new york
CNN
—
The second quarter of this year was a strong quarter for retirement savers, according to a new analysis from Fidelity Investments.
401(k) balances increased on average across all age groups in the second quarter and year-over-year, driven by continued employee and employer contributions and market improvements.
Here are some concrete numbers based on accounts with Fidelity, one of the largest providers of workplace retirement plans. Over 23 million 401(k) participants.
Overall, average 401(k) balances increased to $112,400, up 4% from the first quarter. It was his third straight quarter of an increase in average balance. And compared to 10 years ago, average balances are up 39%.
Fidelity tracked savings growth over the past year and found that the average 401(k) account among baby boomers increased by 6.3%. Of course, millions of baby boomers will retire in the next few years.Them The average balance of those who have been consistently saving since 2008 is now $499,000. That’s well above the second quarter average of $220,900 for everyone in that age group.
Young workers’ balances, on the other hand, have grown at a double-digit rate over the past year. In Gen X he was 14.5% he was $153,300. Millennials are 24.5%, $48,300. 66% of Gen Z workers, $8,100.
Regardless of generation, people who have been saving continuously for 5, 10, or 15 years Fidelity also saw a double-digit percentage increase.
The “save consistently” part makes a big difference when building a nest egg, but so does the level of contribution to your account. In the second quarter, Fidelity found that the gross contribution rate (employee savings plus employer matching) averaged his 13.9% of gross income.That is It’s been pretty much the same for the last few quarters, Still below Fidelity’s recommended savings of 15%. By generation, the average contribution rate of baby boomers was the highest at 16.6%.
Kevin Barry, President of Workplace Investing at Fidelity Investments, said: “Amid improving market conditions, maintaining a high contribution and savings rate is critical to improving retirement preparedness. It’s an element,” he said.
What can hurt your progress is leveraging your retirement benefits long before you retire. This is because you will have less money left to invest and your funds will not grow as quickly as they otherwise would. Additionally, simply withdrawing money is taxed and he may have to pay an early withdrawal penalty of 10% if less than 59-1/2.
However, in some situations, it may make sense to take out a 401(k) loan that you pay back with interest if it helps solve immediate financial challenges that will hurt you in the long run.
According to Fidelity research, the percentage of participants with outstanding 401(k) loans rose slightly from 16.6% in Q1 to 17.1% in Q2. However, that 16.6% is a record low and “significantly below the loan balances observed pre-pandemic,” the firm said.