PROVIDENCE – Workers continue to sock away money for retirement at record levels, with account balances reaching a new high for the third consecutive quarter, according to a recent report from Fidelity Investments Inc.
Fidelity’s Q2 2021 Retirement Analysis attributed the gains in account balances to positive investing behavior combined with drops in outstanding and new 401(k) loans.
Fewer than 1 in 5 account holders had an outstanding loan as of the second quarter, a record-low percentage that continues a trend of declining loan balances. Drops in loans combined with fewer people changing asset allocations speak to increased confidence among investors despite the financial uncertainty still lingering from the pandemic.
In a separate, recent survey of Fidelity plan participants, fewer workers reported feeling stressed or anxious as of May compared with November of the prior year.
Balances increased across all types of retirement accounts, as follows:
- Individual retirement account balances increased to an average balance of $134,900, a 4% quarter-over-quarter increase and a 21% increase year over year.
- Average 401(k) balances increased to $129,300, a 4% quarter-over-quarter increase and up 24% from a year ago.
- Average 403(b) balances increased to $113,300, a 6% quarter-over-quarter increase and 24% higher than a year ago.
Contributions spiked particularly among baby boomers, with a record 18.2% of this demographic making “catch-up” contributions to their 401(k) accounts in the second quarter.
Younger workers are also increasing contributions, with more than half of Generation Z workers – those who were born between 1997 and 2012 – and 43% of millennials increasing their 401(k) savings rate over the last year. Across all age groups, 38% of 401(k) savers have increased their savings rate since the second quarter of 2020.
The report is based on survey results of Fidelity’s 30 million plan participants as of June 30, 2021.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
