Fidelity Reports Record Gains for 401(k) Participants

May 24, 2013 ( – Fidelity Investments released a quarterly analysis of its 401(k) accounts, which found that the overall average balance achieved a record high $80,900 at the end of the first quarter.

By Kevin McGuinness | May 24, 2013
Page 1 of 3 View Full Article

This represents an 8.4% increase over the prior year, when the average balance stood at $74,600 and 75% growth since the market low during the first quarter 2009, when it dropped to $46,200. Continued contributions from the employee and employer, as well as the strong equity markets, contributed to the overall gains.

“We looked at the account balance growth to see how much of it was the market and how much of it was employee and employer contributions. In this case, two-thirds of the growth was due to the market and one-third to contributions. While during other periods the split was more 50-50, one-third is nothing to case aside,” Jeanne Thompson, Fidelity Investments, vice president of Market Insights, told PLANSPONSOR.

New analysis of 401(k) accounts of preretirees (age 55 or older), who had an employment history of 10 years or more with their current employer, showed very strong growth over the last four years. The average balance for this group reached $255,000 by the end of the first quarter, nearly double since the market low during the first quarter of 2009, when their balance dipped to $130,700.

“The basic savings principles we encourage workers to adopt, such as saving consistently and holding a balanced portfolio with an appropriate exposure to equities—even when close to retirement—were key factors in driving better outcomes since 2009,” said James M. MacDonald, president, Workplace Investing, Fidelity Investments. “It’s important to continually remind employees that sticking to this savings philosophy may not always reward in the short term but may over the long term.”

Unlike preretirees that stayed the course, the small percentage of preretirees (1.6%) who abandoned equities in reaction to market volatility in either late 2008 or early 2009 and never rebalanced experienced much more modest growth. Their balance grew 25.9% over the same time period with balances reaching $101,000 by the end of the first quarter from $80,200 at the end of the first quarter 2009.