Retirement account balances are increasing, according to Fidelity Investments’ Retirement Savings Assessment for the second quarter, released Thursday. The average IRA amount increased 5% from the previous quarter.
“We are pleased to see a third straight quarter of positive gains for retirement savers as the market continues to improve and both employees and employers commit to establishing a strong financial future,” stated Kevin Barry, president of workplace investing at Fidelity Investments. “As we begin to see improvements in market conditions, maintaining high contribution and savings rates is an essential component of improving one’s retirement readiness.”
In the second quarter, Fidelity found, total contribution rates, including the employee’s savings plus the employer matches — averaged 13.9% of one’s gross income. This amount is slightly lower than last quarter’s 14% rate but higher than the previous quarters. Fidelity suggests a savings rate of 15%.
All generations saw year-over-year increases in retirement accounts from last year. Gen Z — with members born between 1997 and 2012 — saw the greatest increase, at 66%, followed by millennials — born between 1981 and 1996 — which saw an average growth of 24.5%. Members of Gen X — born between 1965 and 1980 — expanded their retirement sayings by 14.5%. Baby boomers — born between 1946 and 1964 — grew their balances by 6.3%.
The total number of IRA accounts rose significantly from a year ago, especially among people aged 18 to 35. This group had a 34.4% increase in IRA accounts year-over-year, with a slightly greater increase for women (34.8%) than men.
“I am so encouraged to see the leaps young investors are making when it comes to their retirement savings, across both 401(k)s and IRAs,” said Joanna Rotenberg, president of personal investing. “Investing at a young age not only allows your money the opportunity to grow to a level that will have a major financial impact on your future, but also presents an opportunity to learn about investing, try new things and ultimately set yourself up for a successful financial future.”
Consistency is the key to securing a retirement nest egg, the experts noted.
“Those who have been focused on consistently saving over the long term benefited the most from three quarters of growth. In fact, boomers saving in their 401(k) plan continuously since 2008 now have an average balance of just under half a million dollars ($499,700),” according to Fidelity.
