Magazine

UpFront | Published in July 2012

Retirement Savings Rising

By Rebecca Moore | July 2012

Fidelity reports 8% jump in average 401(k) balances

Fidelity Investments reported the average balance in 401(k) plans that it administers rose to $74,600 at the end of the first quarter, an increase of 8% from the end of the fourth quarter 2011. The first-quarter balance also represents a 62% increase since the end of the first quarter 2009—often considered the low of the 2008 to 2009 market downturn, when the average balance was $46,200. Fidelity’s 401(k) savings analysis is based on its 11.8 million participant accounts.

Strong stock market performance in the first quarter accounted for approximately 80% of the account balance growth, with the other 20% attributed to both participant and employer contributions.

Fidelity also found the number of participants taking advantage of annual increase programs (AIPs) grew nearly ninefold over the past five years. AIP programs are an employer plan design option that automatically increases contribution rates by participating employees, typically by 1% a year. Seventy-six percent of Fidelity 401(k) plans offer this program.

During the first quarter, nearly 10% of Fidelity 401(k) participants increased their contribution rate versus less than 4% who decreased it. Of those participants in plans offering automatic AIP, 16% increased their contribution rate.

In 2011, 20% more participants attended workplace workshops and 45% more used online webinars than in 2010. Also, approximately two-thirds of 401(k) participants accessed their accounts through NetBenefits, Fidelity’s participant portal, either online or through the company’s smartphone application.