Fidelity Investments said Tuesday that the average balance in the 401(k) retirement accounts it manages rose 9 percent in the past year, to $88,600. The average balance is almost double what it was five years ago, when the stock market bottomed out.
“It’s encouraging to see such positive savings results for millions of Americans in the five years since the market downturn,” said Julia McCarthy, executive vice president of workplace investing at Fidelity.
The average balance in Fidelity 401(k)s at the end of the March is slightly below the all-time record of $89,300 reached at the end 2013. Since then, the stock market is down about 1 percent.
On average, employees in Fidelity retirement plans are saving the recommended 10 to 15 percent of income for retirement, including employer contributions, the mutual fund company said. But younger workers are not putting aside enough early in their careers. Members of Generation Y — people born between 1979 and 1991 —are saving only about 10 percent of earnings, also including employer matches, according to Fidelity.
McCarthy recommended that companies offer employees options that automatically increase contributions each year.
“We understand that saving for retirement competes with numerous financial goals such as the purchase of a home, college tuition, and the escalating costs of health care in retirement,” she said.
Fidelity is the largest provider of 401(k) plans in the country, managing $1.1 trillion in assets for 13 million participants at 21,200 employers.