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Fidelity Q2 Retirement Analysis: Balances Again Reach Record Levels, While Many Workers Aren´t Taking Full Advantage of Company Match

08/03/2017
Rising stock markets could lead to overexposure in equities; target date funds, managed accounts can help keep investors on track

BOSTON — Fidelity Investments® today released its quarterly analysis of its 401(k) and Individual Retirement Accounts (IRA). 

The analysis1 reveals:

  • Retirement account balances reached all-time highs for the third consecutive quarter. Positive stock market performance and increasing contributions drove the average 401(k) and IRA balances to record levels. The average 401(k) balance hit $97,700, while the average IRA balance climbed to $100,200.

    Average Balances

    Q2 2017 Q1 2017 One year ago 5 years ago
    401(k) $97,700 $95,500 $89,100 $73,300
    IRA $100,200 $98,100 $89,600 $73,100
  • The average 401(k) account balance triples for long-term savers. People in their 401(k) for 10 years straight saw their balance increase to a record average of $266,100, up from $78,800 in Q2 2007. The ten year growth is attributed to 53 percent market action and 47 percent employee contributions, which shows the benefit of saving and investing with a long-term view.
  • Small business retirement accounts see double-digit growth. Fidelity's yearly analysis of small business retirement plans, which includes self-employed 401(k) accounts, self-employed (SEP) IRAs and Savings Incentive Match Plan for Employees (SIMPLE) IRAs, indicates average balances have increased by double digits since Q2 2016. The average balance for self-employed 401(k)s increased 10 percent to $162,700, while the average balance for SEP IRAs increased 14 percent to $100,400. The average balance for SIMPLE IRAs grew to $39,000, an increase of 10 percent from Q2 2016.
  • One in five workers still aren't taking full advantage of their 401(k) company match. Over the last 12 months, employees contributed a record average of $5,850 2 to their 401(k), up 4 percent from one year prior. But many employees are not taking full advantage of their employer's matching contributions. Fidelity research shows 3 more than one in five employees (21 percent) did not contribute enough to their 401(k) to take full advantage of their company's matching contributions, potentially missing out on thousands of dollars in matching contributions over the course of a year.

"While many employers have made it easier to enroll and get started in their 401(k) plans, employees need to verify they are they are taking full advantage of their company's matching contributions," said Kevin Barry, president, Workplace Investing, Fidelity Investments. "Nearly 90 percent of employees are eligible for some sort of company match, so it's important to know what your company offers and make every effort to save enough to get the full match. If not, you're essentially leaving free money on the table."

While Balances Increase, Savers Need to Ensure They Are Not Over-Exposed to Stocks

The stock market's performance over the last several years means people may have a greater allocation of stocks4 in their 401(k) accounts than Fidelity recommends5. This could expose their retirement savings to unnecessary risk in the event of a market downturn.

Fidelity found that 40 percent of those who managed their own 401(k) asset allocation—as opposed to have their savings in a target date fund or managed account—had a stock allocation in their 401(k) that was higher than recommended, up from 38 percent in Q2 2016.

"Having the right balance of stocks, bonds and cash in your retirement savings is just as important when the market swings up as when it goes down. While we've had several years of positive market performance and are experiencing record growth in account balances, it's important for retirement savers to make sure they are within the recommended asset allocation to help protect their savings," continued Barry.

About Fidelity Investments

Fidelity's mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $6.2 trillion, including managed assets of $2.3 trillion as of June 30, 2017, we focus on meeting the unique needs of a diverse set of customers: helping more than 26 million people invest their own life savings, 23,000 businesses manage employee benefit programs, as well as providing more than 12,500 financial advisory firms with investment and technology solutions to invest their own clients' money. Privately held for 70 years, Fidelity employs more than 40,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.

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