Here’s a bit of good news for retirement savers. A new report from Fidelity Investments reveals that balances for retirement accounts such as 401(k)s and IRAs hit an all-time high in the third quarter.
Just how high? Average balances for 401(k)s and individual retirement accounts have nearly doubled since the third quarter of 2008, when the U.S. was in the midst of the Great Recession.
The average 401(k) balance reached a high of $106,500 in the third quarter this year, according to the Fidelity report released Monday. That figure represents an 87% increase compared with the third quarter of 2008, when the average balance was $56,900. And the average IRA balance rose to $111,000, more than twice as much as the average IRA balance in the third quarter of 2008.
| Q3 2008 | Q3 2017 | Q2 2018 | Q3 2018 | |
|---|---|---|---|---|
| 401(k) | $56,900 | $99,900 | $104,000 | $106,500 |
| IRA | $52,000 | $103,400 | $106,900 | $111,000 |
The report, which looked at more than 30 million retirement accounts, also found that the number of 401(k) and IRA millionaires — that is, people who have $1 million or more saved in these types of retirement accounts — saw double-digit growth compared with the same period a year ago. Fidelity estimates there are now 187,400 401(k) millionaires, up from 133,000 last year, and 170,400 IRA millionaires, up about 25% from the same period last year.
What’s more, Fidelity found significant gains for those who have saved consistently over the past five, 10 or 15 consecutive years in their work-sponsored 401(k) accounts. Most notably:
- The average 401(k) balance for millennials who have been saving for five years straight in the same employer-sponsored account topped $80,000 in the third quarter of this year, up from $20,600 five years ago.
- The average 401(k) balance for those who’ve saved 10 years in a row reached $305,400, or about five times the average balance for this group 10 years ago.
- For those who have continuously saved for 15 years (or since the third quarter of 2003), the average 401(k) balance increased to $400,300 in the third quarter of 2018. That’s more than eight times the average balance of $47,800 that same group had in the second quarter of 2003.
In the midst of a turbulent stock market, these gains may help encourage retirement savers.
“Most individuals will go through several periods of market volatility in their savings career, so it’s important to stay the course, not react to short-term market events and continue to take a long-term approach to retirement savings,” said Kevin Barry, president of workplace investing at Fidelity, in a press release.
“These groups of long-term savers are great examples of how a consistent approach to retirement savings can lead to significant financial gains over the long run,” he said.