Fidelity Finds Millennial 401(k) Account Balances at Record Levels

The average 401(k) account balance for Fidelity customers rose to $88,900 at the end of the second quarter of 2016 signaling an increase of nearly 2% from the end of quarter one, according to the company’s latest retirement savings analysis. The average account balance for its customers’ individual retirement accounts (IRA)s increased to $89,700 at the end of Q2 2016. That figure increased from $89,300 at the end of Q1 2016.

Despite this growth, however, retirement account balances for Q2 2016 decreased when compared to the levels reported in Q2 2015. The average 401(k) balance at the end of Q2 2016 fell 2.5% from Q1 2015. The average IRA balance at the end of Q2 2016 was 7% lower than it was at the closing of Q2 2015.

The analysis also found that the average 401(k) balances of Millennial account holders rose to record levels. The average balance for Millennials who have been continuously active in their 401(k) plans for 10 years reached a record $92,900 at the end of Q2 2016, an increase of nearly 10% from $84,700 one year ago, Fidelity reported. The overall balance for long-term savers reached $241,300 at the end of Q2 2016, up from $231,500 one year ago.

The company’s findings also revealed that more people are embracing digital tools when it comes to managing their retirement savings. More than 400,000 people tapped Fidelity’s online guidance for information about a wide range of financial topics including increasing savings, establishing emergency funds, and taking advantage of Social Security benefits. In addition, more than 225,000 people completed Fidelity’s interactive money checkup which analyzes an individual’s financial needs and offers guidance.

The percentage of Fidelity customers with all of their 401(k) assets in a target-date fund or managed account topped 45% at the end of Q2. These investors were less likely to react to market swings and economic events—among savers with all of their 401(k) savings in a target-date fund, only 1% made an investment change within their 401(k) over the past 12 months, compared to 13% of 401(k) investors taking a “do it yourself” approach to retirement savings. 

“Most retirement savers are accustomed to market volatility, but the swings in the second quarter were especially dramatic, including a 600-point drop followed by a nearly 800 point increase,” says Doug Fisher, senior vice president of Workplace Investing at Fidelity Investments. “It can be tempting for investors to have a knee-jerk reaction to market volatility, so it’s encouraging that more people are tapping professional guidance to help keep their retirement savings and investing on track.”