Fidelity® 2019 Retirement Analysis

Of IRA Millionaires And A Q2 Savings-Spree

A Record Number of People Boost Their Savings Rate in Q2 as Average Account Balances Continue to Increase

August 21, 2019 — BOSTON–(BUSINESS WIRE)–Fidelity Investments®, a leading workplace benefits provider and one of the largest and most diversified financial companies in the industry, today released its quarterly analysis of retirement savings trends, including account balances, contributions and savings behaviors, across more than 30 million retirement accounts. Average account balances continued to increase in the second quarter, reaching near-record levels after experiencing a dip at the end of 2018.

Highlights from Fidelity’s Q2 2019 analysis include:

Average 401(k), IRA and 403(b) balances increased slightly in Q2 2019. The average 401(k) balance rose to $106,000, a 2% increase from $103,700 in Q1 2019. The year-over-year average balance is also up roughly 2% from $104,000 in Q2 2018. The average IRA balance increased to $110,400, a 2% increase from last quarter and 3% higher than the $106,900 balance one year ago. The average 403(b)/tax exempt account balance increased to $88,600, a 3% increase from last quarter and up 6% from Q2 2018.

Average Retirement Account Balances

Q2 2019

Q1 2019

Q2 2018

Q2 2009

401(k)1

$106,000

$103,700

$104,000

$52,600

IRA2

$110,400

$107,100

$106,900

$55,700

403(b)/Tax Exempt3

$88,600

$85,800

$83,400

$40,900

 

The number of 401(k) and IRA millionaires reached record levels. The number of people with $1 million or more in their 401(k) increased to a record 196,000, up from 180,000 at the end of Q1, while the number of IRA millionaires increased to 179,700, also a record high and an increase from 168,100 last quarter.

Employee savings rates hit record levels as nearly a third of investors increased savings rate in Q2. The average employee contribution rate climbed to a record-level 8.8% in Q2, nearly a full percentage point higher than ten years ago. Nearly a third (32%) of savers increased their contribution rate in Q2, the highest quarterly percentage ever and nearly three times the 11% of savers that increased their contribution rate in Q2 2009. Among millennials, the percentage of workers that increased their savings rate was 38%, while 34% of women increased their savings rate.

Double-digit increase in the percentage of IRAs owned by millennials. The percentage of IRAs owned by millennials at the end of Q2 increased by 20% over the same period last year. Among millennial women, the percentage of IRAs owned at the end of Q2 increased 19% over Q2 2018.

Average balance for 10-year savers tops $300,000. Among participants who have been in their 401(k) plan for 10 years straight, the average balance reached $305,900, more than five times the average balance of $59,900 for this group 10 years ago. As of the end of Q2 2019, more than 1.6 million individuals had been in the same 401(k) plan since Q2 2009.
“The record number of workers who increased their 401(k) contribution rate is a great indication of how focused Americans are getting about saving for retirement,” said Kevin Barry, president of Workplace Investing at Fidelity Investments.

Increasing your contribution rate, even by one percent, can make a big difference in your long-term retirement savings...

“Increasing your contribution rate, even by one percent, can make a big difference in your long-term retirement savings – what may seem like a small amount today can have a significant impact on your account balance in 10 or 20 years.”

Employers Automatically Enrolling New Employees at Higher Savings Rates

Since the passage of the Pension Protection Act in 2006, the percentage of employers that automatically enroll new employees in the company’s 401(k) has increased to nearly 35%. And as the number of employers auto enrolling employees has grown, the default contribution rate for auto enrolled employees has also steadily increased – as of the end of Q2, more than one in five employers (20%) defaulted auto enrolled employees at a contribution rate of 6% or higher, more than three times the 6% of employers that defaulted employees at this rate as of Q2 2009. While a 3% default contribution rate is still the most popular among employers, the percentage of employers defaulting at this rate has dropped to 44%, down from more than 60% 10 years ago.

For more information on Fidelity’s Q1 2019 analysis, see Fidelity’s “Building Financial Futures” overview, which provides additional details and insight on retirement trends and data.

 

 

About Fidelity Investments
Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $7.8 trillion, including managed assets of $2.8 trillion as of July 31, 2019, we focus on meeting the unique needs of a diverse set of customers: helping more than 30 million people invest their own life savings, 22,000 businesses manage employee benefit programs, as well as providing more than 13,500 financial advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for more than 70 years, Fidelity employs more than 40,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.
1 Analysis based on 22,900 corporate defined contribution plans and 17.1 million participants as of June 30, 2019. These figures include the advisor-sold market, but exclude the tax-exempt market. Excluded from the behavioral statistics are non-qualified defined contribution plans and plans for Fidelity’s own employees.
2 Fidelity IRA analysis based on 9.5 million Personal Investing IRA accounts, as of June 30, 2019 and includes all IRAs except for inherited IRAs, small business IRAs and IRAs distributed through the advisor-sold market.
3 Analysis based on 10,500 defined contribution plans, including 403(b), 401(a), 401(k) and 457(b) qualified plans, and 6.2 million participant accounts, for 4.6 million unique individuals, in the tax-exempt market, as of June 30, 2019.