Fidelity Finds Average Retirement Balances Hit Record High in 2019

During his State of the Union address a couple of weeks back, President Donald Trump continued to tout the strength of the United States economy. Indeed the stock markets did have a strong (albeit bumpy at times) year in 2019 — but how does that impact the average American? Well, according to a new report from Fidelity, between new contributions and market gains, those saving for retirement saw their account balances rise to record levels during the last quarter of the year.

Fidelity’s quarterly report analyzes balances and contributions to more than 30 million retirement accounts — including 401(k)s, 403(b)s, and IRAs. For the fourth quarter of 2019, the average 401(k) increased to $112,300. That not only represents a year over year 17% increase but also a 7% bump from the previous quarter. Similarly the average IRA balance climbed to $115,400 — also a 17% gain from Q4 2018. Tax-exempt 403(b)s had a lower average overall ($93,100) but saw a slightly higher YOY gain of 18%.

As impressive as these new records and yearly gains may be, what’s even more eye-opening is the difference a decade can make. According to Fidelity, the average IRA balance in the last quarter of 2009 was just $63,900. 401(k)s weren’t too far behind with $62,600 while 403(b)s lagged with $48,400. Also notable is that the number of individuals with seven-figure account balances (over $1 million) rose to a record 233,000 in 2019 compared to a mere 21,000 in 2009.

Another interesting discovery from the latest Fidelity figures involves Millennials. While the generation is known for being saddled with student debt and other expenses, Millennials managed to contribute a total of $373 million to IRAs in Q4. That marks a 46% increase from one year prior. Also notable, 73% of these contributions went to Roth IRAs, allowing these younger savers to pay taxes on contributions upfront but take tax-free withdrawals when they reach retirement.

Commenting on the report’s findings, Fidelity Investments president of Workplace Investing Kevin Barry said, “The growth in savings levels over the last 10 years demonstrates the positive impact of taking a long-term approach to retirement, and recent Fidelity research demonstrates workers who do so have reason to feel increasingly confident about their retirement readiness.” Barry went on to offer a slight warning, noting, “However, as we enter a new decade and continue to see markets rise and fall, it’s more important than ever to remember some of the important elements of a successful retirement strategy – these include maintaining positive savings habits, ensuring your account has the right balance of stocks, bonds and cash, and continuing to focus on your long-term savings goals.”

Even as investors brace for a potential slowing in 2020, the power of the markets and compounding gains were on full display in 2019. Therefore, even if things aren’t quite as rosy in the coming year, it’s important that savers stay the course, allowing them to take advantage of these upswings when they occur. Hopefully those seeing new highs in their 401(k)s and IRAs this past year will be inspired to follow through and thus properly prepare themselves for their eventual retirement.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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