Balances in 401(k)s and IRAs have reached record highs,
according to new data from Fidelity. But that may not mean much for your
retirement. The average 401(k) balance at the end of the first quarter was
$91,800, up 0.5 percent from last quarter's then-record numbers and up 3.6
percent from a year ago, according to the analysis by Fidelity, the
nation's largest provider of 401(k)s. Among employees participating in a 401(k)
for at least 10 years, the average balance hit $251,600, up 12 percent from a
year ago.
IRA balances also reached a record, with Fidelity reporting
that the average Q1-ending balance was $94,100, up 5 percent from last quarter.
Among consumers who have both a 401(k) and IRA, combined balances average
$267,200, up 2.2 percent from last year.
Much of the increase stemmed from more consumers saving for
retirement, and boosting their contributions. More than 1 million workers
raised their contribution rate during the first quarter, according to Fidelity.
The average contribution rate remained at 8.1 percent of employees' salaries, a
record set during the fourth quarter, while employer contributions climbed from
4.1 percent in the previous quarter to 4.4 percent.
IRA contributions dropped slightly from the fourth quarter,
from an average $3,270 to $3,150, the report notes. But the overall percentage
of consumers contributing to those accounts rose 7 percent over the same
period.
Still, the retirement outlook remains dismal for many
consumers, with a new Employee Benefit Research Institute study finding that 1
in 5 elderly Americans dies broke. Fidelity's figures are limited to
accounts it manages; only 49 percent of workers have access to a
retirement savings plan at work.
Opinions differ on just how much that might be—one recent
Legg Mason survey reported many investors think they'll need at least $2.5
million, versus the $1 million figure many advisors float. The magic
number, for most consumers, is very personal. For a bare minimum, consider how
much you'll need to cover basic needs—shelter, food health care—in retirement. Another
common rule of thumb is to save 10 to 15 percent of your income for
retirement, including the employer match. By that measure, the average 12.5
percent Fidelity customers are contributing to their 401(k)s is right on track.
Click here to access the
full article on CNBC.