| More than a million workers increased their 401(k) plan contributions and more employers automatically enrolled new workers in 401(k) plans in the first quarter, according to a recent retirement savings analysis from Fidelity Investments.
“Contributions to retirement savings accounts have increased across the board, including IRAs, small business plans and traditional 401(k) accounts,” Jim MacDonald, Fidelity’s president of workplace investing, said in a statement. “We’re very encouraged by this trend and hope to see it continue, considering that any increase in savings – even by one percent a year – can have a positive impact on long-term retirement success.”
According to Fidelity’s Quarterly Retirement Snapshot, a record 23 percent of employees enrolled in a 401(k) plan increased their contribution rates since the first quarter of last year, and 27.9 percent of plans automatically enrolled new workers, up 2 percent from the year-ago period. Additionally, 13 percent of employers automatically increased their employees contribution rate each year.
Fidelity also said the average 401(k) balance increased 3.6 percent year-over-year to $91,800 in the first quarter, and average 401(k) balances totaled about $251,600 for employees enrolled in such a plan for 10 years or more. That represents a 12 percent increase from the year-ago period.
The quarterly retirement snapshot also looked at Individual Retirement Accounts (IRAs) and small business retirement plans, in addition to 401(k) plans.
The average IRA balance was $94,100 in the first quarter, an increase of 5 percent from a year ago and a record high, although the average contribution in this period was $3,150, down slightly from $3,270 in the first quarter last year. The overall percentage of investors contributing to an IRA in the first quarter increased 7 percent from last year and among investors under the age of 35, that increase was even sharper, climbing 26 percent year-over-year.
The average combined IRA and 401(k) balance increased 2.2 percent year-over-year from $261,400 to $267,200, and the average combined contribution increased 1 percent from $11,200 to $11,300.
For self-employed 401(k) accounts, the average balance at the end of 2014 was $144,100, a 39 percent increase since 2007. The average contribution was $22,400 at the end of 2014, a 29 percent increase since 2007.
For self-employed IRAs, the average balance at the end of 2014 was $89,800, a 48 percent increase since 2007. The average contribution for 2014 was $14,000, a 20 percent increase since 2007.
For Savings Incentive Match Plan for Employees (SIMPLE) IRAs, the average balance at the end of 2014 was $37,700, a 54 percent increase since 2007. The average contribution for 2014 was $6,260, an 8 percent increase since 2007.
