidelity InvestmentsA today released its annual analysis on the saving habits of 401(k) participants and health savings account (HSA) owners revealing that regardless of income those who saved in both vehicles in 2011 had a higher 401(k) balance than those who saved only in a 401(k). In addition, nearly one quarter of continuously contributing HSA account holders save most of their contributions, which will help pay for escalating costs of health care in retirement.

On average, 401(k) participants who also contributed to an HSA in 2011 deferred 8.5 percent of their annual salary into their 401(k). Meanwhile, participants that year who only saved in a 401(k) contributed an average of 8.1 percent.

During benefit enrollment season, it s encouraging to see that on average, saving in an HSA is not done at the expense of an employee s crucial 401(k) retirement savings, said William Applegate, vice president, Fidelity Investments. Employers and employees alike are increasingly recognizing the importance of planning for current and future health care costs and many are beginning to integrate this tax-advantaged product into their overall retirement strategy.

The average 401(k) balance for participants earning $40,000 to $60,000 per year and saving in both their workplace savings plan and an HSA was $63,600. In contrast, those in the same income bracket who saved only in a 401(k) had an average balance of $46,100, 28 percent less. Similarly, those earning $100,000 to $150,000 per year and saved in both vehicles had an average 401(k) balance of $226,800. But for those saving in a 401(k) alone, the average balance was $174,200, 23 percent less.

One Quarter of Account Holders Save Contributions for Future Health Care Costs

As it did last year, Fidelity categorized its HSA account holders as Spenders, Hybrids and Savers. Of Fidelity HSA account holders:

23 percent are Savers, those who spend only 10 percent or less of their annual contributions, electing to invest their remaining balances for health care costs in retirement

33 percent are Spenders, those who spend 90 percent or more of their annual contributions on qualified medical expenses

44 percent are Hybrids, those that both spend their contributions but also leave year-end remaining balances

In 2011, the average HSA balance and contribution dropped slightly from 2010. But for Savers and Hybrids, average balances rose in 2011 and over the previous two years.

Fidelity studied its HSA account holders who made continuous contributions to an HSA over the three years 2009 to 2011 and uncovered an increased average balance across all categories of 59 percent, from $3,200 to $5,100. But Savers saw a more than 100 percent increase in average balances, from $5,900 to $12,100. For Hybrids, average balances grew 79 percent, from $3,300 to $5,900.

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Publication:Mena Report
Date:Oct 6, 2012
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