Home |  Elder Rights |  Health |  Pension Watch |  Rural Aging |  Armed Conflict |  Aging Watch at the UN |  Videos 


Mission  |  Contact Us  |  Internships  |    










Average 401(k) Balance Near $75,000

By Ross Kerber, Reuters


May 11, 2011


Stock market gains helped drive up balances in the average U.S. 401(k) retirement-savings account to a record $74,900 as of March 31, up 12 percent from a year ago, said Fidelity Investments.

The total is the highest since the giant Boston fund firm began tracking the figures in 1998. Fidelity gave the number in its quarterly update on 401(k) accounts to be released on Wednesday.

Fidelity's figures are closely followed by retirement specialists because the firm is the largest administrator of retirement savings plans, covering roughly 11 million workers.

Its data is seen as an indicator of how well retirement savings are rebounding as the U.S. economy rebounds from the recession that ended in 2009.

Of the increase over the past year, two-thirds was due to market gains and the rest to continued contributions by workers, said Fidelity Vice President Beth McHugh, who oversees the area.


McHugh said that about 10 percent of plan participants increased their contribution to savings plans in the past quarter, while 3.2 percent cut their contributions.

That marked a turnaround since the depths of the financial crisis in late 2008, when more people were cutting their contribution rate, a likely sign of households being under pressure from job losses.

Other measures still showed stress, however, notably the percentage of plan participants who have borrowed money from their 401(k) accounts. This stood at 22.1 percent of participants as of March 31, down just slightly from 22.4 percent at Dec 31, the all-time high.

Fund companies like Fidelity, T Rowe Price Group (TROW.O) and Legg Mason Inc (LM.N) have benefited from rules designed to encourage private retirement accounts as a supplement to Social Security and other retirement savings.

The 401(k) movement has risen as many firms have abandoned defined-benefit pension plans, leaving workers much more exposed to market volatility, especially in equities, as they craft their retirement strategy.

Individuals have reduced their equity fund holdings in response, in favor of more fixed-income investments, although Fidelity and other companies lately have encouraged workers to keep their asset mix at levels tied to their ages and comfort with risk, and not to abandon equity-based funds.

The steady upward crawl of average 401(k) balances has eased some of the political pressure on the accounts. At the same time, it isn't clear what behavioral changes investors might make after the wild ride some of their funds took with markets, said Jack VanDerhei, research director at the Employee Benefit Research Institute, a Washington trade organization.

VanDerhei plans to study whether the recovery of balances will encourage workers to save more in their accounts, where possible -- and whether savers have grown more cautious in their investment choices.

More Information on US Social Security Issues 

More Information on US Private Pension Issues

More Information on Trade Unions and Pension Issues

Copyright © Global Action on Aging
Terms of Use  |  Privacy Policy  |  Contact Us