PROVIDENCE – Workers’ retirement balances continue to soar, reaching record levels for the second straight quarter, according to a new report by Fidelity Investments Inc.
Fidelity’s Q1 2021 Retirement Analysis credited consistent savings among workers along with employer contributions and a positive stock market performance as reasons for continued growth in average retirement balances.
Some individual retirement accounts also saw a seasonal increase due to tax-deferred contributions made before the filing deadline, Fidelity stated.
Meanwhile, loans and withdrawals from retirement savings accounts decreased despite the continued financial impacts of the pandemic, the report stated. Only 1.6% of 401(k) account holders took out a new loan, while 2.4% made a withdrawal. However, 17.5% of workers still have outstanding 401(k) loans.
Balances increased across all types of retirement accounts, as follows:
Individual retirement account balances reached an average of $130,000, a 1% increase over the prior quarter and a 31% increase year over year.
401(k) balances reached an average of $123,900, a 2% increase over the prior quarter and a 36% increase year over year.
403(b) balances reached an average of $107,300, up 1% over the prior quarter and 42% year over year.
More than 8 in 10 employees benefited from matching employer 401(k) contributions in the first quarter, with the most popular formula using a 100% match for the first 3% of employee contributions and a 50% match for the next 2% from an employee.
Overall, employers contributed to 401(k)s at an average 4.6% rate, with an average contribution of $1,720. For 403(b) accounts, employer contribution rates were an average 4.1% with an average $3,000 contribution.
Auto-enrollment options also increased, with more than a third of companies automatically enrolling employees in 401(k) plans. Among organizations with more than 50,000 workers, auto-enrollment rates were 62%.
The savings rate for auto-enrollment also went up, with 20% of employers increasing the auto-enroll rate from an average 3% to 6%.
The report reflects first-quarter data from more than 30 million retirement accounts managed by Fidelity.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
