24, 2013 (PLANSPONSOR.com) – 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.
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.