Americans are still saving for retirement – and becoming 401(k) millionaires

Americans may be afraid to look at their retirement accounts thanks to stock market volatility, but many investors are still on track, according to the latest data from Fidelity Investments released on Thursday.

The 401 (k) plan savings rate reached a record high of 14%, just a recommended 15% percentage point that Fidelity suggests to retirement savers, according to Fidelity’s first quarter 2022 data from its participants. .

“We have more and more retirement savers who don’t make changes based on short-term market events,” said Mike Shamrell, a spokesman for Fidelity Investments. “They are deciding to stay the course and take a long-term approach.”

Most savers also didn’t play with their asset allocation, and those who did were more likely to be older participants near retirement, Shamrell said. Of the 5.6% of 401 (k) account holders who made a change in the first quarter of 2022, the majority (82%) made only one change. Only 4.4% of 403 (b) account holders made a change to their plans during the first quarter, and 87% of those who did made only one change.

“People are beginning to understand that this is something that will happen and that trying to make changes based on these short-term events could have a negative impact on your long-term savings capacity,” Shamrell said.

Shamrell said incentives to save for retirement in the workplace, such as automatic enrollment in retirement plans, may be one of the reasons why fewer investors made changes in asset allocation. Many participants, especially younger workers, have their savings in a target date fund, which links their asset allocation to a specific year, such as 2055 or 2060.

However, not all savers may have seen the benefits of their increased savings rates. Retirement account balances declined from last quarter, or about the same time last year. For example, the average balance of 401 (k) was $ 121,700 in the first quarter of 2022, below $ 130,700 in the last quarter and $ 123,900 in the first quarter of 2021; IRA balances were $ 127,100 in the last quarter, down from $ 135,600 in the last quarter of 2021 and $ 130,000 in the first quarter of 2021. The average balance of 403 (b) was $ 107,600. in the first quarter of this year, below $ 115,100 in the previous quarter, but an increase of $ 300 over the same period last year.

Still, a $ 1 million balance can still be reached: there were 406 billion holders of 401 (k) millionaire accounts in the first quarter of 2022 and 346,800 millionaire IRAs, Shamrell said.

Fewer workers also took out a loan from their 401 (k) accounts. The number of people taking out a new loan fell for the third consecutive quarter – to just 2% in the first quarter – and the percentage of participants with outstanding credit balances also fell for the fourth consecutive quarter, to 16.6% .

Consistency has proven to be key among Fidelity’s retirement plan participants. For people who have contributed to the same 401 (k) plan over the past five years, the average balance grew from $ 115,000 in the first quarter of 2017 to $ 257,400 in 2022. Those who have been in the same plan for the past five years 10 years saw their balances grow from $ 85,100 in the first quarter of 2012 to $ 383,100 in 2022. And participants in the same plan for 15 years had an average account balance of $ 64,900 in the first quarter of 2007 to $ 482,900 in 2022 .

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